LEIGH SALES: Minister, thanks for your time.

ANGUS TAYLOR: Thanks for having me Leigh.

LEIGH SALES: Why wasn't a cost benefit analysis done of Snowy 2.0 before it was commissioned?

ANGUS TAYLOR: It has been done. I mean, we know that the benefits of Snowy 2.0 will be from $4.4 to $6.8 billion, and it is very clear that the cost benefit at the heart of it works because Snowy will reduce volatility of wholesale electricity prices, it will put downward pressure on prices, and of course it will deliver a return whilst it is doing that. What makes this possible and what makes it work is the record levels of investment we are seeing in solar and wind, and Snowy works as a big battery.

LEIGH SALES: But Minister, this analysis wasn't done before the Snowy scheme was announced. How is it responsible use of the money of hardworking taxpaying Australians to announce a massive infrastructure spend without doing a feasibility study first?

ANGUS TAYLOR: Leigh, we made our investment decision after we'd done a cost benefit, and after we'd done the feasibility work. Now, the feasibility work was done in December 2017, and the cost came out at $3.8 billion to $4.5 billion, and the cost benefit we know now is $4.4 billion to $6.8 billion. Now the essence of this is that Snowy provides very low cost storage. By storing energy, it can bring down the prices and reduce the volatility of those prices.

LEIGH SALES: On that point, if Snowy 2.0 comes online in 2025, how much in percentage terms will the average household power bill go down by?

ANGUS TAYLOR: Well, it depends on the time of the day and the time of the year, but at peak times of the year it can come down by thousands of dollars per megawatt hour. And to put this again into perspective, we know that at peak times-

LEIGH SALES: [Interrupts] Sorry to interrupt you, but the average person doesn't know - I don't know what a megawatt hour is when I look at my power bill. I just want to know by what percentage is my power bill going come down by?

ANGUS TAYLOR: Yeah, okay, the benefits across all Australians is as I say, $4.4 billion to $6.8 billion. And that is a very significant-

LEIGH SALES: [Interrupts] No, but what about, that doesn’t mean thing to me because my bill is in the hundreds of dollars – so what does my bill go down by?

ANGUS TAYLOR: It depends on how much you are spending now, but we are talking very significant amounts for businesses, for industry and for households.

LEIGH SALES: Why has Snowy 2.0 doubled in cost and blown out significantly in terms of time?

ANGUS TAYLOR: Well, it hasn't, it hasn’t.

LEIGH SALES: Well, it has. Malcolm Turnbull said it was going to be four years originally?

ANGUS TAYLOR: The feasibility study work was done in December 2017. The numbers were $3.8 to $4.5 billion and we are in line with those. The commissioning will be done in 2024-2025 and they were numbers, they were times that were established during the feasibility work.

LEIGH SALES: Australians were originally told it would cost $2 billion, then less than a year later that doubled. Earlier this year a contract for part of it was signed for more than $5 billion. Is there a limit to what the Government will chip in? Is it not a blank cheque, because you are effectively signed up to this as a key policy and therefore it has to happen?

ANGUS TAYLOR: No, Leigh, the decision was made based on the feasibility study in December 2017. They were the numbers that count, and the numbers are still in line with that feasibility study. And the cost benefit-

LEIGH SALES: [Interrupts] Is there an upper-limit to what the Government will chip in?

ANGUS TAYLOR: Well, we intend to achieve the outcomes of the feasibility study. That is the plan. I'm assured by the Snowy Chief Executive and Board that we will achieve those outcomes.

LEIGH SALES: The CEO of Snowy Hydro Paul Broad says that because of the amount of Government money being spent, Australians are either going to have to pay for this through their taxes or through their bills - which will it be?

ANGUS TAYLOR: The truth of the matter is it going to reduce bills by $4.4 to $6.8 billion. And as I said-

LEIGH SALES: [Interrupts] So does that mean that we will be paying for it through our taxes?

ANGUS TAYLOR: And as I said, the reason – well, no. I mean, the reason there is an opportunity to deliver a better outcome for consumers is very simple: right now we are seeing huge volatility in electricity prices and in wholesale electricity prices, and this is set to intensify from the record investment in solar and wind. Now, the result of that is we have very low prices at certain times of the day and very high prices at certain times of year, particularly when demand is highest. What Snowy can do is store energy when the prices are low and use that energy when the prices are higher. The result of that is to bring down prices on average and to reduce volatility. That's a very significant benefit.

LEIGH SALES: But Minister, we are talking about Government spending of a massive scale on a really big infrastructure project. Where does the money come from? It has got to come from somewhere?

ANGUS TAYLOR: Yes, the money comes from, the investment is being made from the Government - $1.3 billion in equity investment. But it delivers a return. This is the whole point.

LEIGH SALES: Okay.

ANGUS TAYLOR: And it will deliver a return for the reasons that I have said.

LEIGH SALES: Is the return therefore – I mean, what do you want then from Snowy 2.0? Do you need it to be a profitable company so it delivers a return to the shareholder, which is you the Government? Or do you need it to get power bills down as much as possible, which means it won't be as profitable?

ANGUS TAYLOR: Well, the beauty of this investment Leigh, is that it can deliver an investment for shareholders which is Snowy, and ultimately the Australian taxpayer, and at the same time put downward pressure on electricity bills. That is the beauty of it. The reason that is possible, as I say-

LEIGH SALES: [Interrupts] But my question goes to the heart of - what is the balance there, what do you want more? Return for the shareholder, return for the Government or lower power bills?

ANGUS TAYLOR: Both, and we can achieve both. That is the point. That is why this project works.

LEIGH SALES: But there is a trade-off. The more return the Government gets on the investment, the less that is being passed on to reductions in power bills?

ANGUS TAYLOR: We need a satisfactory return like any investor, but only a satisfactory return - that is all that the required. Naturally through the competitive forces of the market the rest will flow through to customers. But the whole point about this investment is that it is one where you can achieve both a good return, a solid return for investors, one is that is reasonable given the capital being invested, and at the same time put downward pressure on prices.

LEIGH SALES: We are talking about huge Government spending on this scheme on the same day that the Treasurer announced an inquiry to the big four banks not passing on interest rates to consumers in full. Don't Liberal voters have a right to feel ripped off that they voted for a government that promised a free market approach?

ANGUS TAYLOR: Well I mean, this is an investment being made on a commercial basis. That is why it makes sense-

LEIGH SALES: [Interrupts] But I am talking about your approach overall. You’ve got serious government interventions in a couple of sectors there. It is not really consistent with a Liberal government, is it?

ANGUS TAYLOR: This is a commercially based intervention so it is a sensible one. This is the whole point of Snowy, and it is exactly what makes it so attractive. It is a commercially attractive investment because it is very low cost storage in a system that desperately needs storage because of the record levels of investment in solar and wind, but at the same time it delivers benefits to customers by reducing volatility and putting downward pressure on those wholesale prices. So it is a commercially-based intervention, and in my view and in any liberal's view that is a sensible intervention.

LEIGH SALES: Minister, I am sure you have Cabinet tonight, thank you very much for making time to squeeze us in.

ANGUS TAYLOR: Thanks for having me Leigh.