PAUL CULLIVER, HOST: Tim Ayres is the, well, somewhat recent Federal Minister for Industry and Innovation. He's also of course Senator for New South Wales, and he's come in to Newcastle today. Minister, good morning to you.
SENATOR TIM AYRES, MINISTER FOR INDUSTRY AND INNOVATION AND MINISTER FOR SCIENCE: G'day Paul, got to be on the show. When I heard that weather report, I thought maybe I should turn the car around, it sounds cold and miserable.
CULLIVER: Yeah, well, that's everywhere, so you've just got to cop it.
AYRES: That's right, that's right.
CULLIVER: What are you coming to Newcastle for today?
AYRES: Well, as you said, I've been recently appointed as the Minister for Industry and Innovation and Minister for Science. I've been in and around the manufacturing sector in the Hunter Valley for all of my adult life I've grown up through the sector. It's very important to me, early after the appointment to get stuck back in on the shop floor in the Hunter Valley. I'm very keen to do that.
We have, as you've indicated, been working very closely with Tomago Aluminium and delivered very early this year a $2 billion aluminium production credit, which is their design to support low emissions aluminium production here in Australia, so to support our local manufacturing sector, and Tomago Aluminium in particular. And I'm keen to get my head in the door there, talk to local management and workers, and keep as close to the action as possible.
CULLIVER: Let's just lay out here what the problem is, because to get access to those production credits, which of course would smooth their transition to green energy, don't they need to be using green energy, and it seems that supply is just not there for them?
AYRES: Well, it's certainly projected that those credits will start operating in some years’ time, but it provides a certain investment horizon for Tomago Aluminium and their owners. And it's important to understand that the reason why the Australian aluminium producers are shifting to low or zero emissions electricity for their production processes. It's simply because that is the cheapest form of energy in the future, that is the source of their competitive advantage, is low‑cost electricity, it's why Tomago is in the place that it is. At the time the source of low‑cost electricity were those two large coal‑fired power stations, Liddell and Bayswater. Now the market has changed, and now for the owners of Tomago, it is very clear that future energy capacity in Australia, the cheapest form will be wind and solar, backed by gas, backed by hydro, backed by batteries, so they are shifting in that direction.
And the second reason that they are doing that is because their market, the big industrial suppliers who they supply to, is demanding zero emissions or close to zero emissions electricity. So that's Australia's future competitive advantage. They're not doing it because the Government's asked them to, they're not doing it because - I'm sure they've got very good sustainability policies and all that sort of stuff, but they are doing it because it's in their commercial interests, and that's the competitive advantage that the Government is focused on in securing future production here in Australia.
CULLIVER: Okay. So that's off into the horizon of sort of 2028 and beyond, and that's why you can sort of start to invest now in that green energy; I understand that. But the reporting around from AFR and others, is suggesting that Tomago is in a very real situation of discussing their viability as we speak and coming to the Federal Government and the State Government for a bail‑out to even get to a point where you might be able to access those production credits. Is the Federal Government at the table there?
AYRES: Well, of course we are fully engaged with this sector. We, as I said, delivered that $2 billion package. It is not a small package, Paul.
CULLIVER: Sure, but they can't access it yet, right?
AYRES: That's right, that's right.
CULLIVER: So, I'm asking about getting to a point when they can access that.
AYRES: Yes, of course. I just point out the reason that they are at the table and engaged here is because of that credit. Our opponents at the election said they would abolish it, that would have been the end of the argument – that would have been the end of aluminium production in Australia had our opponents been elected.
There are challenges that the company faces, of course, as they're renegotiating power purchase agreements, that is not a new dynamic. Every time there is a new round of power purchasing agreements, the company is engaged with government, and in the old days the New South Wales Government owned the electricity system, so it was a very straightforward set of discussions. Now there are multiple sources of potential support and engagement with Tomago Aluminium. The Federal Government, we have played a very significant role here. But of course, they are engaged with the New South Wales Government and the power companies.
I'm keen to get there today to hear more directly from the company about what the shape of what their vision for the future of that facility is.
It's important we have a shared approach across all of the players – with New South Wales, with the power companies, with Tomago itself, because it is such an important industrial facility for the region, but also for Australia's and New South Wales' sovereign economic capability.
We have as an economy over the last 30 or 40 years become less complex with less manufacturing, and less investment as a parallel with that in our research and development capability, and of course we're coming off the back of some decades of low productivity growth performance.
These issues are all related. If we want to build a stronger economy that is more resilient, that delivers good jobs in the regions and suburbs, if we want to attend to our productivity performance, that means the Future Made in Australia program is there to reindustrialise the economy, make us more diverse, diversify our production, and the goods and services that we offer the world, make us more economically resilient and more secure.
We've all got a role to play in it. The Federal Government is providing some leadership here, but all of us, private sector, public sector, have got a role to play. Part of my job is to be closely engaged with private sector here, and talking to them about their vision for investment in the future, and Tomago Aluminium's a good place to start. I'll be at UGL Broadmeadow a little bit later in the day to have the same kind of discussion.
CULLIVER: Obviously we know it supports about 6,000 jobs in the economy, there's countless families who depend on that work. If I can invoke the example of Wiles Steel Works, obviously those issues for them were a little bit different, but at the end of the day $2.4 billion coming from the Federal and State Government in South Australia. Would it be true that Tomago Aluminium smelter ‑ it's too big to fail, there's no way that a Federal Government would let them go under?
AYRES: Well, it's certainly the case – in Australia we have from top to bottom the aluminium supply chain. Bauxite and alumina, aluminium production, all the way to through to finished products. That is an important Australian national capability. That's why we delivered this $2 billion production credit, and I am confident about the future of the aluminium sector in Australia, I'm confident about that facility. It is not a low‑efficiency production facility, it is a high‑efficiency production facility.
CULLIVER: Okay. My question, Minister, though ‑
AYRES: It's globally competitive, but I'm not complacent about these questions, that's why I'm engaged.
CULLIVER: What my question is, is there any world in which the Federal Government would let Tomago Aluminium Smelter close?
AYRES: Well, that's a hell of a question, Paul. We've just put $2 billion on the table for ‑
CULLIVER: In three years' time.
AYRES: Yes, but it is real money, it is part of the largest pro‑manufacturing package in Australian history. It is why Rio Tinto and the other owners of Tomago Aluminium are at the table, progressing their investment plans and their future plans. Absent that, we would be in diabolical trouble here. The Albanese Government's package is the reason that there will be further investment.
But I'm not complacent about the future. I haven't got my feet up on the table wondering what's next. I'm very focused on this facility and a range of other metal production facilities around the country that are very important for our economic and industrial future. They deliver very high-quality jobs in a region like the Hunter Valley, but they're also important in national interest terms. And that's why I am fully engaged, and this set of issues will have a lot of focus from the Federal Government. Everybody's, as I say, got a role to play here.
CULLIVER: All right. Minister ‑
AYRES: Every level of government, and the power industry as well. It's a very important facility.
CULLIVER: Understood. Look, I appreciate your time to front up and talk about this this morning, and hopefully as those conversations continue, we can do more of that.
AYRES: Any time, Paul, thanks.
CULLIVER: Thanks, Minister.
ENDS.
