MICHAEL MCLAREN, HOST: Good to speak Minister. Thank you for your time.

SENATOR TIM AYRES, MINISTER FOR INDUSTRY AND INNOVATION AND MINISTER FOR SCIENCE: Oh, g'day. I think it's the first time I've been on your show. It's a real privilege to come on. G'day.

HOST: Not at all. We certainly won't make it the last. Okay. Bell Bay, another aluminium smelter, heavy electricity user, we know the story, ageing facility, so on and so forth. But again, it's another government bailout. I guess some taxpayers will be saying, look, I run a small business, I'm about to go to the wall. Many of them are shutting down, we don't get a bailout. Why does this mob?

AYRES: Well, there are scores of small businesses employing well over 1,000 people in North East Tasmania which, you know, the Northern Tasmania is the industrial beating heart of the Tasmanian economy. Really important in industrial terms for the whole Australian economy. Largely big industrial energy users, like this Rio Tinto facility, built on cheap electricity from Hydro Tas. Now that is the history. Publicly owned Hydro facilities that have been there since the 1950s, has been Tasmania's competitive advantage, lower energy costs than on the mainland. And it is the last of the aluminium smelters in this round of interventions. But it's really important, this facility, for jobs and continued industrial capability in Tasmania. The big mainland smelters, younger, larger, big electricity users, the case for intervention there is about their industrial capability, what that means for national sovereignty and our future economic resilience. But also underwriting enormous investment in new electricity generation and transmission as part of both of those deals. So, using them to support rebuilding a modern electricity network that can deliver energy as a future competitive advantage for Australia.

HOST: Ok, if Bell Bay is the industrial beating heart of the Tasmanian economy, as you say, I mean it's a beating heart that's in need of a quadruple bypass, I think, when we look at the situation not just around Bell Bay with this facility, but the manganese plant which of course went under when Gupta left and so on and so forth. I guess people listening now Minister would say, well hang on this is it not a poster child, as you said, for what green energy can do with heavy industry. And yet, be that as it may, here it is needing a bailout. So, if it doesn't work in Tasmania, why would it work on the mainland?

AYRES: My job here is to deal with the actual facts. And I think there's two parts of that, the way that you outlined it, that are unfair comparisons. The first, Liberty Bell Bay is a consequence of an owner who's let the facility down and hasn't done the investment. You can imagine, these are big industrial facilities, furnaces that require constant maintenance and constant investment. If they heat up and cool down, heat up and cool down, it means that more damage gets done. They're not looked after properly. And in Liberty Bell Bay's case, that failure to invest, despite all of the work of the staff there, meant that a new buyer couldn't be secured. Owners have a responsibility, a stewardship responsibility, in the national interest, to look after these facilities.

HOST: That's true.

AYRES: [Bell Bay Aluminium’s] electricity costs, they're lower [than] on the mainland. It is hydro, you know, 80 per cent of Tasmania's electricity in most years is hydroelectric. It's been a competitive advantage for Tasmania for a long time. There's a gap ultimately, I have applied public and private pressure, I guess, to Tasmania to sharpen their pencil and do the best electricity deal possible. It's the right thing to do here, to intervene. I'm just saying it's a different case on the mainland, where what we've got is an electricity system that was left to its own devices. No investment for a decade. We are coming to grips with that and rebuilding new electricity generation and new transmission that's modern, and gets us to the lowest possible cost. The coal fleet on the mainland, most of it is past its expiry date. Every single day, over the last 400 days, every single day, there has been an unplanned outage in the coal fleet, and that puts up electricity prices. So, their production costs are high. But the fact that they're unreliable means that they're constantly closing down, requiring us to use more expensive gas and to adjust the system. We need to build a new electricity network. So, two things.

HOST: Well, just before we go back to the two things, I had a debate with Matt Kean about this unreliable thing as well. I don't care where we get our electricity from, but I do care about semantics and the coal grid. I mean, my uncle's Model T Ford's unreliable too, but that's because it's an old piece of kit. Coal itself isn’t unreliable. But when we leave these facilities to wind down because governments say you cannot build new ones. No one's going to invest in the next generation of Healy power plants. So, I mean that's the unreliability factor. I mean I can point to you on every day a coal-fired power station shut down unexpectedly, where a wind plant didn't produce at maximum efficiency or the clouds came over and the solar plant didn't produce anything either. I mean they're as unreliable, in fact they're more unreliable because, at least with coal, you've got human ingenuity generally running the system. With renewables you've got Mother Nature and we can't control her.

AYRES. Yeah, I think we can find a bit of agreement here on this question. Number one is yes, you could build new coal in theory, but it would be very, very expensive.

HOST: But what we're doing now is very expensive Minister.

AYRES. So, let me come to that. But it would push up the cost of electricity and it would take –

HOST: Well, so just on that I want you to justify that statement because GenCost, the latest GenCost report suggests you're wrong. The latest GenCost report, as you know, says that if we want to reach the Government-mandated renewable targets, that what you are doing with renewables is the cheapest pathway. But if we didn't have those targets and we just wanted the cheapest electricity grid possible, that coal would deliver it. I mean that's what the CSIRO which Chris Bowen waves around, said.

AYRES: Yeah, let me take that in two parts. The second part is how we build a modern system. And you're right, there is variability, but you build for the variability. You build a system that meets Australia's competitive advantage. And our competitive advantage is we've got unlimited sun, the world's best wind resources, enormous amounts of space, and what we had over the decades of the kind of Abbott-Turnbull-Morrison period was. Yeah, hands off the wheel, don't worry about it, somebody else's problem. Let the market figure it out. That led to disinvestment and higher prices and a structural problem. We are providing a clear direction for the market. Investors need a signal from government about what is going to work. We are pointed towards the lowest-cost possible option that meets Australia's competitive advantage in electricity terms.

HOST: That meets your ideological position on renewables. Because as I said, the latest GenCost report suggests that last statement you made is not true.

AYRES: Well, as it happens, the cost and you know, you don't want to discount the emissions and climate questions. They are real questions. But if we're focused on what is Australia's competitive advantage. It's the one that I outlined. Two areas on energy. Number one, we've got the world's best wind, solar resources. Battery costs going down. We've got terrific gas. Battery costs are reduced by about 70 per cent over the last period. As the technology moves along and we get scale, that is proceeding at pace. On the gas side, we have enormous gas resources, but we are the only gas-exporting country on earth that doesn't have a gas reservation scheme. It should have been put in place in 2000.

HOST: I agree. I agree.

AYRES: We are doing it now. We will be coming to the Parliament with a gas reservation scheme, which will mean Australian gas being reserved for Australian industry, households too. But I'm very focused on heavy industry –

HOST: I've advocated for that. If you forgive me, Minister, I've only got 30 seconds. If we could just quickly answer this. As we transition, as you envisage on the mainland, be it Tomago, be it Boyne, whatever, we move toward renewable energy. Are you certain these facilities will remain open for decades?

AYRES: Yeah, that is exactly what these facilities are demanding. Rio Tinto are not hippies. They are very clear with the Government – cannot afford coal. We want a renewable, low-emissions pathway. That is what the company is demanding. And they are demanding it because it's in their interests and in the interests of the electricity grid and industrial development. We're working with them in Queensland. That means $7.5 billion being underwritten by Rio Tinto in new electricity generation. Wind, solar, backed by storage and backed by gas. We are an unashamedly pro-manufacturing government that's about re-industrialising the economy. That's what the Albanese Government's about. Practical steps to do this. Not soundbites, not negative politics. Just getting on and working with industry and delivering it.

HOST: It might have been the first time we spoke. I hope it's not going to be the last. I thank you for your time.

AYRES: Terrific, mate, thanks for that.

ENDS.