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

21 March 2011

Interview with Fran Kelly

ABC Radio National

21 March 2011

SUBJECTS: Carbon Price; Tax Forum; ASX

TREASURER:

Good morning Fran.

KELLY:

Treasurer, if you link tax cuts to pricing pollution, will it be easier to sell a carbon tax to the Australian people?

TREASURER:

Well Fran, we've always said that any of the revenue received from the permits which are sold to the largest polluters to reduce their pollution, every single cent of that would go either to households or to industry or to climate change programs. So it's very important that people understand that when you put a price on carbon, the revenue raised from that price goes back to assisting households and industry.

KELLY:

It's quite a powerful sales pitch though, isn't it? People want climate change action, but they don't want to pay for it – that's what the recent polls are showing us – and you're suggesting now that they can have that. They can have action on climate change and money back in their pockets.

TREASURER:

Well, Fran we've always said that we would be providing assistance to households and to industry, that every cent that is raised from the permits – the revenue from the permits which are sold to the highest polluters in the economy – would be returned. That's a fundamental principal that we have put in place in terms of emissions trading.

KELLY:

Tony Abbott's response is real tax reform does not rob Peter to pay Paul.

TREASURER:

Well, Tony Abbott doesn't have a commitment to real tax reform his only contribution to this debate –

KELLY:

But he has a critical analysis of yours, which is one job of the Opposition.

TREASURER:

He's got no positive alternative on anything. No positive alternative on climate change. He's a climate change sceptic. He's got no positive alternative when it comes to real tax reform.

KELLY:

But would you call this tax reform, if you're going to, basically, a tax merry-go-round? Tax some, get the money in and give it back to others. Is that tax reform?

TREASURER:

Fran, putting a price on carbon has been discussed in this country for well over five years. John Howard took a price on carbon to the 2007 election and at that time Tony Abbott and Joe Hockey and all of the other people in the Liberal Party were supporting a price on carbon. They didn't run around the country then saying a price on carbon would destroy jobs or destroy industry. They went around the country saying a price on carbon was absolutely essential to future economic reform. This just demonstrates, once again, how negative they are.

KELLY:

Well, let's look at what you're planning because the Prime Minister said yesterday that tax cuts are a live option. Tax cuts are also a very expensive option. How much of the money raised with the carbon tax are you prepared to give back through tax cuts?

TREASURER:

Well, Fran we're going through the consultations about an emissions trading scheme through the Multi-Party Committee. What we've already said is a fundamental principle is that every cent raised from the sale of permits to those large polluters will be returned to households and to industry. But we haven't concluded those discussions yet and we are discussing these matters, not just through the Multi-Party Committee, but also with the community groups and also with business. That's what we're engaged in doing now. That's the sort of constructive approach I think the country wants.

KELLY:

But are you going to be looking at a tax cut, as the Prime Minister indicated tax cuts are a live option, or something different to that? And of course tax cuts don't help many of the poorest amongst us.

TREASURER:

Well, there's no doubt that if you're not in the tax system then you would not benefit from the tax cuts. So of course assistance which is provided to households will have to be provided in a way which is affordable. It will also have to be provided in a way in which it goes to where it is most needed. So there will be a balance that will have to be struck, but we haven't reached decisions in that area as yet.

KELLY:

What about suggestions of changes to the Low Income Tax Offset? Is that a mechanism that you favour?

TREASURER:

Well, the Low Income Tax Offset is a very important way of delivering additional assistance to people on the lowest incomes who are paying tax, and under this Government there's been very substantial tax cuts given to people who are on lower incomes through increases in the Low Income Tax Offset. But look, we have to consider all of these things as we go through our consultations in the Multi-Party Committee.

KELLY:

As you're considering all these things, isn't the obvious place for you to consider it the Tax Forum that you're setting up?

TREASURER:

No the obvious place to consider these matters is in the way in which we are doing it at the moment.

KELLY:

Why not at the Tax Forum?

TREASURER:

Fran, can I just make a couple of points about emission trading and pricing of carbon? We've been having a discussion about this for over five years. John Howard took a proposal to the 2007 election for emission trading. We have taken proposals to the last election for emissions trading. The fact is that these matters are being canvassed. We've got a substantial reform agenda. We're working our way through a very substantial consultative process at the moment. We can't put that reform process on hold. What we are doing is looking at the next wave, if you like, or discussion of tax reform through this forum later in the year. But we have already announced the first wave, if you like, the first tranche of tax reforms which are being put in place and being debated right now.

So what we have to do is to get on with the job of immediate reform, but also to keep faith with our commitment that we gave the Australian people, that we would further discuss tax reform this term and to keep faith with the Independents who we agreed with that we would have a forum, we've put this on at the end of the year. Granted it has been slightly delayed, but I think most people are happy with the timing. There will be plenty of time for us to have a fulsome discussion about a tax reform agenda, not just for the next year, or two years, but for the next decade.

KELLY:

The Independents have made it quite clear that they do want to discuss the mining tax and now a carbon tax at this forum, even if it's already on the table. Are you happy to –

TREASURER:

Yes they're welcome to do that, but reform must go on, and the fact is that we've got a very substantial agenda. We've got the revenue from the mining tax which will fund substantial reform to business taxation in this country and the business community wants that. We've got substantial boosts to superannuation, particularly to low income working Australians. We've got to get on with that job because boosting national savings in the context of dealing with the challenges of Mining Boom Mark II is critical. All of those reforms will go ahead. What we're dealing with here is a second wave of reforms and discussion arising not just from the Henry Report, but from the community itself which wants to have a broad discussion about taxation and we're very happy to facilitate that indeed very keen to have that discussion.

KELLY:

Just on the mining tax, there was a report on the weekend that the compromise that you and Julia Gillard reached with the miners last year was put in train by Kevin Rudd when he was still Prime Minister. Is that the case? Did Kevin Rudd as prime minister ask you and Treasury in May to produce a compromise plan, the plan you ultimately got agreement on?

TREASURER:

There were, Fran, ongoing discussions through that period about what adjustments might or might not be made. I don't think there's any news in that report whatsoever.

KELLY:

Well, the suggestion at the time was that Kevin Rudd couldn't get agreement and wasn't interested in agreement and was playing tough with the miners, is that true? Behind the scene was he actually getting ready for this very deal?

TREASURER:

Well, certainly there was discussion within the government at that time, there's never been any secret about that, but ultimately the breakthrough agreement that came through sometime after that was an agreement that was brokered by the Prime Minister, Julia Gillard.

KELLY:

But was it the same agreement that Kevin Rudd was moving towards?

TREASURER:

Well, there were elements that were common and there were new elements in it.

KELLY:

What were the new elements?

TREASURER:

Well, I'm not going to go in to the discussions that were going on within the Government, but what I can say is that there were discussions through that period, but ultimately agreement was reached early in July.

KELLY:

Just finally Treasurer, there are now several reports in the media that the Government is set to reject the proposed $8.4 billion merger between the Singapore and Australian stock exchanges. Are you softening the market up for rejection?

TREASURER:

Not at all. I have no idea where those reports come from. They are entirely speculation. The final decision maker here is the Treasurer. I will take my decision based on the evidence before me, based not only on the recommendations of the Foreign Investment Review Board, but a thorough consideration of all of these issues in good time. I will do all that without any outside influences upon me whatsoever. That's the responsibility that I have under the law, that's how I'll do it, and I'll announce the decision under our national interest guidelines in good time.

KELLY:

Is it the political reality that even if you approve the deal it will in all likelihood be rejected by the Parliament? And therefore why would you set yourself up for that defeat?

TREASURER:

Well, my decision will be taken in the national interest and it will have nothing to do with those political considerations whatsoever.

KELLY:

Treasurer, thank you very much for joining us on Breakfast.

TREASURER:

Thank you.