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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

16 December 2008

Interview with Nicole Dyer

ABC Gold Coast Radio

16 December 2008

SUBJECTS: Carbon Pollution Reduction Scheme White Paper

DYER:

Mr Swan, good morning.

TREASURER:

Good morning, Nicole.

DYER:

Money for compo will be raised through carbon permit options.  How much in total are you expecting to allocate to households under this scheme?

TREASURER:

There’ll be a significant amount allocated to households because when you put a price on carbon as we are doing, which will apply to about 1000 businesses around Australia who have to pay for their carbon pollution, that raises money, but it also has price impacts out there in the economy.  What we’ve said is that we do want to protect households, particularly low-income households, from the price impacts of the Carbon Pollution Reduction Scheme so there is additional compensation for those people.  For example, pensioners, seniors, carers and people with a disability will receive additional support above their normal indexation to meet the overall increase in costs.  But that will also happen for a number of families as well, because we understand households deserve some protection and some assistance, just as some businesses are adversely impacted, and particularly those businesses that trade with the rest of the world that are energy-intensive and trade-exposed.  Now, permits are being given to those businesses to ensure they just don’t pack up and leave and go offshore and continue to pollute elsewhere without any gain to the overall economy.  So, I think what we’ve done is strike the balance. 

Now, I’ve heard some criticism on your station this morning where people say the target isn’t high enough.  This is a very important target – five per cent by 2020.  That amounts to a 34 per cent reduction for every man, woman and child in this country.  We think we’ve struck the right balance.  It’s a very significant contribution to reducing carbon pollution, whilst at the same time ensuring our economic interests, ensuring our economy continues to grow and protecting some of the more vulnerable people in our community.

DYER:

Even though people listening to you right now may be very keen to protect the environment, at the end of the day, especially these days worried about their hip pockets, Mr Swan, households will be compensated because energy prices are expected to rise.  The Australian today reports an 18 per cent spike in electricity prices under this scheme.  Is that the type of increase that you’re forecasting?           

TREASURER:

Yes, it is the type of increase we’re forecasting…

DYER:

So, what compensation will people get to survive?

TREASURER:

Well, that’s what we’re saying.  We have got a whole compensation package in there.  If you come to seniors, it’ll be $382 for singles; $320 for couples.  There’ll be increases in terms of Family Tax Benefit Part A up to $157 per child.  An increase in the low-income tax offset.  So, there’s a whole series of additional amounts of money to assist those people that are facing these higher prices. 

Now, what’s the point of the higher prices?  Well, the point of the higher price on carbon is basically to encourage people to be more energy efficient, to encourage business to invest in the new technology so we can all, as a community, as businesses and as households, reduce our consumption of energy, increase our productivity.  That’s what it’s all about.  If we want to be serious about climate change, it does cost.  What we’ve tried to do is strike the balance between assisting business and households on the one hand, and making sure there’s a price signal in the economy which helps us reduce our carbon pollution over time sustainably, and make that very, very important contribution in the longer term to saving our planet.

DYER:

Mr Swan, the Courier Mail quotes one Brisbane mum today disappointed that the Government didn’t set a higher target.  She says the scheme isn’t investing in changing habits and that’s what’s really needed.  Yes, there’ll be compensation but what incentives are there to make people more energy efficient?

TREASURER:

Well, I think you just outlined them.  There will be increases in the price of electricity.  You see just because…

DYER:

That’s not teaching people habits, that’s forcing people to pay more…

TREASURER:

…there will be compensation out there, but the price signals in the economy is the most efficient way and the most effective way of people reducing their use of energy.  That is the whole point and that’s what just about everyone agrees on in the climate change debate.  That’s why people will get some compensation to help with the overall cost of living.  But there’s a powerful price signal out there that will encourage people to use their energy more efficiently, to switch their lights off, do all those sorts of things to make those individual contributions and, importantly, to encourage business to invest in better technology over time which means they are more efficient users of energy.  That’s basically the purpose of fighting climate change and it’s the best way known to humanity to do so.

DYER:

Okay, yep.  Mr Swan, I noted there’s something in this for low and middle income households, that they will be compensated.  How does the Federal Government define low and middle income?

TREASURER:

Well, we’ve outlined all of that in the paper.  Can I just recommend to all of your readers, your listeners sorry…

DYER:

Well, they are our leaders in many ways, I guess.

TREASURER:

Yes, they are our leaders, absolutely, to have a look at all this online.  Just go to climatechange.gov.au.  But for a single person, low income,: basically about $30,000,; middle income: $30,000-$80,000,; but that’s just for singles.  For couples: $45,000 low income, no children; middle income: $45,000 - $120,000.  Couples with children: low income $60,000; middle income: $60,000-$160,000.  So, that’s sort of the approach that we’ve outlined in the paper.  All the figures are there for those that are interested in the compensation.  But I would urge people to just read beyond the compensation as well and have a good look at all of the material that is provided, both scientific and economic, so that they can fully understand why the Government has reached the conclusions it has reached through this White Paper process.

DYER:

Mr Swan, what about people on high incomes?  Should they just have to suck up the higher electricity prices forecast?

TREASURER:

Well, people on higher incomes won’t be fully compensated.  That’s exactly right, because as you’ve correctly identified earlier there has to be some means by which behaviour is changed.  What we’ve done is affordable.  We don’t say that it’s cost-free.  If we are going to do something about dangerous climate change it does have a cost, it has a cost to all of us in the community, both businesses and households.  What we’ve done is try to strike the right balance in putting forward this comprehensive scheme which over a long period of time will set our country up to prosper in a lower carbon economy of the future.  Our view is that we have to take a measured step early so we prevent much harsher adjustment costs down the track.  So, this target, I think, reflects the fact that if we move early, put our economy in a position where it’s beginning to adjust, as the rest of the world realises the scope of the adjustment, then Australia will be in a much better position to prosper in that economy and we can hand a more prosperous economy to our children, but also one that uses energy much more efficiently.

DYER:

So, people on high incomes use more power than someone on a lower income?

TREASURER:

Well, it will vary from house to house.  For the people on higher incomes, they can afford the price impact.  That’s a fairly obvious point.

DYER:

No word from the Opposition if it will back your scheme.  It’s commissioned an independent review of it.  How confident are you that the scheme will be passed by the Senate so it’s ready to start in 2010?

TREASURER:

Mr Turnbull can’t make up his mind where he stands on any of this.  When he was in government he claimed that he was serious about doing something on climate change, but now they are divided on this.  Mr Joyce, this morning, has come out and said he opposes the scheme.  So, that’s one part of the Coalition opposing the scheme.  Essentially we’ve had a decade of denial and inaction from the Liberals and Nationals on climate change and it seems to be that every day of the week is a good day for denial and inaction from the Liberal and National parties on climate change, and that continues now.

DYER:

Wayne Swan, what are you doing at home to be more energy efficient?

TREASURER:

Well, I’ve got a very big water tank that we put in some time ago.  I also drive a hybrid car, a Toyota [Prius], and over and above that, generally, I’ve got a young son who makes sure that we switch our lights off and use our water more conservatively.

DYER:

Wayne Swan, thank you very much for your time.

TREASURER:

Good to be with you.