The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

10 July 2008

Interview with Samantha Hawley

The World Today
ABC Radio

10 July 2008

SUBJECT: IMF Statement, Emissions Trading Scheme

INTRODUCTION:

The Federal Treasurer is being questioned on just how committed the Government is to its emissions trading timetable, while the Opposition struggles to come up with a united position on the timing for any such scheme. The shadow treasurer Malcolm Turnbull and his leader Brendon Nelson seem to be at odds over the issue. Dr Nelson says big polluters should be on board before Australia begins its carbon-trading scheme, while Mr Turnbull believes it should start in 2012 regardless of what other countries are doing. Wayne Swan uses the word 'ambition' to describe the Government's stance on a 2010 start. Mr Swan spoke to our reporter Samantha Hawley about that and the International Monetary Fund's latest assessment of the Australian economy.

TREASURER:

Well I think the IMF Statement is a strong endorsement of the Rudd Government's first Budget, and I think in particular our long-term reform agenda to build productive capacity in the economy, but most particularly, our plans to tackle inflation – to get that downward pressure on interest rates in the long-term.

HAWLEY:

It has found that the cuts in personal income taxes which of course came into force about ten days ago will support economic activity. Are you concerned at all that those tax cuts will be inflationary?

TREASURER:

No I'm not concerned. Those tax cuts have been earned by the Australian workforce, and many on low and middle incomes have waited a long time to get some incentive in the tax system.

HAWLEY:

You definitely don't think those tax cuts will lead to an increase in spending?

TREASURER:

I don't know what they will do in terms of the individual. The individual will make the choice themselves. But most importantly in terms of our Budget, which the IMF has given a very strong tick to, is they note that we had to find room in the Budget to deliver those tax cuts.

HAWLEY:

There have been some suggestions this week that the next move on interest rates by the Reserve Bank could actually be down. How likely do you think that is?

TREASURER:

Well that's entirely a matter for the Reserve Bank. But what we can see from this IMF Report is that, with our budgetary stance, it is their view that we are assisting the Reserve Bank in that fight against inflation.

HAWLEY:

OK, well can I ask you about the emissions trading scheme. When that's introduced, will it be inflationary?

TREASURER:

Well the emissions trading scheme will certainly have an impact on prices, there's no doubt about that. But what we have to do is to put forward a set of responsible approaches to an emissions trading scheme which deliver for the country.

HAWLEY:

But an emissions trading scheme could be inflationary and could lead to higher interest rates?

TREASURER:

Well what we know about the whole issue of climate change is that the cost of inaction is far greater than the cost of action. What we will have is a set of approaches to emissions trading which will work in a responsible way and minimise those impacts.

HAWLEY:

Should households be prepared for a further rise in interest rates once an emissions trading scheme is introduced in this country?

TREASURER:

Potential price impacts of an emissions trading scheme flow from the design of the scheme itself. We can have that debate in full when the Green Paper is published and we are talking about the proposals.

HAWLEY:

Brendan Nelson says that the 2010 start date is too rushed. Do you really think the Government can meet that target?

TREASURER:

Well Brendan Nelson isn't clear about what he's saying. On the one hand he said that it could start in 2011 or 2012. Mr Turnbull suggests the Liberal Party's position is that it will start in 2011. There is no coherent position from the Liberal Party when it comes to an emissions trading scheme.

HAWLEY:

There is some confusion though when it comes to the Government as well isn't there, in terms of the start up date? Can you promise that the Government will start this scheme in 2010 as outlined before the last election?

TREASURER:

Sam, the Prime Minister has made it very clear, the Climate Change Minister has made it very clear, and I'm making it very clear, that our ambition is to start that scheme in 2010.

HAWLEY:

But using the word 'ambition' seems to give the Government a bit of wriggle room. Is that what it aims to do?

TREASURER:

No it's not what it aims to do. It's a practical recognition that we are going to design a scheme, that we're going to have a Green Paper which is published next week, that we'll consult on that through to the end of the year. We will then produce a White Paper with all the detailed proposals, and we have an ambition to start that scheme in 2010. It's as clear as that.