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

7 June 2011

Interview with Fran Kelly

ABC Radio National

7 June 2011

SUBJECTS: Carbon Price; Global Economy; Interest Rates; Live Animal Exports

KELLY:

Treasurer, good morning.

TREASURER:

Good morning Fran, good to be with you.

KELLY:

At $20 a tonne Treasurer, how much will a carbon tax cost the economy?

TREASURER:

Well, there's a variety of scenarios that are in the modelling.  What I'm going to give today is a snapshot of some of the results, and the truth is that the economy will grow strongly, gross national income will grow strongly while we do make significant cuts in carbon pollution, but we've priced this in a variety of ways and in a variety of scenarios.  So there is no commitment here to one particular price but through a variety of those prices that are modelled in the modelling, we see that the economy will continue to grow very strongly while we make deep cuts in carbon pollution.

KELLY:

Gross national income growing is a positive thing, but what does it mean for individuals say on a $20 a tonne tax, what would it do to the income of someone earning $65,000?

TREASURER:

Well, what we've got in the modelling if you take that $20 figure is that national income will increase from $56,000 roughly to something like $65,000.  So an increase upwards of over $8,000.

KELLY:

So the income would be going up over $8,000 but what would it be without the tax?  How much more would it go up?  That's the point, isn't it?

TREASURER:

Well, that's right, it would be slightly more without the impact of the carbon tax.  A very small difference.  That's the significance of the modelling, a very small difference.  A carbon tax or a carbon price makes very little difference in terms of overall income levels.

KELLY:

And if my maths is correct, and that's no means a given, it would be a small difference wouldn't it?  If it's a hit to the national economy of 0.1 of 1 per cent.

TREASURER:

That's right.

KELLY:

Then 0.1 per cent of $65,000 is $65.00 per annum.  Is that the cost of a carbon tax to each of us?

TREASURER:

Well, it's a relatively small amount of money Fran, and that's the whole point.  The modelling shows that we can grow our economy strongly, grow national incomes and not have a significant impact overall on those individual incomes.

KELLY:

Now you're using the modelling of $20 a tonne, but what point is it giving us this if the price is going to be something else?

TREASURER:

Well Fran, we do model a variety of scenarios.  In my speech today I do talk about $20 a tonne but we have modelled a variety of price points in the modelling.  All of that will be available for people to see when we publish the modelling in full.  We haven't concluded all of the detail as yet, but when we do it will be out there for everybody to see.

KELLY:

When are we going to see it?  If you've got this modelling why not show it all today?  Why not at least show $26 a tonne which is what Professor Garnaut says we need?

TREASURER:

Fran, I think it's really important given the nature of the scare campaign that we're seeing, particularly from Tony Abbott at the moment, that we do give some insight into the modelling.  I mean Tony Abbott is running around trying to scare the pants of people at the moment and we know that only two years ago he was an advocate of a carbon tax.  I mean this is phoney Tony in full scare campaign mode.  The fact is that I wanted to give some insights into the modelling so that we can have an informed discussion about the impact of a carbon price because this is the next frontier, Fran, of economic reform, and those countries that succeed in the 21st century will be those countries that are powered by clean energy. 

This is terribly important for the future of our economy, to put a price on carbon and to get this reform in place.  But Fran, as we know, in the past when we've put in place a very big structural reform, such as pricing carbon, the one that might be compared to that say would be national superannuation.  These sorts of campaigns, these scare campaigns have been run before, just like they are now.

KELLY:

Yes but there's only a scare campaign able to be run - phoney or not - because we don't have the detail.  I mean, you're talking to us today about $20 a tonne but you concede that's fictional at the moment.

TREASURER:

Well, no, what I'm saying is that there are a variety of prices and scenarios which are in the modelling and as soon as soon...

KELLY:

The EU's trading price is currently $23 a tonne. Why not use that?

TREASURER:

Well Fran, when we publish the modelling it will be there for you to see and I'm sure that you and all of the others that are interested in this topic will be satisfied because it is comprehensive and we do look at a number of price points, that's the whole point.  What I'm doing today is giving an insight into the results that we will see.  That's important because of the nature that of the scare campaign that we're facing at the moment.

KELLY:

What you're doing today too is giving out these details before you've given them to the members of the Multi-Party Committee on Climate Change.  They say they commissioned this modelling and they haven't seen it.  Why have you done that?  They're cranky about it.

TREASURER:

Well, we've been having a pretty good discussion through the Multi-Party Committee.  We've also been talking with the Multi-Party Committee about the modelling and we will continue to do that.  We take that process very seriously but I think they understand the nature of the scare campaign that has been run by the Liberal and many others.  So I think it's entirely reasonable in those circumstances to talk about some of the directions that we're seeing in the modelling.

KELLY:

They don't though.  Christine Milne says it was an act of bad faith to selectively…

TREASURER:

Well, I'm sorry I don't accept that.  The modelling has been prepared by the Government.  We are working with the Multi-Party Committee.  We will work with them and are working with them in good faith and we will continue to do that.

KELLY:

Treasurer, it's all very well to say most of us will barely notice the hit to our cost of living from a carbon tax, but what about those whose jobs disappear altogether in areas like the Illawarra, Newcastle, the Latrobe Valley.  There will be major job losses, won't there?

TREASURER:

Well, once again Fran, this is where we're having a really dishonest scare campaign from Mr Abbott and many others.  The fact is that the economy will grow strongly.  The economy will continue to generate a substantial number of jobs.  That is very clear. There's been 700,000 jobs created in this economy in the past three years.  We can expect another 500,000 jobs in the next 2 ½ years and we can expect to see the economy continue to grow strongly with a carbon price.  That's very important that's understood…

KELLY:

So the reassurance to people in those areas is that as the economy grows there's always more jobs coming as we are seeing in the mining boom.  Is that your argument?  Is that the reassurance?

TREASURER:

Well, Fran, there's a couple of points here.  The economy will continue to grow very strongly.  We can see that.  We are in the midst of a mining boom and a very considerable expansion of our economy.  Resources and a mix of where people work in that economy will change over time as they have done in the past, but our economy will be bigger and there will be substantially more jobs as we continue to grow strongly.

KELLY:

Treasurer, to the global economy more broadly, are you concerned about the US slowdown and is it enough to stop the RBA from lifting rates today?

TREASURER:

Well, those are matters for the RBA Fran, I think it has been a …

KELLY:

What about the US slowdown?

TREASURER:

Well Fran, there has been a concern with US growth.  When I was there earlier in the year they were far more optimistic.  Some of the figures we've seen have been on the downside and of course that's prompted a lot of speculation about global growth.  The forecasts for global growth are still relatively strong.  I don't think we should be just analysing what's happening in the US or any other country based on one particular set of figures in a month.  It is disappointing to see the latest results in the United States, but of course in our region the economy continues to grow strongly and of course for our country that is very good news.

KELLY:

Do you think the economy, our economy, would be damaged by another rate rise?

TREASURER:

Well, Fran, these are matters for the Reserve Bank.  They take those decisions independently.  As you're aware, the whole centrepiece of our recent Budget was to bring the Budget back to surplus in 2012-13 because we are going to grow strongly in the next couple of years.  Because we are going to grow strongly in the next couple of years we've got to make sure that the Budget is in surplus, so we don't add to any of the price pressures which are flowing from this very big resources boom which is generating substantial employment in our country for years to come.

KELLY:

And Treasurer just finally - and we're just 40 second to the news - but the live cattle export debate is raging.  I wonder if you saw the footage and if you think this industry should be suspended until the issues are worked out.

TREASURER:

Well, certainly like all Australians I was deeply concerned by the footage.  Minister Ludwig is taking action.  He is putting in place a range of measures which will have a very significant impact and I'm fully supportive of those.

KELLY:

Not much, it's moving pretty slowly.  It's a pretty timid response, isn't it?

TREASURER:

Well, no I don't accept that characterisation at all Fran.

KELLY:

Alright Treasurer, thank you very much for joining us.

TREASURER:

Good to be with you.