PATRICIA KARVELAS: The federal government is claiming a victory of sorts in its bid to get energy retailers to lower their prices by January next year. The Government has campaigned heavily on bringing down the cost of power, but its proposed default energy price doesn't kick in until 1 July. With a federal election due before then, the political cost of a long, hot summer with air conditioners running at full tilt looms large. The Energy Minister is Angus Taylor and he met with the industry retailers today. He joins us on RN Drive - Angus Taylor - welcome.

ANGUS TAYLOR: Thanks for having me, Patricia.

PATRICIA KARVELAS: Energy retailers have agreed to make it easier for consumers to compare prices and get a better deal, but they haven't agreed to lower prices. Did today's meeting achieve anything concrete?

ANGUS TAYLOR: Absolutely. First of all, we've put the energy companies on notice on their standing offers - the prices you get if you don't go and negotiate each year, and there are many Australian households and businesses, families and businesses, who are still on standing offers. We want a fairer deal for them. We've put them on notice and we've got a process now running and we want to see the loyalty tax, as we call it, for those customers who are stuck on those standing offers gone by 1 July with a down payment on 1 January. Now, we don't negotiate those prices collectively - that's against our competition rules - but we have put in place a very clear process for them to come down. The second thing, though, that happened today, which was an initiative put forward by the retailers, is bringing forward an ACCC recommendation to make it easier to compare offers from the big energy companies. So, right now, if I get an offer from one company that's a 20 per cent discount and another that's a 25 per cent discount, it's very difficult to compare them - you're not comparing apples with apples. Well, we have to make it much simpler for customers to compare offers and the companies have agreed to bring that initiative forward so customers can negotiate better deals faster and more easily.

PATRICIA KARVELAS: Ahead of the meeting, the Australian Competition and Consumer Commission - the ACCC - has warned that any attempts to discuss pricing could amount to cartel action, cartel behaviour. Does that complicate the idea? Is that why there was a kind of muted level of discussion today, because of that awareness that all of those providers have?

ANGUS TAYLOR: Well, this is not an unusual situation. We've had roundtables - I've been to one as the Minister with the gas producers as well - and we always have this issue where you can't agree on a price as a group - that's illegal and we don't do that. But what we can do is make it clear what our expectations are as a Government and how we're going to implement those expectations. And we've said very clearly: if these standing offers, these non-negotiated prices, don't come down voluntarily, as we would like them to do, we will make them come down. It's as simple as that.

PATRICIA KARVELAS: And have the energy retailers indicated whether they are prepared to reduce their prices by January, as you've requested?

ANGUS TAYLOR: Well, that's an issue for them. But what we've seen-

PATRICIA KARVELAS: Well, no - so, they haven't agreed then?

ANGUS TAYLOR: Well, it is an issue for them. You don't agree a price collectively, Patricia - that's illegal. But it is an issue for them. But what's not an issue for them is if they don't do as we are asking them to do, we will make it happen and we have the power to do that and we will do it and we've made that very clear. They're on notice. I think the good news is what we saw today is good faith from the energy retailers - a willingness to actually do the right thing by the customer that we haven't seen in the past - and that's, I think, a big step in the right direction. These are companies that serve every Australian household and business and they deserve a better deal.

PATRICIA KARVELAS: The Government has threatened divestment if you don't get what you want. Are you prepared to go through with that and is 1 January a hard deadline for that?

ANGUS TAYLOR: We are prepared to go through with it, yes.

PATRICIA KARVELAS: And so if they don't- if there's not- can they reduce their prices by $1 and that sort of ticks the box?

ANGUS TAYLOR: Well, we're talking about two different things: one is price reduction, the other is making sure there's enough supply in the market [inaudible].

PATRICIA KARVELAS: But are you prepared to go through with divestment?

ANGUS TAYLOR: Absolutely we are. There's no que- look, we are-

PATRICIA KARVELAS: And when will you make that call?

ANGUS TAYLOR: We'll make that call in the coming weeks and months. We have said we will bring forward legislation to the Parliament this year - big stick legislation which will give powers to the ACCC and the Treasurer-

PATRICIA KARVELAS: They might have the powers, but it's about pulling the trigger, isn't it?

ANGUS TAYLOR: Well, giving them the power is the first step to allowing them to pull the trigger, Patricia. But the point I'm making is that we're not bluffing here. We need the companies to do the right thing by Australian households and businesses. And if they don't, we'll do what we have to. Now, I am actually confident that the energy companies fully understand our position. That fact that they have made a big step in the right direction today suggests to me that they're willing to work with the government to get the right outcome by consumers, but we've got a lot further to go and we'll keep working with them.

PATRICIA KARVELAS: Do you accept that a default price makes it harder for energy retailers to compensate for other cost increases?

ANGUS TAYLOR: Look, there's all sorts of arguments being made about all of this-

PATRICIA KARVELAS: But do you accept that? That's what I asked you.

ANGUS TAYLOR: Well, I'll tell you what I think on this is that consumers deserve a better deal. If the energy companies are not prepared to deliver it to them voluntarily, we'll make it happen. And it's as simple as that.

PATRICIA KARVELAS: But do you accept that the default price makes it harder for energy retailers to compensate for other cost increases?

ANGUS TAYLOR: Well, the ACCC doesn't think that. Rod Sims...

PATRICIA KARVELAS: What do you think?

ANGUS TAYLOR: ... has been very clear- and I agree with Rod Sims on this, Patricia.

PATRICIA KARVELAS: So, you don't think it does make it harder for them?

ANGUS TAYLOR: I think making sure that customers who don't negotiate their prices - and there's a lot of them out there, who haven't got the time, they're too busy taking the kids to sport or getting home from work to do it - I think they deserve a fair price and we've seen them get stung in many markets around Australia in recent years simply because they've been loyal to and trusted their energy company. Now, that is unfair and, as I say, we are prepared to act and we are confident that we have the power to fix that problem if the energy companies don't do the right thing.

PATRICIA KARVELAS: If you're just tuning in, Angus Taylor is my guest. He's the Energy Minister. 0418-226-576 is the text line. What do you make of the Government's plan, particularly this divestment power it says it's willing to execute? Origin Energy and EnergyAustralia want the removal of rooftop solar subsidies, which they argue have increased the cost of power; that's what they're arguing. Are you prepared to do that?

ANGUS TAYLOR: No. We've been very clear about this. The way the rooftop subsidy system works is it gradually phases down between now and 2030 as the technology continues to improve. That's absolutely appropriate. We've seen very significant reductions in the cost of rooftop solar over recent years. And they continue, and the subsidies come down as that technology continues to improve.

PATRICIA KARVELAS: So, you won't remove...

ANGUS TAYLOR: So, we won't remove it any faster than is planned to occur now. And nor should we, because there needs to be the right balance between technology improvement and taking that program away. So, it happens gradually. Look, we are seeing a lot of renewables coming into the system right now: both large scale wind and solar, as well as household - which is what we're talking about now. That is a good thing in many ways, but it creates some challenges, and we'll deal with those. But we're not proposing to change those programs.

PATRICIA KARVELAS: Minister, what do you say to an industry which says it is still dealing with a policy vacuum on emissions? Because that's the clear message and they're saying that's part of the issue here.

ANGUS TAYLOR: Well, we're going to reach our emissions targets. And we're not just going to reach them...

PATRICIA KARVELAS: No, no, no. I'm talking...

ANGUS TAYLOR: No, but that's want counts here.

PATRICIA KARVELAS: A policy vacuum on emissions. You don't have any architecture. You don't have - you've abandoned it all.

ANGUS TAYLOR: So, the objective, No, hang on, what matters here is emissions, Patricia. The atmosphere - climate change is driven by atmospheric concentration of carbon dioxide. That's the outcome that matters. That is what is at issue here. Now, we are going to reach our emission reduction targets for the national electricity market well ahead of 2030, which is the target deadline; well ahead.

PATRICIA KARVELAS: But, they're asking you for policy certainty.

ANGUS TAYLOR: Well, you don't need policy if you're going to reach the target.

PATRICIA KARVELAS: Well, no - but they're saying they do, Minister. And they're the ones operating in the market.

ANGUS TAYLOR: The policy is to reach the target and we will reach the target. It is that simple. So, we can have a long- we don't put policy...

PATRICIA KARVELAS: But it's the opposite to what the people who actually are operating in the market are saying, though, Minister.

ANGUS TAYLOR: Well, let's look at the numbers. We will be, on the ESB's forecast at 134 million tonnes of emissions by 2021. The target for 2030 is 130.

PATRICIA KARVELAS: Okay. But doesn't it make it harder to stabilise the wholesale market if the players in it don't know what the rules are and how carbon emissions will be constrained?

ANGUS TAYLOR: Well, I have told you, we're going to reach our emissions targets. So, the critical thing for us now...

PATRICIA KARVELAS: So, you're saying there's going to be no changes to them.

ANGUS TAYLOR: Well, we're going to reach them, so why do we need to make an additional intervention? Look, there are people out there who just want interventions for the sake of them. We want interventions to get an outcome. We're going to get the outcome anyway. What matters now is with a 250 per cent in solar and wind in the next three years - we're going from 9 per cent solar and wind in the national electricity market to 23.5 per cent in three years. Now, the challenge is to make sure that works for us; to make sure we have the reliability, we have the affordability; we keep prices at a level which is affordable or get prices to a level which is affordable for Australian families and businesses. That is our challenge. The emissions targets, as I say, because of that...

PATRICIA KARVELAS: Well, you're just saying: that's just going to happen on its own. We're not going to actually set any rules, tell people what the policy is. It's just going to happen.

ANGUS TAYLOR: You see, Patricia, why create rules when we're going to get to the objective?

PATRICIA KARVELAS: Because the industry is asking for rules and certainty in the long term, Minister.

ANGUS TAYLOR: They have certainty. We're going to reach our target.

PATRICIA KARVELAS: They're saying they don't have certainty.

ANGUS TAYLOR: Well, we're going to reach our target. I can give them that absolute certainty. We are doing extremely well. We've got $15 billion of investment coming in in the next couple of years. And for that reason, we'll reach our targets. And the challenge now is to make sure we have affordable reliable power. Now, the companies, the truth is, this is a tough ask for them. We are asking them to step up and give customers a better deal. Perhaps some of those companies don't want to talk about that, but that is a discussion which is extremely important because Australians want us to hold the energy companies to account on delivering a good deal on electricity prices.

PATRICIA KARVELAS: Minister, before I let you go, just on broader politics. The Prime Minister is on a listening tour of marginal seats in Queensland with a bus called the Scomo Express except that he's actually not on the bus, he's flying; what's the point of the bus if you're not on the bus?

ANGUS TAYLOR: Well, he has been on the bus.

PATRICIA KARVELAS: Well, he just revealed today he's actually not going to go on the bus to his next location.

ANGUS TAYLOR: Well, that might be true for the next location, but he has been on the bus. But, look, what matters here - we can get caught up in all of this sort of insider stuff...

PATRICIA KARVELAS: It's not insider stuff. No, no, no, no, no. You don't have a big bus and then not use the bus, and then expect you're not going to be asked about it; it's not insider stuff, it's a real bus.

ANGUS TAYLOR: Well, let me tell you: what matters is that the PM is getting out there into every reach of Australia. I was with him in WA a couple of weeks ago. I was with him in Melbourne a week or so...

PATRICIA KARVELAS: Right, so he's campaigning.

ANGUS TAYLOR: Well, he's out talking to Australians, Patricia. And that is what politicians should be doing; that's they're job. Because that's how you learn. That's how you do a better job. That's how you work out what Australians need and what we as politicians should be doing. So, I encourage my colleagues - and I try to spend as much time as I can - to get out there and talk to constituents, talks to Australians, talk to hard working...

PATRICIA KARVELAS: Do you think Australians would take it a bit more seriously if he actually travelled on the bus?

ANGUS TAYLOR: Well, I think Australians take seriously a prime minister who gets out and talks to them about their issues; that's what counts. That's what Australians rightly want from their elected representatives. And that's what I seek to do, and the Prime Minister is doing an enormous amount of it right now.

PATRICIA KARVELAS: Minister, thanks for joining us.

ANGUS TAYLOR: Thanks, Patricia.

PATRICIA KARVELAS: That's the federal Energy Minister Angus Taylor.