E & O E - PROOF ONLY
HOST: Good morning Prime Minister and welcome to AM.
PM: Good morning Sabra.
HOST: I'll get to the electricity debate in a moment. But first up - is Tony Abbott right, Paul Henderson doesn't want you anywhere near the Northern Territory because you're the equivalent of political kryptonite?
PM: Paul Henderson is fighting a Territory election on Territory issues. The people of the Northern Territory are smart enough to know that they're voting for their local government.
HOST: The WA Energy Minister says you've got the credibility of a cane toad over your threat on electricity power pricing here, that you are just passing the buck on price hikes due specifically to the carbon tax.
PM: Well it seems to me if he's using terminology like that he's not trying to win the argument.
We've been upfront that carbon pricing was going to make a 10 per cent difference to electricity prices.
And it will and that's why we've given people tax cuts and family payment increases and pension increases. And that means most Australians will come out either square or in front.
But of course we've seen spiralling electricity prices well before there was a price on carbon - 50 per cent around the country over the last four years, 70 per cent in New South Wales.
Hitting people hard, And particularly hitting the poorest hard because it's those people who have got less room in their budget and less ability to buy things like solar panels and white goods that are more energy efficient.
That's why at the end of this year I want action on some of the true drivers of spiralling electricity prices.
HOST: Okay well you say that some states have been effectively price gouging, gold plating their pole and wire distribution systems. Why then did you say nothing about it when Labor was in power in New South Wales and Queensland?
PM: We've had a lot of technical work happening over the past few years on all of these issues. But now is the moment to act.
Now is the moment to strike because during the first part of next year price determinations will be made which will affect power prices for the next five years.
So my aim is to uplift this from all the technical work which has been proper and necessary and to bring it to the table of the Council of Australian Governments in December to get action.
And the big drivers here of costs for electricity, we've got big investments in the poles and the wires.
There's basically a problem, a policy problem here, that the more state governments allow investments in the poles and the wires, the more they earn, the more goes into their budget out of family budgets. We've got to solve that policy problem.
HOST: But again I bring you back to that point - was it an inconvenient truth to raise this issue while Labor was in power in Queensland and New South Wales?
PM: No Sabra, it's the right time. We've had our energy ministers working hard, Martin Ferguson's done a power of work.
But we are moving to the stage now where decisions will be made that affect power prices for the next five years. I am not having those decisions made without getting state premiers to the table to address their role in power price rises.
And let's look for example at New South Wales. They've enjoyed a 60 per cent increase in the dividend they get from their state owned electricity assets over the last four years.
That's money coming out of the budgets of families into Barry O'Farrell's budget.
HOST: The states correctly point out that ultimately it is a federal regulator who ticks off and signs off on these prices, and in June last year the national energy regulator warned that he didn't have the power specifically to tackle this issue. So why has it taken you 14 months to actually say something about it?
PM: We've been working on precisely this point about the federal regulator and what the regulator can and can't do.
And there is a problem with that at the moment that's been the subject of a review, and that is that the regulator can make determinations and then the power company interests can cherry-pick which bits to accept and which bits to appeal.
That is a policy problem and it does need to be resolved.
HOST: Given what the states had to say yesterday it seems when you need to change the role of the energy regulator you need to get all the states and territories on board this to approve it. Given the wall of noise that we heard from them yesterday, might you have to carry out your threat to wield this big stick and actually force them to cut their investments? Is that the likely outcome of what's going to happen?
PM: Sabra I expect that there's going to be plenty of shouting and some of that shouting's already started today.
Despite all of that shouting I'm determined that in December we get action here to make a difference for power price rises for families.
This is hitting family budgets. It's hitting people hard and I want to see action.
I always want to see action through cooperation. So despite all of the shouting my aim will be to get people to that table, working together to get solutions. But if that proves impossible then we'll find some other way to get this done.
HOST: So it is a serious threat?
PM: Of course. My aim here is looking after families who are worried about constantly escalating power prices, families that have seen $1,000 increase per year in their power bill. They're who I want to help out here.
Sure, I'd like it if state premiers could stop some of the shouting and work together, and I suspect that's where we will get to. State premiers actually realise this is an issue.
HOST: But the carbon price is also adding to this pressure on families as well.
PM: Well Sabra let's be very clear. We put a price on carbon and gave tax cuts and gave family payment increases and gave pension increases, and for most Australian households that means they come out square or in front.
Round the country, New South Wales 70 per cent increases in power prices, not one cent of assistance from the New South Wales Government, and so it goes. That's the problem.
HOST: Following the logic of your argument you seem to be suggesting here that Australia does have a gold plated electricity system. You say that that's not absolutely essential. So are you proposing then that more brown-outs are acceptable to Australia, a first world country, and specifically Australia which experiences so many days where the mercury pushes 40 degrees?
PM: We're a smart people, a very innovative people. And I think we can do better on questions of reliability and meeting peak demand than doing the equivalent in electricity of building a 10 lane freeway where two of the lanes only get used one weekend a year. We don't do that in our road system.
I think we can find better ways of meeting peak demand, keeping reliability, but doing better on prices than we are now.
This is making a big difference for families; $11 billion of investment in the network to meet peak demand, an impact of around $500 per year in family bills. I think we can do better than that. We can get smarter than that.
HOST: But if there's lower investment in the poles and wires and not the gold plated system, Australia might face more brown-outs.
PM: Sabra we need the right investment so we have a reliable system. We don't need over-investment that hits family budgets.
HOST: Obviously this morning is an exception with Sally Pearson and Anna Meares winning gold, but as Prime Minister are you worried, as the Australian Olympic Committee freely admits, that Australia's performance at this Olympics so far has been below expectations?
PM: I think it is too soon for all of this. What I want to be doing now, just as an Aussie let alone as Prime Minister, is cheering on the remarkable things our athletes are doing.
And the women have done us proud overnight. So let's share in that joy, share in the expectation of more fantastic performances to come.
There will be plenty of time afterwards to work through everything that people want to discuss in sport. We've proudly provided record funding.
But really now's the time to just be experiencing some sense of joy as we share in our athletes' delight, and I think we've got a lot more wonderful performances to look forward to.
HOST: Do you sometimes worry that as a nation that really loves its sports that sometimes Australia places too much emphasis on winning, actually winning?
PM: People want to see our athletes do well. They want to share in the triumphs. They want to also feel some of the heartache.
One of the reasons I think we're so attached to sport is it's an incredibly emotional business. And you get to share in the emotions; you get to feel the joy, you get to feel the pain.
That's why it's such gripping TV and why we're all just so addicted to watching the Olympics on our TV screens.
But you know on the sort of policy issues about sport, there's plenty of time for that. Let's just get into the spirit of it. And what a wonderful night we've had.
HOST: Prime Minister, thanks for talking to AM.
PM: Thanks Sabra.