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

3 March 2011

Interview with Jon Faine

ABC Radio, Melbourne

3 March 2011

SUBJECTS: Private Members Bill; Carbon Price; Minerals Resource Rent Tax; National Accounts; Foreign Investment

FAINE:

Wayne Swan, good morning to you

TREASURER:

Good morning, Jon

FAINE:

Are the Greens calling the shots?

TREASURER:

No, of course they're not.

FAINE:

That's the perception.

TREASURER:

Well I don't believe that's the case at all. The fact is that this is a private members bill. A private members bill which affects the power of the Commonwealth Minister in relationship to the Territories. It's been referred to a Senate committee. We're going to take some further advice on it. There are lots of private members bills floating around the parliament at the moment, Jon.

FAINE:

And very few get the support of the Prime Minister. Why did she not consult before backing it?

TREASURER:

Well the Minister took the proposal to the caucus, but I think there was the view that we needed some further advice on the full ramifications of the bill…

FAINE:

You didn't answer the question. Why did she not consult before supporting it?

TREASURER:

Well what I'm saying is that the bill did actually go to the caucus. That is the consultation process. A number of members of caucus were pretty keen to get some further advice on the bill. And the bill in itself has been referred to a Senate committee in any case. So further advice will be forthcoming, it'll go through those processes, and we'll consider it again. There is nothing particularly unusual about all of that, Jon.

FAINE:

A group on the right of the Labor Party say they were conned. No one explained to them the way this might be used, not just for gay marriage but for other issues of some social divisive nature, maybe abortion reform and the like in the future as well.

TREASURER:

Well I don't accept those characterisations either. This is a private members bill. It's a private members bill that's now going to a Senate committee.

FAINE:

But the Greens sponsored this.

TREASURER:

Sure, and there's plenty of bills floating around Jon, I can show you bills from minor parties, the Greens, independents and so on, plenty of those floating around and it's the nature of the parliament at the moment.

FAINE:

Are you concerned about an electoral backlash, not just an internal ALP backlash?

TREASURER:

No, I'm not concerned either of those things. It's not unusual that private members' business which will propose courses of action which people may agree with or may not agree with end up being debated extensively. That's happening in the case of this bill and I can tell you Jon, it's going to happen in the case of a number of other bills as they come through the pipeline.

FAINE:

And yet at the same time a lot of the, not just the social agenda, but some of the environmental agenda is also in alliance, in alignment with the policies of the Greens and this is fertile ground then of course for Tony Abbot and the Liberal Party to portray your government, Julia Gillard's government, as captive.

TREASURER:

Well I think Tony Abbott and the Liberals are selling the country short with their hysterical approach to these issues. The fact of the matter is that we have believed in a carbon price for a long period of time in the Labor Party.

FAINE:

And Julia Gillard promised that she wouldn't introduce one.

TREASURER:

Well what we actually said during the campaign was we would move to a carbon price, a cap on carbon emissions, and we said we would do that through constructing a consensus in the next parliament and the community. That's precisely what we're doing but the debate hinged on the fact that we've said that we would consider a fixed price for a short period of time. Some people call that a carbon tax, but a fixed price was also a feature of the last CPRS as we move through to a floating price. What we haven't announced yet is the price. We haven't announced the full coverage of the scheme and Mr Abbott is out there making misrepresentations about price, misrepresentations about coverage. What we're going to do is talk to the community, talk to the other parties in the parliament about those issues and reach a conclusion. Because I can tell you this Jon, the country needs the certainty on carbon price if we're going to get the business investment we need, particularly in electricity. We need some certainty in this area.

FAINE:

Treasurer, we'll come to the economics of it in a minute, but on the politics, a carbon tax, a mining super profits tax, a flood levy, raising money also now for a disability insurance scheme - where does it stop?

TREASURER:

Well that's…

FAINE:

Classic Labor Party [inaudible] trying to hit the people for massive programs that cost a fortune.

TREASURER:

Well could I just go through all of that and unpack that because that's all what Mr Abbott says. The fact is what a carbon price is about is putting a price on carbon so that people reduce carbon emissions. There is a revenue stream that flows from that and what we've said is that every cent of that revenue stream goes back to either households or industry or climate change programs, so it's not the sort of tax Mr Abbott is talking about. Now let's just go the MRRT, the resource rent tax. Our mining companies are now super profitable. We own the resources, 100 per cent, they can only be dug up once. So on the advice of the Henry Review we've put in place a resource rent tax to make sure that Australia got fair value for the resources we owned and what we said we'd do with the revenue from that is give as tax cut to business, boost the superannuation savings of low-paid workers and invest in infrastructure - that's pretty sound economics. And it's pretty good social policy.

FAINE:

Then you backed down and you're actually delivering a fraction of what Kevin Rudd originally decided [inaudible]

TREASURER:

I'm sorry, I'm sorry but that's also not correct.

FAINE:

Well, no, Kevin Rudd's plan was much more lavish and all encompassing then the one you've ended up with.

TREASURER:

There has been a lot of speculation about revenue raised. What we did was sit down with the industry and reach agreement on a new tax, a different one, absolutely agreed, which also taxes those super profits and delivers fair value. Now what we've seen in the last couple of months is the whole justification for what we've done because our terms of trade are at a 140 year high. They're going to remain higher than they were historically in the years to come. It's important that…

FAINE:

Company tax receipts are not growing along with the increase in their profits.

TREASURER:

Well, that's a different…

FAINE:

Well, but it's a concern, isn't it? Whilst the mining companies are making more money, they are actually paying a lower proportion of tax.

TREASURER:

Well we had the debate about that matter when we put forward the resource rent tax. That is part of the argument for a resource rent tax. The fact is that we have to make the maximum opportunities from Mining Boom Mark II. That's what we're going to, not just in terms of the resource rent tax but also in terms of investing in infrastructure, building up superannuation savings and so on. But all these latest figures Jon, what they demonstrate is the need for what we did, what we outlined well over a year ago.

FAINE:

Treasurer, BlueScope steel chief, Paul O'Malley, is on the front page of the Financial Review today saying the Port Kembla steelworks in NSW would have to close under your plan for a carbon tax. Massive job losses, massive loss of revenue and export monies.

TREASURER:

Well he's raised challenges that emission trading pose for energy-intensive, trade-exposed industries.

FAINE:

Well, do you accept that he's right with his current assessment of the impact of your scheme on industry?

TREASURER:

Well, we haven't designed the scheme so I don't know that we can so what the impact will be. What I can say to you is what we will do as we bring about the design of the scheme.

FAINE:

Will you compensate the steel industry?

TREASURER:

Well what we've said is that we'll put in place assistance for energy-intensive, trade-exposed industries. And we'll do that, but we haven't outlined the full details of the scheme. We haven't outlined the coverage, there isn't a carbon price. What we're going to do is have a constructive engagement with industry on these matters as we go through the next few months.

FAINE:

And meanwhile on the front page of The Age today, your name is up in lights over alleged WikiLeaks disclosures that Canberra, in other words your department, the Foreign Investment Review Board in particular, is making life difficult for Chinese investors to get a toe hold in Australia. Have you got something against China?

TREASURER:

No, that's just complete fantasy. We have put in place a couple of years ago new guidelines for state owned enterprise investment in Australia, whether it's from China or any other country. And since we've put those guidelines in place, Jon, there has been substantial Chinese state owned enterprise investment in Australia.

FAINE:

I'm grateful to you for your time today, and I've run over and I'm sorry if I've made you late.

TREASURER:

Thank you very much.