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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

8 March 2011

Interview with Leon Byner

5AA Mornings

8 March 2011

SUBJECTS: Pension Housing Rent Calculations; Carbon Price; State Owned Enterprise investments; Darwin Detention Centre

BYNER:

Morning Wayne.

TREASURER:

Good morning.

BYNER:

We are about to take the $30 pension payment granted by you and Kevin Rudd and include it in the housing rent calculations at a time when pensioners here are reeling at record utility prices. What's your view on this?

TREASURER:

Well nothing could justify doing that, it is something the Federal Government has expressed a very strong view on, I don't think it is justifiable.

BYNER:

Well, the States are basically saying 'mind your own business Feds, we're going to do it'

TREASURER:

Well, it's not acceptable to us. I'll talk to our Families Minister Jenny Macklin about that but it is not what they ought to be doing. I've made that very clear to Ministers. State Government will take their own decision for their own reasons but I regard it as unacceptable and not the right thing to do.

BYNER:

Alright. Now, you have argued that whatever the cost of your carbon tax, will be refunded to low and middle income earners. But of course, given what we've done with that $30, this state is likely to include that compensation in the same way they have included the money that they should have kept basically totally separate.

TREASURER:

Well that's is a very good question, because what actually is happening here is the biggest polluters will actually pay for permits to emit their pollution - that's how the carbon price works. That money doesn't go to the State Government, that one will go back to the Federal Government and every single cent of the revenue that is paid by the biggest polluters will be spent to assist households and also to assist industry.

BYNER:

Which is my point - if you assist household with any money, this State Government, knowing its form, will include that in the -

TREASURER:

No they won't, because it wouldn't be distributed through the State Government. The situation with housing and the pension increases is that the State takes a certain percentage, or levies a certain percentage, of the income of their residents to take their rent. That's why they would be eating away at that increase. It would not be delivered in that way.

BYNER:

So you will avoid the State Government being able to take any of that money?

TREASURER:

Too right.

BYNER:

Alright. Isn't the situation of the carbon tax that it will have an effect on the cost of almost anything that uses energy to create it?

TREASURER:

Yes certainly it will have an impact on prices, it certainly will not have the impact on prices that Mr Abbott is talking about. I mean, Mr Abbott is trying to imply a carbon price is taken directly out of people's pay packets. It doesn't work like that; it comes from the largest polluters. It will have an impact on prices, and it certainly will have an impact as we go down stream as it is passed on. That's why we do provide assistance to households and also to industry. But the aim of the carbon price is to discourage the largest polluters from emitting that pollution, getting them to drive the investment in renewable energy and more energy efficient processes. That's what it's all about.

BYNER:

Wayne, there is a slight problem here isn't there in that you're going to compensate the polluters but then they're arguing that they've got to increase their prices because they're going to have to pay for something that you are giving them the money back for?

TREASURER:

No, not at all - it doesn't work like that. Some sections of industry will be affected. For example, energy intensive trade exposed industries, there is an impact there. And we will assist them. But by and large, the assistance will be going to households, and also to assist those energy intensive trade exposed industries.

But look there is no alternative to this, there is simply no 'do-nothing' option here. John Howard took an emissions trading scheme to the people in 2007, and ironically if he had been re-elected then, Australian would have an emissions trading scheme now. There has been a bi-partisan agreement on a carbon price between the Liberal Party and the Labor Party for a long time, and that was shattered at the end of 2009 when Tony Abbott became leader. He is a climate change sceptic, he doesn't believe in climate change, but if you are going to deal with it, you deal with it through a carbon price and it is what we are doing and it is what the Liberal Party used to stand for as well.

BYNER:

The Chair of Climate Change at Adelaide University, Professor Barry Brook, has said that your carbon tax will be okay provided it's also part of a whole range of other energy sources which must include nuclear. What do you say to that?

TREASURER:

Well, we are not favourable towards nuclear energy, we also believe that the carbon price will drive the sort of investment -

BYNER:

But aren't you at your National Conference discussing nuclear energy?

TREASURER:

Well of course we'll be, we'll be discussing a lot of things at our National Conference and some people in our Party have a view which is in favour of a domestic industry. But what we're going to do though the carbon price is encourage investment in more energy efficient processes and of course in renewable energy. That's what drives the reduction in carbon pollution.

BYNER:

Well, you've taken a bit of a hit in Newspoll. You're now behind the Coalition who are 54 to your 46. Do you expect it to get better or worse?

TREASURER:

Well, we're not tackling this reform because it's easy, it is a difficult reform, we're doing it because it's the right thing for our country. I believe the majority of Australians do want action on climate change. They want to reduce carbon pollution. They understand the need to do that. What we've got to do is to go out there, up hill and down dale, and argue the case. Because it's the right thing for the country. And that's what we're going to do

BYNER:

What are you views on Nick Xenophon's legislation to restrict foreign ownership of our farms?

TREASURER:

Well I haven't seen the final of Nick's legislation. There's no doubt that there is a degree of concern about foreign ownership of agriculture and farms which is why we instigated a process sometime ago to get an accurate picture, or map if you like, of where there is foreign investment in our agricultural sectors. And we're doing that right now. But our general foreign investment rules will apply to those investments, and they do now.

BYNER:

Well, if you buy anything under the value of $231 million, you don't have to tell anybody?

TREASURER:

No, but if you are a State Owned Enterprise, you do have to notify - that's not quite true. State Owned Enterprise investments under guidelines that I brought out a couple of years ago have to be declared, at any level.

BYNER:

Wayne, a World Bank report has recently told us that there are very many countries aggressively targeting any place or sovereign entity who has got weak regulations about the ownership of foreign investment.

TREASURER:

Well, can I just tell you something about that, because I go to these international meetings, and Australia gets criticised internationally for having very restrictive foreign investment rules. We have been criticised for example by the OECD for our National Interest Test. What we do almost uniquely in the world, and I think it's a very good thing and I think you agree with me, is that we apply a National Interest Test above those thresholds that I was talking to you about before. But when it comes to State Owned Enterprise investment, there is no such level and all investment has to be notified. But we don't have over the last ten or twenty years a very good record of what's been happening in agriculture which is why we moved last year to get a better handle on that investment.

BYNER:

There are companies set up by sovereign entities to get around the legislation.

TREASURER:

Well, if there are SOEs investing in Australia, buying into land, they have a responsibility to notify the Australian Government of that, and if that's happening as you say, it will be detected.

BYNER:

Well it hasn't been detected so far, that's why we're having the inquiry.

TREASURER:

Well I'm happy if you've got examples, or any of your listeners have got examples, of where this is happening, for them to pass the information on to me.  Because we've got a set of rules, we do a lot more than many other countries when it comes to foreign investment, we have been criticised strongly by other countries because of the way we operate our national interest test. I make no apology for our National Interest Test because I think it serves our country pretty well.

BYNER:

Okay, just quickly. Last night channel seven ran a story about the new detention centre in Darwin, it is going to cost $9 million to build but we now find it's going to cost $24 million to lease.

TREASURER:

Well let's just go back a minute, the original proposal up there was to spend $185 million on capital; it is now $9 million because of the changed arrangements. But there are running costs each year and leasing costs and they apply as they normally would for any facility that is operating. I don't think there is any great news in that.

BYNER:

Wayne, thanks for joining us

TREASURER:

Good to talk to you.