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RUBY:

From Schwartz Media, I’m Ruby Jones. This is 7am.

There’s one last thing Anthony Albanese has to do before the end of the political year.

Energy prices are still out of control, and they’re only set to get worse.

That’s in part because of global pressures, but also because ageing coal-fired power stations are going offline, without enough cheap electricity ready to replace their output.

Today, Columnist for The Saturday Paper Paul Bongiorno, on the race to cap electricity prices before we see more damage to the economy.

It’s Friday, December 9.

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RUBY:

Paul, Parliament might have ended but there is one big thing that the Albanese Government really wants to achieve before Christmas, isn't there? And that is to put a cap on energy prices. So to begin with, why is it so important for this Government to really try and achieve that before the holidays set in?

PAUL:

Yeah, well, Ruby, we know that energy costs are the driving force for the rampant inflation, creating the cost of living pressures that we've seen all year. Crippling domestic energy costs are threatening the viability of many businesses, especially in manufacturing and hitting households. But, you know, it's a bit of a mixed bag as energy prices soar around the world. Australia is reaping higher prices for its coal and gas. But unfortunately, as countries in Europe look to further wean themselves off Russian gas by buying ours, we're stuck paying those exorbitant international prices. And adding to the mix is the ongoing impact of older coal fired power plants coming to the end of their lives. So if the Commonwealth and the States can agree on a way to lower coal and gas prices domestically, it would alleviate some of the pain households and businesses are suffering without a new deal, according to the October budget forecasts, energy prices are set to rise by an alarming 56 per cent over the next two years.

Archival tape – Peter Dutton:

“The first point is, and I quote “To cut power bills by $275 a year by 2025.” With the budget confirming this promise has been broken, will the Prime Minister admit that his economic plan is in ruins?”

PAUL:

You know, it's one issue where the Coalition has managed to land a few blows on the Albanese Government. For example, it's allowed former energy minister and now shadow treasurer Angus Taylor to claim without blushing that this Government has no plan.

Archival tape – Angus Taylor:

“I don't see a plan. A little bit like energy, I don't see a coherent plan that lays out how they're going to preserve the strength that they've inherited. In fact, we saw in the budget an economy going backwards…”

PAUL:

Of course he left the cupboard bare on energy policy and he and his colleagues haven't proposed much of a solution themselves. So a plan is something Albanese is desperate to deliver before the holidays. In fact, he promised to do so.

RUBY:

Okay. And so to put caps on energy prices, Anthony Albanese really needs to get this agreement with the states, doesn't he? So what is it that he's actually trying to get them to agree to, Paul?

PAUL:

The Government wants to create caps on the prices that coal and gas producers can sell to domestic power generators. So our utilities don't have to compete with the international market price for what is, after all, our coal and gas. And now, because the state governments receive royalties from coal and gas exploitation, they would need to agree on price caps.

A price cap on gas could be imposed more easily by the Commonwealth alone. But any relief package couldn't leave it there. Coal can't be left out of the equation, as it's still the dominant source of our electricity. And that's been the challenge for Albanese since the election and it's coming to a head today.

Archival tape – Anthony Albanese:

“The idea that you make a decision and it has an impact immediately on prices is not right, of course. The default market offer that will occur is expected to be in February. So what we're looking at is trying to act before Christmas…”

PAUL:

The Prime Minister arrived at a cabinet meeting on Monday. He was wearing a mask. One of his personal staff had contracted COVID, but at that stage he was testing negative. Anyway, the meeting was dominated by the energy price crisis. Albanese updated his ministers on his negotiations with the premiers and it's now clear Cabinet came to the conclusion New South Wales and Queensland would have to be given temporary compensation if they were to impose price caps on their coal.

Archival tape – Patricia Karvelas (ABC):

“The Federal Government wants a gas price cap at around $12 a gigajoule, but you're against it at the state level. Why?”

Archival tape – Matt Kean:

“Well, that's not right. Let me be very clear, I would support a regulatory solution, but there are some conditions…”

PAUL:

State figures like Matt Kean, the Liberal New South Wales Energy Minister and Treasurer, have been supportive of the idea of price caps. Kean too is worried about the impact of rising energy prices, especially as he faces a state election in March. But he insists it's a national problem and the national government should bear the lion's share of the burden.

Archival tape – Matt Kean:

“The number one issue here is protecting consumers from electricity bill increases. Protecting business from electricity bill increases. That's what I want to see and that's what we're asking the Commonwealth to do…”

PAUL:

Besides New South Wales and Queensland, while they're raking in millions extra from royalties as international energy prices soar. They both say they've been using some of that windfall already to compensate their consumers with rebates. That was all set to come to a head at a national cabinet meeting on Wednesday. But then Anthony Albanese tested positive for COVID late on Monday. So the showdown has been rescheduled for today.

RUBY:

Right. Okay. So it sounds like by the end of today we should know more about the deal to cap energy prices. But it does seem like at least this week, there has been some consensus from the states that something needs to be done.

PAUL:

Yes. With Albanese recovering at home from COVID, Energy Minister Chris Bowen met with the States on Thursday to set down a road map for the deal.

Archival tape – Chris Bowen:

“We have various different powers, you know, the Commonwealth's got some good powers, the states have some good powers. What we've done is looked at all the powers we have under our respective constitutions and thought, well, what's the most effective way here?”

PAUL:

Australia's Energy Ministers signed off on a scheme to accelerate the take up of giant batteries, which will help decarbonise the electricity grid. But the big decisions on energy caps will come down to today's virtual meeting between the Premiers, Chief Ministers and the PM.

Archival tape – Chris Bowen:

“We're talking to our friends in the State Government from an energy ministers meeting today, which is important. But we'll be talking about how we get more renewable energy on faster in a more dispatchable way…”

PAUL:

In the lead up there’ve been reports Albanese wants to cap two mystic coal prices to $125 a tonne compared to the global market price of $600 a tonne.

So there's a lot to be ironed out. But if the Government can reach an agreement that brings down the scary forecasts for energy prices, then the beginning of next year looks decidedly better for Albanese landing an energy relief package on top of his delivery of a national anti-corruption commission. And the biggest shake up of workplace relations in two decades means the Government faces the new year with its challenges known and unknown in pretty good shape.

RUBY:

We'll be back in a moment.

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RUBY:

Paul, a deal that puts a cap on energy prices might be just around the corner, but energy prices are really only one part of the economic challenge facing the government at the moment because we know the RBA this week lifted interest rates once again. So can we talk a bit about this historically rapid set of rate rises that we've seen this year and what that's going to mean for the government heading into 2023?

PAUL:

Well, as we've seen, much of the inflation problem is global. And you'd have to say that so far the Australian economy is weathering the storm better than most as the national accounts demonstrated mid-week.

Archival tape – Jim Chalmers:

“This paints a picture of an economy which is relatively robust, despite the substantial challenges being thrown at it from around the world…”

PAUL:

Economic growth for the September quarter was 0.6 per cent for an annualised 5.9 per cent. But Treasurer Jim Chalmers warned there are bigger challenges to come, not the least of which will be avoiding an interest rate induced recession.

Archival tape – Jim Chalmers:

“The challenges in our economy are not behind us, they are ahead of us. Certainly the challenges in the global economy are not behind us, they are ahead of us as well…”

PAUL:

The Reserve Bank on Tuesday raised rates to a decade high of 3.1 per cent, with the prospect of more hikes in the new year.

Archival tape – Jim Chalmers:

“We understand that Australians are under the pump right now and an interest rate rise is not what homeowners wanted for Christmas…”

PAUL:

Chalmers said the thing about these interest rate hikes is that the impacts of them are felt immediately on people's mortgages and repayments. But the impact on the economy takes a little bit longer to flow through. And that's a scary reminder that we haven't seen all the impacts of these rate hikes just yet. Now, from March next year, a huge proportion of fixed rate home loans locked in during the pandemic at 2 per cent will end, pushing borrowers onto repayments at 5 to 6 per cent just as house prices fall. It is an uncertain time with global conditions out of the Government's hands, but there's hope that reforms like the energy market deal will help alleviate these pressures on domestic prices and head off more aggressive action by the Reserve Bank next year.

RUBY:

And Paul, there is no doubt that it has been a particularly busy end to the political year. Last week we saw a whole heap of legislation pushed through Parliament. So what do we know about how voters are responding to everything that the government has tried to do?

PAUL:

Well, this week, Ruby, we got the final national opinion polls published for the year and they suggest Albanese has topped up his credibility tank. The average two party preferred lead for Labor in the latest polls is 12 per cent. In fact, since August, the average lead in the polls has not dropped below 10 per cent. But what is telling is Albanese's rise and Peter Dutton's fall. The Resolve Political Monitor in the Sydney Morning Herald and The Age gave Albanese a 35 point lead over Dutton as preferred Prime Minister. That was the same margin as the latest Newspoll. Well, the prime minister rightly observed that the polls don't count for much two and a half years from the election.

They do, however, indicate how he and his opponents are travelling. And you'd have to say Labor is travelling much better. The Prime Minister sums it up as more to do, but heading in the right direction. And that raises the obvious questions about what direction Peter Dutton is heading. Attempts to redefine himself as warm and contemporary are clearly not impressing voters. Last weekend he gave an interview to The Sun-Herald, where he claimed he could come out of the wilderness after just one term. But apart from thinking, Labor will do him the favour of imploding. He offered not one new policy idea that would appeal to voters in the political centre. You know, they're the ones who deserted the Liberals in droves in May.

RUBY:

Yeah. And Paul, we know that the Liberal Party has been examining that loss in May. There is a review underway and the party is sure to really try and drill down on where they went wrong in which voters they lost. So, is that the big challenge for Dutton now? How to actually put anything that comes out of that review into meaningful action?

PAUL:

Well, it is, of course, and lip service is being paid to gender equality in the party, as is a commitment to eventually ramp up ambition on climate change action. But on what will be a defining issue of the national debate next year the constitutional recognition of First Nations people through a Voice to the Parliament. Well, Dutton, he's sitting on the fence and while giving comfort to the naysayers.

Now, Allegra Spender, the independent who wrested Malcolm Turnbull's old seat of Wentworth from the Liberals, says it's an issue that's constantly being raised with her in her public meetings. An example of the sort of Liberal leadership that would appeal to these voters is the state's leading moderate, Matt Kean. He wants to see the federal Liberals campaign for The Voice. He says it's an opportunity to unite the nation and strengthen our democracy. Kean says the Uluru Statement From the Heart is a modest request, but it's an important step forward that recognises past injustices and atrocities and entrenches consultation on policies to close the gap.

But Ruby, the evidence so far is that the Dutton Opposition is yet to realise this and how important a new direction for the Liberal Party is away from the Morrison era. But as we saw last week, most of the Parliamentary party lined up in Parliament to pay homage to Morrison, the leader who led them into the current abyss.

RUBY:

Paul, thank you so much for your time.

PAUL:

Thank you, Ruby. Bye!

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RUBY:

Also in the news today…

Tanya Plibersek, Minister for the Environment, has proposed a root-and-branch overhaul of Australia’s environmental laws and the creation of a National Environmental Protection Agency, or EPA.

Archival tape – Tanya Plibersek:

“This is an exciting Australia-first and it delivers on an important and important promise that we made during the election to have a strong independent EPA, a tough cop on the beat that is operating at arm's length from the Government.”

RUBY:

The reforms would also create national standards for assessing any new projects, and are part of Labor’s goal to ensure that no further Australian plant or animal species go extinct.

And…

And 25 people have been arrested in Germany over a far-right terrorist plot to overthrow the Government, execute the Chancellor, and install a German Prince as the Head of State.

According to prosecutors the terrorist cell was influenced by the conspiracy theories of QAnon and falsely believed that Germany was controlled by a so-called “deep state”.

Those arrested included current and former soldiers, as well as a police officer and the German aristocrat Prince Heinrich Reuss, who is alleged to be the ringleader of the movement.

7am is a daily show from The Monthly and The Saturday Paper.

It’s produced by Kara Jensen-Mackinnon, Alex Tighe, Zoltan Fecso, and Cheyne Anderson.

Our technical producer is Atticus Bastow.

Brian Campeau mixes the show, our editor is Scott Mitchell.

Erik Jensen is our editor-in-chief.

Our theme music is by Ned Beckley and Josh Hogan of Envelope Audio.

I’m Ruby Jones, seeya next week.

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