Economic Policy

Transcript | ABC Radio Melbourne Mornings | 20 June 2024

June 20, 2024

Thursday 20 June 2024
Interview on ABC Radio Melbourne Mornings
Subjects: Nuclear energy, grocery prices

RAFAEL EPSTEIN: Joining us this morning is James Paterson. He's the Shadow Home Affairs Minister. He is also one of the Liberal senators for Victoria. Good morning.

JAMES PATERSON: Good morning.

EPSTEIN: Would you buy something if you didn't know what was on the price tag?

PATERSON: Everyone will know the price tag before they are required to make a decision about it, because we release the full details, including the costings, well before the election.

EPSTEIN: Will, I know how much it cost to build a nuclear reactor?

PATERSON: Yes, we're going to put out all of our costings, all of our modelling. It'll be transparent for people to make their own decisions.

EPSTEIN: So can you tell me when my bill will be cheaper?

PATERSON: No, but the modelling will go to that. And in the short term Raf, it's going to be about things like more gas, to get through the crisis that we're facing right now. We are saying that we hope to have nuclear power up and running in Australia by the mid 2030s. In the meantime, the cheaper power bills we are hopefully going to deliver you will be through gas and other measures.

EPSTEIN: When will you say my electricity bill will go down?

PATERSON: We will give the full details of that before the election.

EPSTEIN: So I'll have a year before the election on when my bills will be cheaper.

PATERSON: I didn't say there would be a year. I just said before the election we will release our full costings and full assumptions and our full modelling for our energy policies, including nuclear, gas, and everything else that we seek to do.

EPSTEIN: Are my cheap bills one year away after you're elected? 20 years away? Like when? I mean, the whole conversation is about emissions, yes. Which is important. Clearly. But do you know when my bills are going to go down.

PATERSON: Before you go into the polling booth to make your decision, you will have all of the Opposition's policies on these issues that will answer those questions. I can't answer them all today, to be directly honest with you.

EPSTEIN: I know, I understand, but will I know when you expect my bills to be cheaper?

PATERSON: Yes, we will put out the full modelling and the full costings of our energy policies on gas, on nuclear, on renewables, on everything else that will be transparent to you about how we hope to deliver you price relief from what has happened over the last few years. I mean, on average, cumulatively, Australians are $1,000 worse off in terms of their electricity bills compared to two years ago. And let's remember, the Prime Minister promised them before the election there'd be $275 better off. And he didn't just promise that once. He promised it hundreds of times.

EPSTEIN: And we got to know your modelling and your costing. Like a lot of the numbers come 1 or 2 days before we vote. Are we going to know before the election campaign?

PATERSON: Well, I'm not going to specify the exact date now.

EPSTEIN: Before the election campaign?

PATERSON: It will be comfortably before the election so that you can make an informed decision.

EPSTEIN: Comfortably is wide open to interpretation. That could be 48 hours before I vote or six months.

PATERSON: And Raf, we haven't chosen the exact date that it will be announced yet. So I can't tell you exactly what it will be, but it will be within plenty of time for you to make an informed decision.

EPSTEIN: One of the details. There are two power stations at Loy Yang, there’s Loy Yang A, there's Loy Yang B. They. They are each owned by two different companies. Your Finance Shadow Minister Jane Hume says we could end up with two reactors in Victoria. Here she is with Ali Moore yesterday.


ALI MOORE: You could have two reactors in Victoria?

JANE HUME: Well, they're literally next door to each other. They use the same mine, the same infrastructure. So that would make sense.

MOORE: To have two reactors?

HUME: Well, you could have, multiple, generators on the one site. Yes.


EPSTEIN: Is it two or one?

PATERSON: We've identified seven sites around the country. Loy Yang is one of them. Every single one of them is either a current or retiring coal fired power station. By the time any nuclear facility would be established it would be after coal fired power station is closed. Loy Yang A, which is operated by AGL, has a scheduled closure date of 2035. It's up to state government negotiations with them to determine whether that happens. Loy Yang B, which is owned by Alinta, has a theoretical life well into the 2040s. So whether or not that last that long is a matter for the state government and AEMO. AEMO says most Coal will be out of the system in the 2030s. So we're looking at Loy Yang A as the site, for a nuclear reactor.

EPSTEIN: So you are ruling out two?

PATERSON: We are looking at Loy Yang A for the site for the nuclear power facility that we will build in Victoria.

EPSTEIN: I'm just confused. Is it 1 or 2?

PATERSON: We are building one nuclear power facility at Loy Yang A.

EPSTEIN: So it's not two?

PATERSON: No, it's one nuclear power facility at Loy Yang A.

EPSTEIN: Okay, why should we believe that it will be cheaper if the CSIRO says it's the most expensive?

PATERSON: Because that's what the international evidence shows. So look at a province like Ontario in Canada.

EPSTEIN: You can't just pluck a province.

PATERSON: I'll give you a couple then, if you prefer.

EPSTEIN: I can also google where power is cheaper, where there are nuclear power stations.

PATERSON: Hang on Raf, you asked me why it will be cheaper, I'm about to give you a real world example of where it's cheaper.

EPSTEIN: A real world example is literally a Google search. I want to know if you've asked someone, if we build a nuclear power station in Australia, will it be cheaper?

PATERSON: Raf, I don't know why you are reluctant for me to talk about this. In Ontario, 60% of their energy is provided by nuclear power. They pay one quarter the average price that Australians pay on their electricity. In Tennessee, in the United States, 44% of their energy is provided by nuclear energy. They pay one third of the price of what we pay here in Australia. So we think there's real world examples and real world evidence of how nuclear can contribute to lower prices.

EPSTEIN: None of that is evidence it'll be cheaper here.

PATERSON: Well, it's evidence that nuclear power contributes to lower power prices all around the world. And there are other examples too, but I suspect you won't want me to go to those.

EPSTEIN: No, you can list as many as you like.

PATERSON: Well, it's it doesn't seem like it's going to persuade you, because you don't think it's a point of evidence we should rely on.

EPSTEIN: Can I just be really clear. It's not hard to say, hey, in this place the power is cheaper and here they have a nuclear power station. What seems to me to be much harder to dismiss. The CSIRO have real authority and I hope you think they are credible.

PATERSON: Let's talk about the CSIRO modelling then. So we think the assumptions they have made are pessimistic and we'll be putting out our own modelling, which you'll be able to judge alongside the CSIRO modelling. Let me highlight two things about their assumptions. One is, for the purposes of their modelling, they assume a lifetime of a nuclear power facility of 30 years.

EPSTEIN: They don't assume a lifetime. that's wrong.

PATERSON: Yes they do. The international evidence shows they last for 80 to 100 years, right. If you're going to amortise the debt over only 30 years, you're going to get a skewed cost.

EPSTEIN: I think this is a disagreement about the way you can compare financial apples and apples. Maybe it may be a simpler way to proceed with this.


EPSTEIN: The CSIRO are credible, and most people in the country who are involved in the industry believe the CSIRO and accept the numbers. Who's doing your modelling?

PATERSON: We'll release that publicly. But let me talk about another assumption in the CSIRO report. They assume a capacity utilisation, so how often the power plant delivers energy, of between 50% to 60%. That is again much lower than international examples, which are closer to 90%.

EPSTEIN: I don't want to throw documents at you, but appendix D of the CSIRO report, deals completely with those things. But a simple way to, I guess, gauge who you're listening to or who we should all listen to. Who's doing your modelling?

PATERSON: So what you're going for here Raf, is an appeal to an authority, not an appeal to evidence. You're saying if it's done by this brand name that we should trust.

EPSTEIN: No it's 100% an appeal to evidence.

PATERSON: No it's not.

EPSTEIN: You're just saying, trust me there are these mystery people giving me good numbers.

PATERSON: Well hang on, you're just saying. Well, it's CSIRO, therefore it must be right. We can't interrogate the assumptions, we can't question them. We can make difference assumptions.

EPSTEIN: Well of course you can, but neither you or Ted O'Brien, nor Bridget McKenzie has given me a problem with the CSIRO modelling that isn't answering in their modelling. I don't want to get listeners bogged down in detail.


EPSTEIN: A simple, a simple question. If you're not trusting the CSIRO, you're trusting someone else, who are they?

PATERSON: We will be transparent about that when we release our costings, it's not ready to be released, but when it's released it will. Let's talk about the GenCost report though, because the CSIRO, produces the GenCost report, they have modified how they do the GenCost report in response to criticism on previous rounds. So in previous iterations of this report, they didn't adequately consider transmission costs in renewable energy for example. There was public criticism and they responded. They are not impervious. They are not perfect. It is not handed down from on high on a tablet that can't be questioned.

EPSTEIN: And with all of their changes is still the most expensive. But if I can move on from modelling, and if I can just remind everyone who they're listening to. James Paterson is one of the Liberal senators for the grand glorious state of Victoria. You're listening to 774 ABC radio. Maybe a separate part of this equation or a part of this question. You've identified where you want to put the nuclear power plants. You don't own those sites. Government doesn't own those sites. Private companies on those sites, like, they're just going to be charge whatever they like. They can be able to charge like wounded bulls.

PATERSON: No, that's not true. That's not how it works, Raf. So, first of all, I understand why none of those companies currently have plans for nuclear energy on their sites. It's currently illegal, right. We are seeking a mandate from the Australian people to repeal the prohibition on nuclear power in Australia. And we'll have a different conversation with them after the election if we've been successful, and I think they'll be open to commercial negotiation.

EPSTEIN: They must just like, see you coming and rub their hands together.

PATERSON: No, no they won't Raf, because the Commonwealth also has the power under the constitution to acquire property on just terms. And there is extensive legal precedent about how you work out what a reasonable commercial payment is between the Commonwealth when compulsory acquire property.

EPSTEIN: Force a position?

PATERSON: Yes, we've been very open about that. If they're not willing to sell at a market rate, at reasonable rate, then we will use the powers that the Commonwealth has and routinely uses all the time to build things of a national stature. Inland rail, for example used compulsory acquisition. It's completely standard process.

EPSTEIN: Isn't that just going to make everything more expensive? The government's key criticism is that if you introduce uncertainty, uncertainty is what creates expense. If you are now threatening the people who own those power stations, that we will take them off you. That's that is the very uncertainty that drives up my electricity bill, isn't?

PATERSON: I've heard this argument, from the government, but also from the business community and international investors in particular. You can't cause uncertainty by changing policy settings. I'm sorry, we're a democracy. The Australian people are allowed to decide, and we're going to offer them a choice at the next election if they want to change the way we do the energy industry in this country and international investors don't get to tell us that, oh, this is some kind of risk that we're introducing into the system and you're not allowed to do it. It's up to the Australian people to decide.

EPSTEIN: How much is my bill going to go down? I guess I'm curious, are we talking 1%-2%? Are we talking half? Like it's a very ephemeral policy at the moment. Can you give me some idea of how much cheaper you think it will be?

PATERSON: Raf, as you know, I can't answer that question today, but I give you this commitment. Either myself or another one of my colleagues will come back on your programme when the costings are out, and we will go through that in detail. Very happy to be transparent about that before the election.

EPSTEIN: Cheaper after one reactor or cheaper after all of them?

PATERSON: Well, every new reactor that goes into the system will contribute to 24/7 reliable baseload power using a proven technology which is used in 32 countries around the world. There are 50 other countries lining up to introduce it. Of the G20 all but one either use it or are moving towards it right now.

EPSTEIN: It's not all but one, that's wrong.

PATERSON: No it is.

EPSTEIN: There are two or three countries that don't have it, Germany and Italy don't have it.

PATERSON: So where does Germany get the bulk of its power?

EPSTEIN: They get nuclear power from France. But you are the one that said all the G20 countries.

PATERSON: Utilise it. They use nuclear energy because they import it from France.

EPSTEIN: We're probably splitting hairs.

PATERSON: No, no, we're not. No, this is really important. Every single one of the G20 nations except Australia either have it or are moving towards it.

EPSTEIN: Indonesia?

PATERSON: They announced they are exploring it. They're moving towards it. They're G20 country. They're moving towards nuclear.

EPSTEIN: I mean they're really struggling, like Italy. They're really struggling to move towards it.

PATERSON: Raf, hang on. Bangladesh is going to turn on a nuclear power reactor this year, right. Are we seriously saying that this is something that Bangladesh as a developing country is capable of doing, but Australia is not? I mean it's an absurd argument.

EPSTEIN: It's not about capability. It's about whether or not it's the cheapest option, which is still the central question. Can I ask a different version? Maybe it's the same question in a different form. The investment in renewables dwarfs the investment in nuclear around the world is about 100:1, according to the International Energy Agency. If most of the world's money is going towards renewables, why are you bothering with nuclear?

PATERSON: We're supportive of renewables. Renewables will be an important part of the mix as it is internationally, but a very significant proportion of the international energy production put towards emissions is being delivered by nuclear. There is scarcely a country in the world that has an ambitious emissions reduction policy without nuclear. One of the only ones that doesn't is New Zealand and that's because they have hydro. We don't have the geography for hydro on a mass scale in Australia. So we're going to reduce our emissions by renewables only. We're one of the only countries in the world that's attempting to do so. It's a huge experiment. And Australians are already seeing in their bills the consequences of that. And that's before you rip 90% of the baseload energy out of the system over the next decade. That's a massive experiment. We don't know how that's going to go. It's a huge risk to businesses, to people's livelihoods, to their ability to heat their homes.

EPSTEIN: You demanded detail from the government on the voice. Why are you happy to go with it on the vibe?

PATERSON: We're not. We will provide the detail. We will provide the detail before Australians vote.

EPSTEIN: You can't even tell me how much my bill is going to go down?

PATERSON: We will tell you before you're required to vote.

EPSTEIN: So you will come back and talk to answer those questions?

PATERSON: Happily.

EPSTEIN: Separate question. Very, very different question. Because we're going to talk about supermarkets. How much did you spend last time you went to the supermarket?

PATERSON: It was a small shop yesterday, about $15.

EPSTEIN: You don't have to tell me the brands, but what did you buy?

PATERSON: Potatoes, for a shepherd's pie. Strawberries for my kids lunchbox and Weet-Bix for breakfast.

EPSTEIN: Those price has gone up or down lately. Can you remember?

PATERSON: No question, it's up. It's extraordinary, actually, what it used to be to what it is now.

EPSTEIN: Okay. Thank you for coming in. Thanks for asking the questions.

PATERSON: Thanks Raf.


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