Australian Government : Press Conference at ALCOA Portland Aluminium Smelter

PRIME MINISTER:

Thank you Dan and thank you for your outstanding advocacy for Portland Aluminium and the community here.

What we've done today is - together, Federal and State Government, working with the company, working with the community - to ensure that this smelter keeps working. To make sure that the 700 men and women who have jobs here at the smelter and the over 2,000 people in this region whose jobs depend on it, keep those jobs.

I was just talking to one of you, just a little while ago, about his children. He said how his kids wanted to be sure that he'd keep his job here so they could finish school in here Portland. Well this decision today, and the commitment that we have made as the Federal Government, to make a $30 million grant to Portland Aluminium to fund the cleaning out of all those frozen pots which - despite the Premier's plea for an amnesty, Peter Schwartz tells me will commence today and get underway. Because the sooner the smelter is back in full operation, the better. That's good for Portland, good for the company, good for all the workers, good for Victoria, good for Australia.

We are here, standing up for Australian jobs. Manufacturing jobs, exporting jobs, jobs in regional Australia. What this smelter needs into the future is those big export markets that we've opened up in in Asia and will continue to open up in Asia.

We are committed to trade, to greater opportunities for what you produce, to be sold to the world. What it also needs, most critically of all, is affordable electricity. Affordable and reliable electricity. That has to be the commitment and that's what we have to work towards over the next four and a half years, to ensure there is a long term, reliable, affordable source of electricity for this smelter. Because it is a great smelter, as I said earlier, as Alcoa's Head of Global Aluminium said to us, Martin Briere, this is one of the most technologically advanced smelters in the whole Alcoa global fleet.

So all it really needs to succeed for many, many years is that affordable electricity. That is the critical element. That is why with my colleagues, Josh Frydenberg in particular, as the Minister for Energy, we are working night and day to ensure that we have the national energy policies that will deliver the affordable energy Australia needs to secure your jobs and millions of others like them. Jobs in manufacturing, exporting jobs, jobs in regional Australia. We're standing up for them today.

It's great to be here with the Premier, with whom I have an occasional disagreement from time to time. But as the Secretary of the AWU said, Daniel, this sort of collaboration could catch on if it becomes popular. He's not smiling.

[Laughter]

Anyway, he's smiling on the inside he said. Anyway look it's good to be here. It's a great day. Premier, over to you.

PREMIER OF VICTORIA:

Thanks very much PM. This is not a day that's about politicians, it's not a day about those who have, you know, done their jobs. It's our job to have your backs, to do everything we can to make this business viable, to secure your future, to deal with the uncertainty that so many families have had to live with for these few months, and indeed for a much longer period than that.

Today's about you. It should be a day filled with pride, that the work you do here is first-class and that the governments of this nation and this state - together with your employer, their partners, and your energy provider - have done the hard work to come to an agreement that backs you in. That says: 'We have confidence in you, we may have in you. We're proud of you.' That's what today's announcement is all about.

Four years of certainty, four years of security, and during that time I want to just pick up on what the Prime Minister said. I commit all of our government, all of our team, to working hard on these electricity issues. I was talking to Michael about that. We will continue - just as we have to get to this point of agreement - We will continue, under the agreement, to work as hard as we can to support these jobs, this community, and this smelter, for many years to come.

This is a great day, a really proud day and one that we are very pleased to be part of. But none of it is possible without the quality of the product, without your skills. Your first-class work here makes this a viable business, and then we've come along and provided other strategic support that really does help over these next four years.

Thanks very much. We're now happy to take any questions you may have.

JOURNALIST:

Prime Minister, does this signal a change in policy that industries that are doing it tough, they will receive Federal assistance?

PRIME MINISTER:

Well, this is a very particular case, where because of the breakdown in the electricity supply, you had a huge impact here. Where there is a task of reconstruction or cleaning out of all of those frozen pots - which we have inspected earlier - we take a thoroughly pragmatic and practical approach to this situation.

This is a viable business. This is a technologically-advanced plant. It was hit with a mishap, a catastrophe that should never have occurred. You know the circumstances. One transmission line was under maintenance and repair and was out of action, accordingly. The second one broke down. The chances of that happening were very, very low, but it did. So we've stepped in and ensured that we worked with the State Government and the company to deliver this package, which will see this smelter back in operation, back in the operation. For 4.5 years is the commitment of the company, at least, and what we need to do during that time is to secure that long-term, reliable and affordable energy supply.

Now, you know, it's not time for Daniel Andrews and I to have an argument about energy today, but I just want to make this point; whichever way you slice or dice it, you have to be able to keep the lights on. You have to be able to keep your pots operating here. You have to be able to afford it. Because if energy is not affordable, then you lose job of after job after job. That's why we're committed to affordable energy. That's why we're committed to keeping those big export markets open. Even if you have got affordable energy, if you don't have the markets to sell your aluminium, you don't have a business.

So, this is a place where you see exporting jobs, manufacturing jobs, jobs in regional Australia and above all, they depend on those export markets, free trade - to which we are committed -and they depend on affordable energy.

JOURNALIST:

Premier will this deal with, today with the AGL and the company, will that affect power prices broadly in Australia - in Victoria?

PREMIER OF VICTORIA:

It should have no effect on power prices. We have driven a hard bargain with AGL, both Alcoa and ourselves. I got personally involved in this, and asked them to not only come to the table. There was a 12-hour meeting yesterday, last Sunday. It started at lunchtime. It finished at midnight. Jokingly the Treasurer Tim Pallas suggested to the parties that he might order dinner. They said: 'No, no, we will be finished by then. Six or eight hours later they were still there. The thing was we had a commitment; we're not leaving the room until we get the deal down.

We have asked them to sharpen up their price. AGL did that. The 4-year agreement locks in the current supply that's used now and it locks it in on more favourable terms for the long-term. That's a really important development. That should not have any impact on power prices. I have seen some commentary calling that into question. Of course, you can game it out, that if 2,000 people lost their livelihoods, the power that's used here would go back to the grid. That might affect wholesale and then ultimately retail power prices, but that's not something that any of us should be barracking for. That would be a terrible, terrible outcome. So, any talk that this is a bad deal for power users, just doesn't make any sense at all. This isn't a bad deal for customers, it is a great day for Victoria, for the community, for the economy, not just of the south-west, but for our whole state.

This is a big company, a big employer, and a big generator of wealth and opportunity for every single Victorian. We're proud to partner with them.

JOURNALIST:

After four years there could be still some underlying power issues?

PREMIER OF VICTORIA:

The real challenge to us is over these next four, four and half years is to work with the company, just as we were talking about, to try and make sure they have got the energy they need at a fair and competitive price.

No doubt, there will be other issues, not just about power, there will be other challenges. We will be there for this company in the next four and a half years, just as we have been in a really intense way over the last four and a half months, I suppose. These negotiations have gone on for almost a whole year. We always knew this would come to a head with other subsidies running out. We have made a new deal, a new agreement, for what I think will be a new chapter in the history of this very proud company. And it gives these families and this community and our state the certainty that we've needed for quite some time. Let's not for a moment forget just how uncertain, difficult and challenging it's been for these workers and their families and this local community over recent times, not just since December the 1st but for quite some time. Today that comes to an end. I think that is something to very, very proud of, even if the boss won't give them an afternoon off!

JOURNALIST:

A recent Fairfax media report found that over 30 years the plant received $34 billion in government subsidies. It is feasible for one project to get so much support? Is that good for all Victorians?

PREMIER OF VICTORIA:

There were agreements that were entered into when the smelter was first constructed, more than 30 years ago. I think if you were to ask these workers or any of the small, medium or large businesses in Portland or right throughout the south-west, if you go and do a few vox pops later on this afternoon when you're finished with us, I reckon they will say it was a very good deal. I would agree with them.

This is about jobs, it's about export, it's about opportunities, it's about diversity within the Victorian economy, and this kind of sink or swim brigade, that says that no government money ought to be supporting any industry - I don't agree with that, I never have. You have got to deliver value though. That is exactly what the agreement that we have entered into, it represents value. Now, there's always a cost with these sort of agreements, but I ask you, just for a moment, think about the cost involved in 2,000 jobs gone. 2,000 livelihoods gone. Imagine what confidence - imagine what Portland and the south-west would look like. Imagine what the whole Victorian economy would have to deal with when we had the biggest exporter, one of our proudest companies, gone. That would not be a good day for any of us. Today and into the future. There is a cost, of course. But it's more of an investment really and it represents value.

JOURNALIST:

What is the cost to taxpayers' this time?

PREMIER OF VICTORIA:

As you know, we don't discuss those details. But I can assure you when you are talking about an aluminium sector that delivers to the Victorian economy the best part of $1 billion a year, 2,000 jobs, the livelihood of not just Portland, but this entire district, our contribution, which is substantial - be in no doubt about that, it is substantial - it represents value for Victorian taxpayers.

JOURNALIST:

Would you leave the door open for future subsidised power contracts like we've seen in the past?

PREMIER OF VICTORIA:

I leave the door open to working with the company over the next four and half years, just as we have from the very moment we became the Government, back more than two years ago. We have been in constant conversation. It's been more intense in recent times. The points the Prime Minister made about energy security, they are exactly the same points I made to the CEO of AGL in a number of phone hook-ups, at all manner of different hours in different weeks. He's in New York. Obviously I'm here. These are - there is no need for to us have an argument about this. I think we have the same goals, the same objectives, and that is to secure these jobs, and to grow them. There is no reason why this smelter, this business, can't be even more profitable and more secure, if you like, than it's ever been, because of the partnership between governments and, of course, the partnership between AGL and ALCOA.

PRIME MINISTER:

I think an important historical point to bear in mind too is that it was the Victorian State Government, which over 30 years ago, took the decision to have the smelter here in Portland, with the power coming from the other end of the state, from the Latrobe Valley. And so that big transmission, the fact that the customer, Portland Aluminium, is so far away from the power stations, that was the decision take by State of Victoria for its own purposes. Partly for regional development, no doubt, but also because they wanted to have a big base load customer at the other end of the state for the purpose of stabilising the grid and supporting the big development, power developments in the Latrobe Valley. That transmission cost is a cost that was imposed on this business by a government, because, normally, if you were going to build, normally if you build a big energy-hungry operation, you would build it next door to the source of energy. It is quite right that the State Government is stepping up to take responsibility, because the location of this smelter here in Portland, was a thoroughly governmental or political decision all those years ago.

JOURNALIST:

Can we clarify, Prime Minister, your contribution - is it a loan or is it a grant?

PRIME MINISTER:

No, it is a grant of $30 million and the terms of the grant are that the plant has to continue operating at least 90 per cent of its capacity, its current capacity which equates to about 270,000 tonnes. The grant is fully refundable by the company if it ceases doing that before 30 June 2019. 50 per cent refundable if it does that before 30 June 2020. And 25 per cent refundable if it ceases to produce at that level before 30 June 2021. So as I said in my opening remarks, if the company wants to retain all of the grant, they have to keep going, keep the plant operating at that level through to 2021 which of course is what the company's commitment is and that coincides with the length of the energy contract entered into with AGL.

JOURNALIST:

Can I whether or not there is any base on the grid, reports have been issued around the place about the possibility of a new power plant in this area?

PREMIER OF VICTORIA:

I'm not here today to make any announcements about additional sources of power. The Energy Market Operator makes it very clear to us that we have sufficient power available to us now even post Hazelwood.

But look, we are always looking to invest in renewables. We are always looking to invest in the very best technology that can deliver electricity at an efficient price noting that in calculating that efficient price you've got to look at the costs and the environmental damage that some forms of generation cause. That's always been my view.

I'm not here today to announce additional measures but look, we have a long standing record of investing in wind, investing in solar. We have a whole range of permits going out to the market quite soon, auctions I should say, quite soon.

But at the same time, just so there is no confusion whatsoever, Hazelwood made a decision, ENGIE made a decision, they are getting out of coal right across the world, not just here in Victoria, but right across the world. We still however, through the other coal fired power stations, coal still remains a very important part of our energy mix. That is why, that being my view, and being our government's policy, to be practical, to be in the real world, rather than having a holiday from practical reality as some in politics do. That's why I could pick up the phone to the global CEO of AGL and have a proper adult discussion with him, or many of them over recent weeks.

So let's not be confused about this but sadly I'm not here today to make any announcements.

JOURNALIST:

I was just really asking whether during the discussion you might have mentioned something about a new power plant?

PREMIER OF VICTORIA:

I certainly haven't.

[Ends]