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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

8 June 2008

Interview with David Speers

Sky News

8 June 2008

SUBJECT: Petrol Prices, G8 Finance Ministers Meeting, Climate Change/Emissions Trading Scheme, Inflation

SPEERS:

The Treasurer is in London to talk with his British counterpart there and also other OECD Finance Ministers and to talk to business leaders as well.  He’s just been talking to our colleagues at Sky News in London and he joins us now from London for a chat with us.  Treasurer, thanks for joining us.  You’ve been talking about, primarily, petrol and climate change, amongst other things.  If we could start with petrol, because here in Australia motorists are about to face, or it seems this week, prices as high as $1.70 a litre, what do you say to them?

TREASURER:

Well, what I say is we have to do everything within our power nationally and globally to address this issue.  But as you know, the price of oil is determined internationally.  One of the discussions I’ve been having here has been with the British Chancellor yesterday about the price of oil and about the global factors affecting it, and we’ve agreed that we will take up that discussion at the G8 Finance Ministers’ meeting in Osaka in Japan at the end of this week.

Now, I can’t predetermine the outcome of that meeting, it is a complex issue – the supply of oil  and the demand for oil – but we will be putting that very fairly and squarely on the agenda at the G8 Finance Ministers’ meeting in Osaka.

SPEERS:

This is a very different argument to the one you made last year.  In Opposition you talked all about the price gouging by the oil companies and the need to crack down on that.  Now you’re talking about the world oil price being to blame, which is just what the former Howard Government did. 

TREASURER:

No, that is not true, David, and you now that’s not true.  Let’s just deal with a couple of issues there.  We said there was no silver bullet when it came to petrol prices, but what we said we would do was the maximum possible amount we could do domestically to make sure that people got a fair go at the petrol bowser.  Now, when I was asked questions about this; could I guarantee that the price of petrol wouldn’t go up, or that it would go down, I said I could never guarantee that, but what I would guarantee was that we would put in place a scheme to make sure that people didn’t get ripped off at the bowser, and that’s what we’re doing with FuelWatch.  But we also have to be acting globally as well, and of course, nobody could’ve predicted the spike in the price of oil that’s occurred in recent times.  Nevertheless, it is there, it has profound implications for global economics – not just the Australian economy – it requires global solutions and that’s why the Prime Minister and myself are engaging internationally on this issue.

SPEERS:

Well, as you said, it’s a very complex issue – the world oil price – but how much more can the OPEC nations do, production is at a record high?  Isn’t the problem more China and India and their appetite, enormous appetite for oil that’s causing the price of oil to go up and up?

TREASURER:

I think it is all of those things, David.  We need to far better understand what is going on with the supply of oil internationally.  There is a very significant debate about this and there is no general agreement.  That’s why G8 Finance Ministers do need to be sitting down and analysing that and having a good, hard look at what are the factors that are relevant here and if action can be taken to talk to OPEC, or if other action can be taken, then it should.

SPEERS:

Is that all the action that can be taken by the G8, simply to talk to OPEC?        

TREASURER:

Well, we’ll find out when we get to Osaka at the end of next week, David.  I can’t pre-empt the outcome of those discussions.  But we ought to be clear.  You know, the trend in world oil prices does have significant implications for inflationary pressures in the global economy.  So, all of the OECD Finance Ministers that I was talking to in Paris a couple of days ago are very concerned about the impact of this issue, along with food prices, on their macroeconomic stability.  So, these are very serious issues for the long term for the international economy and that’s why they should be discussed at meetings like the G8 Finance Ministers meeting.

SPEERS:

I’m sure everyone is very concerned about it, but I’m just wondering what is realistically on the table.  I  mean, what can the international community, through the G8 in particular and the Finance Ministers you’ll be meeting, do about this?  I mean, are we talking about any sort of economic or diplomatic or trade measures that can be taken against the OPEC nations if they don’t meet your demands?

TREASURER:

There are no demands here.  What we have to do is to understand what is actually happening.  To solve a problem and to address it, you have to have a very clear picture of what are the major factors affecting supply.  That’s the first step that can be taken at the G8 Finance Ministers meeting.  And I can’t pre-empt that meeting. This is only the second time in history that an Australian Treasurer has been to a G8 Finance Ministers meeting.  I’m going to attend, and along with other Finance Ministers, take up the issues that I’ve been discussing with them individually through the OECD and here in the UK.

SPEERS:

Well, climate change has also been an issue for your talks over there.  The Europeans, of course, have left petrol out of their carbon trading scheme, do you think that’s a good idea?

TREASURER:

Well, I’m not going to comment on what they’re doing in Europe.  What I can comment on is what we’re doing in Australia.  And what we are doing is putting together our emissions trading scheme.  We’re going to publish our Green Paper at the end of July which will canvass the scope of an emissions trading scheme.  We have said up until now that the scheme should be as broad as it possibly can to deliver the best, least cost solution.  We are determined to put in place policies to address climate change because this is a fundamental economic reform. 

I am simply, David, gobsmacked by the irresponsible attitude of the Liberal Party to this.  They sat on their hands for 12 long years and did nothing about climate change, did not put in place an emissions trading scheme and now they are repudiating what they said that they would do only 12 months ago, which was include petrol in an emissions trading scheme.  Malcolm Turnbull said that as the Environment Minister in the last government.  The problem was…

SPEERS:

Let me just pick you up on that.  Did he say that or are you verballing Malcolm Turnbull here? 

TREASURER:

Yes, he did.

SPEERS:

When did he actually say that? 

TREASURER:

He said that as Environment Minister, that petrol should be included in an emissions trading scheme.  Mr Howard himself said, and recognised, that there would be price implications from an emissions trading scheme in terms of petrol.  You see, the Liberal Party has no credibility on this issue.  Climate change is the vital issue of economic and environmental sustainability.  Now, in Opposition, they say there’s no need for any action on climate change, they’re going to walk away.  It just shows why their economic credibility is a smoking ruin.

SPEERS:

Alright.  We’ve been unable to find where Malcolm Turnbull has said that.  Are you confident that he did say that in government, that petrol would be in a carbon trading scheme.

TREASURER:

David, we are not unable to find it.  He said it very clearly on the record and I’ll send it to you after the interview.

SPEERS:

Okay, great.  Let’s get back to the issue itself – whether petrol should be included.  You said the scheme that Australia adopts by the end of next year needs to be as broad-based as possible, to be as low cost as possible.  Can Australia, therefore, afford not to have petrol in the scheme?

TREASURER:

David, we’re putting out the Green Paper to put all of those issues on the public record.  When that is out at the end of July we will have a vigorous public debate about the type of scheme that should be implemented.  The Cabinet will work its way through all of these issues responsibly as we should do, and we’ll announce all of our decisions about the scope of the emissions trading system at the end of the year.  That’s the responsible thing to do.  This is a fundamental challenge to the economic and environmental sustainability of our nation and the globe.  We’re not going to squib it like the Liberals squibbed it.  We’re going to put one in place.  We’re going to do it because it’s the economically responsible thing to do and it’s the issue that really should have been addressed by the previous government but they didn’t have the economic or moral courage to do it.

SPEERS:

Treasurer, in simple terms, do you think people drive less when petrol costs more?       

TREASURER:

There’s no doubt that there is always an impact on behaviour when prices go up.  But what we have to do when we design an emissions trading scheme is a couple of things.  We have to get a scheme which works to reduce emissions, but also we have to recognise in designing this scheme, that if there are impacts on people, then there will have to be compensation for people for some of those impacts.  And that’s clearly been outlined by the Government previously and will be part of our discussion paper which is published at the end of July.

SPEERS:

And one of those compensations; would you consider reducing fuel excise?

TREASURER:

Well, I’m not going to pre-empt the discussion, David.  I’m looking forward to the publication of the Green Paper.  We can have the debate that Australia needs to have about how we put this vital economic reform in place.  We’ll do that through the second half of the year and at the end of the year the Government will take the economically responsible decisions that we must do for our economic and environmental sustainability into the long term.

SPEERS:

Okay, but you did seem to acknowledge there that a higher petrol price means that people drive less.  So, more expensive petrol is a good way of getting people to stop driving as much.

TREASURER:

You shouldn’t be putting words into my mouth, David.

SPEERS:

Well, let me ask you then, is it a good way of getting people to drive less?

TREASURER:

Well, what we’re going to do is put together our emissions trading scheme, we’ve said that it should be as broad as possible, we’ll publish the Green Paper, there’ll be a lot of data and discussion of all of these issues.  When they’re out there on the public record, I’m happy to have a much more detailed discussion with you, David, about all of those issues.

SPEERS:

Alright.  Let me ask you, just finally, over the past few months the inflation problem has been your number one priority.  You’ve described it earlier in the year as the genie being out of the bottle, it’s been called the inflation dragon, the inflation monster.  When you’re overseas, what are you saying to your counterparts and other business leaders about the inflation problem in Australia?   

TREASURER:

That we are tackling it because it is a very serious problem.  Because, you see, if inflation continues at a high level, interest rates are much higher than they need to be.  The combination of high inflation and high interest rates strangles growth, but it also really attacks the living standards of the most vulnerable people in the community.  The people who lose most from high inflation are people on the lowest incomes.  We’re determined to tackle inflation because it’s the way ahead if we are to grow sustainably and create more wealth into the future.  So, tackling inflation is absolutely essential to a program of economically responsible management.

SPEERS:

Alright.  Treasurer Wayne Swan, we’ll have to leave it there.  Thanks very much for joining  us from London.    

TREASURER:

Good to talk to you, David.