Event: Jennifer Westacott interview with Fran Kelly, ABC RN Breakfast
Speakers: Fran Kelly, host; Jennifer Westacott, chief executive Business Council of Australia
Date: 11 October 2021
Topics: BCA’s blueprint to achieve a net zero economy
Fran Kelly, host RN Breakfast: Jennifer Westacott is the chief executive of the Business Council of Australia. Jennifer, welcome back to breakfast.
Jennifer Westacott, chief executive Business Council of Australia: Thanks very much Fran.
Fran: When Labor came out with its plan before the last election to slash emissions by 45 per cent by 2030, you warned it was excessively risky, you called them economy wrecking. Now you're going even further, putting forward cuts of up to 50 per cent within the decade. Were you wrong then or are you wrong now?
Jennifer: No, we were not wrong then and we're not wrong now. The facts have changed, Fran and the response must change. And we've presented a really comprehensive economy-wide, detailed plan. We’ve spent two years working on this. We’ve modelled from a macro level; we've modelled it from the bottom up. But it's really important that people be clear about what facts have changed. You know, three or four years ago, energy prices were going through the roof. Now, new renewable energy is cheaper than new built coal. Businesses at the time were extremely concerned they could not do that. Now they're acting faster than anyone else. The US had pulled out of Paris, now it's back in with a higher target. Japan has higher target. Canada has a higher target. And what we do has always got to be calibrated with what our trading partners are doing. The states now have all committed to net zero, some with very ambitious targets. That wasn't the case at the time. We didn't have a technology roadmap showing us a serious assessment of what we could do. We didn't have that then. We've now seen business and capital markets acting really quickly. 50 per cent of the ASX, which has tripled in the last three years. You've got companies like FMG, BHP, Rio Tinto, big ambitious targets, you've got BP and Shell - global oil and gas companies committing to net zero, you've got capital markets moving.
Fran: Sure, okay.
Jennifer: The IPCC report, which is done every six years, dramatically changed its forecasts. So, now we haven't got a target Fran. We've got a plan, a comprehensive plan, a plan that we worked out with industry, we've consulted with business, the facts have changed, the risks have change, we have to respond.
Fran: You’re coming out with this plan just three weeks before Glasgow. Before Australia needs to be in a position to announce net zero emissions by 2050. So it's very sort of, 11th hour should we say that. And some things haven't changed. I mean, there was a lot of people globally, looking at the writing on the wall a long time ago. Including Mark Carney, the then Governor of the Bank of England. In 2019, he was saying firms ignoring the climate crisis will go bankrupt, persuaded by investors. I mean, the writing was on the wall. Australians, big miners, most of them are your members, were very slow to come to this, but have been persuaded. You've held off until the very last minute. If it's been so clear, for so long, why have you come to this position earlier?
Jennifer: That’s not true Fran. We've been supporting the net zero for quite a long time. We've supported action on climate change for a long time.
Fran: But it’s clear, you couldn’t get to net zero without having a more ambitious 2030 target?
Jennifer: Sure, but you've got to work out how to do it. And you've got to spend the time and the effort working out how to do it. And you've got to look at what other countries are doing. And you've got to look at the kind of detailed consultation with the companies. Whether they're the big emitters, whether they're miners, whether they're retailers, the transmitters, whether they're the network operators, whether they're the manufacturers. That's what we've done. So there's no point just putting stuff out if you're not confident you can do it. And we spent the time and the effort making sure that what we're putting out can actually be done.
Fran: Isn't more the truth that there's a lot of self-interest at play here for the business community because they don't want to be caught out by the prospect of investor strikes and the shift by global capital markets away from industries and in countries not moving towards zero emissions? I mean, it's not so much the facts have changed just the level of fear has changed.
Jennifer: No, I don't believe that's true. I think the facts have changed. And I've just gone through a pretty comprehensive list of the facts that have changed. But there's no doubt that business is looking at its risks differently. And we should be as a country looking at our risks differently, but also looking at the opportunities and that's very much what our plan says. The opportunities now around hydrogen, around renewables, around making these big investments. Those opportunities – we’re now in the box seat for these. Because we’re not dealing with some of the old legacy issues of being able to compete that we had in the past. So I don't think it's a question of fear, it's a question of opportunity. People can see the opportunity; they can see what needs to be done. And what we put out is a comprehensive plan for how to do it.
Fran: Let's go to some of those opportunities as you map them out. Your seven-point plan has Australia well placed to reap an economic dividend from net zero emissions. But you've got a jobs number there, a GDP and a jobs number there out to 2070. 2070 for the big boost to jobs and GDP to come through. That's not going to help Scott Morrison convince the Nats right now that they've got nothing to fear. I mean, that's a long way out isn’t it? How quickly do things improve under your roadmap?
Jennifer: Well, they improve pretty quickly. But this is a long-term plan Fran. I mean, nobody is pretending that there aren't hard decisions to be made, that this is all going to be super easy. But here's the point that I think it's really important to make. The worst thing we could do for regional Australia is to pretend that by doing nothing, nothing is going to happen. Because things are happening and the first of those is opportunities. I mean, green steel, hydrogen, all of the renewable energy stuff, pumped hydro. Where do people think that's going to happen? It's going to happen in regional Australia. You're not going to have a hydro hub in Pitt Street. You're not going to have a green steel plant in Leichhardt. You're going to have those things in regional Australia. The network is in regional Australia. So this is the point that we're making. Act now to make sure that those opportunities go to regional Australia. But the big risk of course is if you don't act your exports become very vulnerable. So for example let's take steel. If we can make our steel carbon efficient, we make it competitive. We give them a chance to compete on the global market like they've never been able to do before. So no one is pretending that is a sugar hit. This is a long road, but you know what those companies say to me, ‘if I could get cheap renewables, that makes my industry more competitive.’ And if you look at what the companies are doing, they're doing it now Fran.
Fran: It's a long road but the time is now. The impost on exports that are not low emission is going to come very quickly.
Jennifer: That's our point. Absolutely.
Fran: If you don't act, your exports would become vulnerable. You also lose your first-mover advantage.
Jennifer: That's totally our point.
Fran: If the economic dividends are so obvious, how do you account for some of the Nationals being so resistant to the shift to cleaner technologies if the economic dividends for the regions are so clear?
Jennifer: Look, I understand why they advocate for their regions as well as they do.
Fran: But isn't this advocating for the regions?
Jennifer: Absolutely. And that's my point. We've got to make sure that we're really clear that the worst thing we could do for regional Australia is to not act now. Is to not get ahead of this and that's what we call for in our plan. A regional low carbon roadmap where we get into those regions now. We get a partnership between industry, government, and the community. We start looking at those new technologies. We look at what's there. Can we adapt that? We look at setting up these hubs. Research hubs in Wollongong to look at green steel. We look at making sure that we invest as part of regionalisation agenda, and we pull out all stops to get ahead of this. Because if we leave it too late those opportunities are going to go somewhere else, and the risks will fall very heavily to regional Australia.
Fran: National’s Senate leader Bridget McKenzie who lives in the regions of course wants a mechanism in any deal with the Liberals that would suspend climate change action if it negatively impacts regional Australia. Essentially net zero economic cost from net zero emissions. She says we have the right as a sovereign nation to hit the pause button. What do you think of that?
Jennifer: Well look I think many of the things she's said this morning I agree with. We need to make sure that we look after regional Australia and that's what our roadmap will do. We're very clear that in our roadmap, in our regional roadmap that should inform the carbon budget, should inform the technology roadmap, and obviously, we've recommended a specific transition authority to be set up as part of the climate change authority to manage these things. But it's not about pausing Fran. It's about making sure that we get out in front. That we calibrate the targets, the budgets, the actions, the technology roadmap to make sure that regional Australia is not left behind. But here's what I absolutely know. And I totally, look nobody advocates better for regional Australia thank Bridget McKenzie and I admire her greatly for that. But when I get out to regional Australia, and I do that as you know a lot. And when we talk to people we ask them this question, ‘do you overwhelmingly believe this is a positive thing or a negative thing for your community?’ People say to us overwhelmingly Fran, ‘a positive thing if we have a plan.’ So let's get the plan. And we want to work with the National party to make sure that we've got that plan for regional Australia because business is a big part of that.
Fran: Okay. Let's talk about the plan again. So just as Labor did at the 2019 election, you are now calling for more ambitious interim targets, somewhere between 46 and 50 per cent overall by 2030. Barnaby Joyce says you've just come up with, "credit card economics" so desire now and hope you can pay later. Even some moderate Liberals say your mid-term or short-term target is too high. Have you modelled the economic cost and potential job losses, if there are any, of halving emissions in less than a decade? So it’s short-term impact.
Jennifer: Well we've looked at a bottom-up approach. We've gone sector by sector. We've consulted with those companies. We've look at the policy mechanisms that would need to be in place to make sure that reliability is ensured, to make sure that economic development is ensured. So we've put out that detail for each and every sector. And I don't think anybody has ever done that Fran. But the point about “credit card politics” is this, everyone knows the sooner you pay off that credit card, the bigger the interest bill that you would be facing is not going to come. The sooner you pay it off the less risk you have of a big interest bill later on.
Fran: Alright just finally and briefly. Integral to your plan is the safeguards mechanism the government has in place. You want the baseline lowered from 100,000 tonnes of carbon a year to 25,000 tonnes. Safeguard credits could be used as offsets or traded. The energy minister Angus Taylor says this is just a carbon tax by another name. I mean essentially it looks very much like Julia Gillard’s emissions trading scheme. Doesn't it?
Jennifer: That's not true. I mean this is the government's scheme. I mean the safeguard mechanism is the government's scheme.
Fran: So this safeguards mechanism is essentially a cap-and-trade scheme?
Jennifer: Well I think people call it more a baseline and credit scheme. But the point is this Fran. This is the government's own scheme. And our plan works with the government's architecture. And importantly, we agree with the government, you've got to do this through technology. But you've got to make those signals for those new technologies to come on earlier. And that's why we've said cover more businesses, reduce the baselines, over time in line with the carbon budgets, support the trade-exposed industries. And if we don't do things like that it's hard to see how we're going to drive that technology change. But this is the government's existing mechanism. They're out at the moment asking people how to make it better? We've put forward an idea. I'm sure others will put forward other ideas. This is the point; we want to work with government to make sure that we've got those incentives right to drive those new technologies.
Fran: Jennifer Westacott thank you for your time.
Jennifer: You're very welcome. Thank you.