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

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

6 March 2011

Interview with Laurie Oakes

Weekend Today

6 March 2011

SUBJECTS: Governor-General Expenses; Politicians Pay; Carbon Price

OAKES:

Mr Swan, welcome to the program.

TREASURER:

Good Morning Laurie.

OAKES:

Not just Treasurer but Acting Prime Minister. Could I ask you a couple of quick questions about stories in the Sunday papers. First, a newspaper story says that while families face cost of living increases, the Governor-General spends $42,000 a year, on floral arrangements at Government House and Admiralty House. Do you think that's excessive?

TREASURER:

Well I think we certainly need to see budgeting being strict with the Governor-General as it is strict with everybody else, and the Governor-General has been subject to the efficiency dividend and as I understand it, some changes have been made.

OAKES:

They cut back on cups of tea for pensioners apparently?

TREASURER:

Well, I wouldn't be aware of every detail of the Governor-General's budget, but the Governor General, like everybody else has got to show restraint and she has been subject to the Efficiency Dividend.

OAKES:

There's also a story, based on FOI - Freedom of Information - about what MPs want in their next salary package. Do you think it's the right climate for Members of Parliament to get more doe?

TREASURER:

Laurie, all of my time in politics I've believed that our salaries and our packages should be determined by an independent tribunal. As you know, there's been an independent review, it will be published in the near future and I think there will be a debate about the future of MPs salaries and what should happen, but my own view always has been, that these matters should be determined not by the politicians but by an independent tribunal.

OAKES:

Okay. The Flood Levy aroused some resentment but the proposed carbon tax has got people fuming all around the country. Have you been surprised by the degree of anger?

TREASURER:

I think there's a lot of misrepresentation out there about carbon pricing. For example, you get Mr Abbott running round the place talking about it in a way which I think does confuse people.

The fact is that a few large polluters will be pay a price to emit carbon, and of course, that money will be used to assist households and industry. But, if you listen to Mr Abbott you would think that the Government was going to go out there and take the money out of people's pay packets and put it in the revenue. It doesn't work like that at all. What we've got is carbon pricing. Putting a price on carbon is absolutely essential to the health and prosperity of our economy. There is no option not to move in this area. We've got to put a price on carbon, and indeed, the Howard Government moved to put a price on carbon too. And it is indeed ironic had John Howard been elected in 2007 Australia would be getting a carbon price next year, but you don't hear Tony Abbott going around saying that he was part of the process that would have delivered a carbon price in Australia.

OAKES:

Well, I've rarely seen an issue that has inflamed anger to the extent that this one has. A friend of mine in Brisbane told me two days ago that he thought it was running so hot up there that if there was an election now you would lose your seat?

TREASURER:

Well, I accept that there has been a tremendous amount of misrepresentation about the carbon price. But what we've got to do is get the facts out there and not the fear-mongering from Mr Abbott and some of those people that have been so extreme about this.

Laurie, if I could quote from the Howard Government's policy document of 2007. It had this to say:

"The most efficient and effective way to manage emission reductions is through market mechanisms"

It goes on to say:

"Moving too slowly will risk being under-prepared for future carbon constraints. A rising forward carbon price curve is needed to drive development and the take-up of low emission technologies."

I couldn't have say it better myself. Mr Abbott didn't go around the country in 2007 and describe that as a great big tax. He didn't go around and say that John Howard's policy was going to kill investment and jobs.

OAKES:

But he's doing it now and he's doing it effectively. It seems to me that you're losing the political debate and losing it pretty badly.

TREASURER:

Well, I don't accept that, Laurie. We've got a tough fight on our hands, because this is the right thing to do for our country. Pricing carbon is absolutely essential to driving future investment when it comes to new technology, low emission technology and renewable energy. The countries that move in this direction will capture the future. Tony Abbott wants to turn his back on the future, what he will do is leave our economy in bad shape to face the great challenges of the 21st century. This is the debate we have to have. We're going to have to it and Laurie, it's a debate we can win.

OAKES:

But it starts off with the Government having broken election promises. That's fuelled the anger, and you're a prime offender, aren't you?

TREASURER:

Well, I think we saw Joe Hockey on Friday really let the cat out of the bag on this. Joe Hockey on Friday admitted that we went to the last election with a carbon price and a commitment to an emissions trading system. Now, I accept there's a lot of confuse about the fact that we are bringing in an interim price which people described as a carbon tax. But the fact is that Mr Hockey's description and Mr Abbott's description of a carbon tax is absolutely incorrect. It is not operating in a way where the government goes in and takes the money out of pay packets, and puts it in the revenue. What happens is a very small amount of -

OAKES:

But hang on -

TREASURER:

very big polluters -

OAKES:

The Prime Minister herself has said for the first three to five years it will operate as a tax?

TREASURER:

That's it will operate with a fixed price, which is described by some as a carbon tax, and that is legitimate, but it doesn't operate like -

OAKES:

Including by the Prime Minister.

TREASURER:

Yes, but it doesn't operate like a traditional tax, like Mr Abbott says it is operating, it is not the case that the Government is going to take the carbon price out of your pay packet, Laurie - not going to do that and we're not going to put it in the revenue. It is paid by a small number of large polluters and that revenue is then used to assist industry and households - just as John Howard and Mr Abbott said in 2007.

OAKES:

But the voters know very well that Julia Gillard told them in the last election campaign there will be no carbon tax under my Government. They know that you said in that campaign that the Liberals, by claiming there would be, were being hysterical and you ruled it out. In fact, going right back to November 2006, you ruled out a carbon tax under a Labor Government. Now of course, people have got the right to be angry, haven't they?

TREASURER:

Laurie, I have been arguing for a carbon price, for an Emissions Trading System since 2005 when the Stern Report came out. I was indeed briefed by Stern on the day that report came down. That report recommended this approach to the pricing of carbon and I've argued that at every election – 2007 and 2010. And if you want to go through all of my statements from the last campaign -

OAKES:

And the one before.

TREASURER:

you will find me arguing for an emission trading system and a carbon price in all of those campaigns. What we're talking about here is an interim price which some people describe as a carbon tax, and they can do that legitimately, it's just that it doesn't operate like a traditional tax. It is not deducted from your pay-packet, or anyone else's pay-packet. It comes from the big polluters and the money from the big polluters is paid to assist households and industry. That is where the big lie from Mr Abbott is coming from.

OAKES:

It was the Greens who pushed this idea of an interim price, an effective tax. Would you have broken that promise if it hadn't been for the Greens insisting on it?

TREASURER:

No, Laurie, we have worked through the multi-party committee to come up with the architecture of an emissions trading scheme, that's what we've done. There is no carbon price at the moment because we're working our way through those issues, we are working our way through the issues of the coverage of the scheme. But we'll work with anybody of goodwill. We will work with the minor parties, as we have worked, we will work with the Greens, to put in place the economic and climate change policies that we need for this country's future. The most irresponsible party on the climate change debate at the moment is, in fact, the Liberal Party.

OAKES:

But, the Greens are taking credit for the carbon tax. Christine Milne, the Deputy Leader, says it happened because power is shared in this country. I mean, do you understand why a lot of people might think Labor doesn't stand for anything except Bob Brown when he enters the room?

TREASURER:

Laurie, we will agree with the Greens on some things and disagree with the Greens on others. For example, I don't think we agree with them on the US alliance, I don't think we agree with them on the coal industry. We did agree with them on the flood levy, we do agree with them on the NBN. We will work with any party, whether it's the Greens or the minor parties or the Independents, to put in place good public policy that does the right thing for the country.

OAKES:

Now, Labor also promised that there would be no gay marriage in this term of office, are you going to stick to that, or is that promise also up for grabs?

TREASURER:

Laurie, I believe that marriage is between a man and a woman. But we have a process we go through in the Labor Party, we have a conference every couple of years. These matters will come up at the conference later this year, and the debate will be held there.

OAKES:

On climate change, and your scheme, I've been getting a lot of angry emails about the tax, as I'm sure you have and other politicians and journalists. Let me throw a couple of questions at you from one of the emails, the question is a typical. The writer asks: 'Tell me how giving poor people money for the money they spend on electricity is going to stop them using it? - can you answer that?

TREASURER:

Well, the most important thing here, Laurie, is to get a price on carbon. As I said before, I don't think a lot of people realise that when we talk about a price on carbon, we are talking about the major polluters, a small number of large polluters, paying a fee for the issue of permits to emit pollution. What that does is send a price signal through the economy. The most important price signal that is sent through the economy is the price signal to business so that business can drive investment in green technologies and emission reduction technology. What that does over time is make us much more efficient. Some prices are passed on, the consequence of that is that we assist those households - particularly those low income households who are experiencing higher prices. But the most important price signal is sent to business to invest in the green technology to make us much more efficient to reduce our carbon pollution.

OAKES:

I'm not sure that answers the question - are you saying that you don't want these people to use less electricity?

TREASURER:

No, I'm saying we do want them to use less electricity, and of course, innovation will produce a situation where new products are produced, they will use less electricity over time, there's a whole range of programs we can work with people on to use less electricity. But the most important price signal is the one that is sent to business so that it gets the certainty to invest in the new technology that reduces emissions.

OAKES:

Well, the second question my email correspondent poses - and I'm getting this question from a lot of people too, he says: 'Tell me just how much the temperature is going to drop by if this stupid tax comes into effect?'

TREASURER:

Well Laurie, this is a long-term problem, and the longer we delay, the bigger the damage to both the environment and to the economy. Countries right around the world are putting in place emissions trading systems and other policies to dramatically reduce their use of energy. And indeed, China in the last couple of days has put in place new policies. We've got to make a start, because if we don't, the environmental consequences of that and the economic consequences of that over time are absolutely horrendous.

OAKES:

Well, The Australian newspaper pointed out yesterday that according to Ross Garnaut's original report, to the extent that Australia acts on pricing carbon and other nations don't, Australia is a loser. How do you respond to that?

TREASURER:

Well, I think what we have to do is to make sure that we keep up with the rest of the world. What is actually happening now is that we are falling behind, and the more we fall behind, the less productive we are. That's why we have got to get the price signal in place to drive the investment in the renewable energy and the low emission technologies. That is what we are going to do.

OAKES:

But China and India don't price carbon, and Barack Obama has shelved his cap-and-trade policy. Will Julia Gillard try and get him to reinstate that when she meets him in Washington?

TREASURER:

Well, it is simply not true to make a statement that those countries are not taking substantial action in climate change. Barack Obama would prefer to have a carbon price and an emissions trading scheme - he can't get it through his Congress. The Chinese are taking dramatic action to reduce their emissions in that country through a whole variety of mechanisms. So it is not true to say that other countries are not moving, they are, and we are getting left behind - that's why we've got to make a start on pricing carbon.

OAKES:

Even if the Americans don't?

TREASURER:

No, the Americans are going to move in a variety of other ways. The most efficient way to move is the way that we are moving. It is the way that Barack Obama would like to go. It is the way 30 other countries around the world are going because this is the most efficient, the least costly way, of acting on climate change. Tony Abbott's policy would result in the expenditure of something like $30 billion. What he would do would be to tax families so he could pay polluters. What we are doing through our scheme is that we are taxing polluters and we are assisting families and industry.

OAKES:

Mr Swan, we thank you.

TREASURER:

Good to be with you.