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

7 June 2011

Question-and-Answer Session

After Address to the National Press Club

7 June 2011

SUBJECTS: Carbon Price; Livestock Trade; Regional Processing; Afghanistan

HOST:

First question is from Paul Bongiorno.

JOURNALIST:

Thank you very much, Mr Wilson. Treasurer, you spoke today of the great need for urgency to act, if we don't act how it will become more expensive in the future. But isn't your call somewhat undermined by the fact that Labor itself was prepared to postpone action, and what do you say in this context to the Greens Deputy Leader, Christine Milne, today, who said we wouldn't be having this argument or this drive to a carbon price today if the Greens hadn't made it a condition of their support for the minority government?

TREASURER:

Thanks very much, Paul. I think, as I said in my speech, my commitment to an emissions trading scheme, my analysis of the dangers of climate change – not just for the environment or for our economy – go back fundamentally to a meeting I had over five years ago with Nicholas Stern in London. Up until that time I, like many people in this room, had spent a lot of time reading about climate change, evaluating its science, evaluating the economics. What I became convinced of in that meeting with Stern was that the costs of not acting were so catastrophic that countries around the world, both developed and developing, needed to act. And from that time I have always been active within the Party and now within the Government in putting in place and advocating an emissions trading scheme and, of course so were all of my colleagues, and we all put so much energy into developing the Carbon Pollution Reduction Scheme, which was defeated by the Liberals and the Nationals and the Greens in our national Parliament.

Australia would actually have an emissions trading scheme right now in fact if the Liberals had not changed leadership at the last minute at the end of the year before last. That should never be lost, never be lost, in this debate. And, of course in that debate the Greens opposed that emissions trading scheme as well. I have never lost my belief that Australia, to protect our economy and to protect our environment, needs an emissions trading scheme. Following the election, the Government sat down and evaluated where we were going. We formed a Multi-Party Committee and we worked through that Multi-Party Committee to get a framework in place for an emissions trading scheme, admittedly with a fixed price for a period of three years in the first instance, but it is an emissions trading scheme.

My belief now is the same as my belief then, that Australia needs this scheme to protect our prosperity and to save planet. That's the motivation I bring to it and it's why the Government in total is so committed to proceeding down this path, which is not an easy political path, Paul. I read some of the commentary around about why the Government is doing this or that. The Government is doing this out of the conviction that this is the right thing for our country, the right thing for our economy and the right thing for our environment and it's something that we must do, otherwise we'll be left behind and the damage to our society, to our environment, our economy, will be great. That's the motivation I bring to it.

In terms of Senator Milne's comments today, we have been working closely with the Multi-Party Committee. The Government did commission this modelling. The Government has been discussing modelling and all other matters with that Multi-Party Committee through the last few months. I decided to give a snapshot, if you like, of the early findings of that modelling. It's not yet all completed but when it is all completed, it will be out there for everybody to trawl through in very great detail and of course it will be provided to the Multi-Party Committee as well. But I thought it was pretty important to get a clear message there into the public debate now about the direction in which it is going.

JOURNALIST:

Good afternoon Treasurer, Philip Hudson from the Herald Sun. You talk about it not being easy politically. A Galaxy poll this week found that less than a third of people are backing the carbon tax package as they currently understand it, and 73 per cent believe they'd be worse off. And while Tony Abbott's running around the country telling people that the carbon tax will hit the cost of living immediately, everything from Weet-Bix to a new car, you today say that it's going to take time for the benefits to be felt. In fact you're asking voters to trust that it's going to deliver gains in 2020, 2050, in your speech you also mentioned 2100, which is obviously a long time for everyone to look forward. Do you think that the now broken pledge the Prime Minister made during the election campaign that there would be no carbon tax is making this so much harder for the Government to convince voters to trust you on all of this, despite the obvious passion you've shown today for why you're trying to do it?

TREASURER:

Well, I don't agree with that characterisation at all. I think most Australians do want action on climate change. I believe that they understand the need for it. The Government has been in a position where we have had to go through a period of consultation, not just with the Multi-Party Committee, but also with industry, with the non-government organisations and the community more widely. We've also been in a position where we've had to commission new modelling. As you would be aware, there was a whole body of work that was done and used to develop the previous scheme but all of that had to be updated.

So we're through this in a methodical way, designing the scheme in consultation with the wider community and most particularly with the business community on one hand, and environmental groups on the other and working through the Multi-Party Committee. That is not something that could have been done in two weeks, three weeks or, for that matter three months. But we are determined to get this done as quickly as we possibly can so we can put all of the facts before the Australian people and we can dispense with the scare mongering, the falsities and all of the exaggeration which is coming from Tony Abbott. And in the process of doing that we can expose him as not being a believer in the science of climate change, that he is climate change denier along with many others on his front bench, and also to expose the fact that some of his current front bench were once believers in the science, but now have lost all principle. When we get the full design out there, we can then have an informed debate about all of these things and I look forward to the day that we get it out there, let me assure you.

JOURNALIST:

Laura Tingle from the Financial Review, Treasurer. How committed is the Government to introducing its carbon pricing system from 1 July 2012? You've said in your speech that you're working on an ETS with a fixed price for three to five years, beginning as early as July 2012. Given the political controversy, wouldn't there be an advantage in legislating it this year, but for a start-up date beyond the next election campaign so that there was a clear mandate for the Government to proceed?

TREASURER:

No, I think it's in the nation's interests that we get it up and operating as soon as we possibly can. That's important for the country. It's important given particularly the fact that the previous scheme was defeated well over 12 months ago. Every year of delay has a cost for our country. The sooner we get it going, the sooner we make this gradual transition, if you like, through the period of a fixed price into an emissions trading scheme, the better, because it will smooth the adjustment over time. The longer we delay, the harsher the adjustment becomes. That's the whole point. That's the case for early action. So I think the sooner we can get it out there, the sooner we can get it legislated and the sooner that we can get it operating. That's the best for the country and it will also demonstrate to the deniers, the naysayers and the scare mongerers that a lot of what they're talking about is simply false.

JOURNALIST:

Sid Maher from The Australian, Mr Swan. You talk about, and we hear a lot about this, you talk about protecting tourism icons like the Great Barrier Reef or Kakadu or the agricultural wealth of the Murray-Darling Basin. How will putting a price on carbon in Australia on its own protect these Australian icons?

TREASURER:

That's a very good question, and it's one that I really want to spend some time on because this is said by all of the climate change deniers. It's really the first refuge of those scoundrels, if you like. The fact is that the world is putting in place, in a variety of different ways, very substantial measures to reduce the carbon pollution that is in our atmosphere. This has been done through a variety of mechanisms. It's being done in our region by places like China. It's being done across the world and I ran through in my speech a long list of countries that are acting, and it is very clear that we are falling behind.

If we, as the 14th biggest economy in the developed world - sorry, the 14th biggest economy - a member of the G20, someone who is in the top 20 of total emissions, as the highest per capita emitter in the developed world, if we can't begin a start on this process, what is the rest of the world to make of us? So it's not a question, as our opponents put it, of us leading. It is a question of us falling further behind in circumstances where we have the highest per capita emissions of any developed economy. We are the 14th biggest economy in the world and we say, well, nothing to do with us. The fact is that we need all countries to come to the table and in a variety of ways they are and that's what we're seeing in the global discussions post Cancun.

We have to begin and we have not really begun as yet. So, as a country, we need to be putting a price on carbon to demonstrate basically to others that we're actually serious as well. But you're right, we need concerted global action. But I put this question to you; how could we be taken seriously given all of those facts if we decide not to move while others are moving and going much further ahead? I for one, want to put the Great Barrier Reef first. I want ensure we have the best possible chance of saving the Great Barrier Reef and as a country which is perhaps more dramatically affected by climate change than many others, we've got the most to lose if the rest of the world doesn't move. I ran through a number of those essential facts. What will happen in the Murray Darling? What will happen to the Great Barrier Reef? What are the implications for our tourist industry, and so on?

So there is a rolled gold case for action in this country, and it is not the case that says that we want to lead the world because we clearly aren't. Our problem at the moment is we look like we're falling behind. We've got to make sure we begin that transition for all of the reasons that I outlined and we've got to do it so we can be taken seriously and propel a global action in this area which is absolutely essential to the future of our environment and our economy.

JOURNALIST:

Lenore Taylor from the Sydney Morning Herald. Since Labor and the Greens couldn't agree on what Australia's emission reduction targets should be last time and since they don't agree on that now, why should we believe that you'll be able to agree on it in two to three years time when you're trying to move to a market mechanism?  And if you can't, how can we be sure we will actually move to an ETS then, rather than just sticking with a tax? Also, what prices and targets have you modelled?

TREASURER:

Well, the first point is that hopefully in three years time after we've got the scheme up and operating, we'll be having a much more mature community discussion about all of these issues, and it won't just be a question of whether there are two parties in the Parliament that may have to agree or not on a particular policy. I would hope we would see an outbreak of commonsense in the Liberal Party, for example. So I don't take your view, as you put it there, as being a static position for Liberals.

The Liberals are rapidly backing themselves into a corner, as I explained in my speech. The irrationality of their so-called direct action policy is really being exposed day after day. Their lack of any alternative in what is a critical area of public policy action is becoming exposed over time. So I don't take it as I don't take it as a given that the Liberals are going to be forever in this neanderthal-type position that they're in now and that they will have to join with the 21st century and come to the table to talk about a genuine market-based scheme.

The irony of this, it's the Labor Party that is arguing the case for efficient markets, for producing the least-cost outcome, and it's the Liberal Party that is running some sort of centralised Russian-style command and control-type policy alternative. That is not sustainable from their point of view. So I don't think it will just be a question into the future, as we succeed in getting this scheme operating, that the Liberal Party will continue to play the spoiling role it is playing at the moment.

HOST:

Targets, what targets have you modelled?

TREASURER:

Well that will all be supplied when we publish the modelling in full, for you to see, Lenore, and everybody else.

JOURNALIST:

Colin Brinsden, AAP. Treasurer, if business reacts more quickly to reducing their emissions than currently they've been predicted, which would obviously be a good thing, would that put a risk on the Budget? Say, for example, if you went down the route of cutting taxes, would that put a risk on the Budget down the track, over time?

TREASURER:

No, I don't believe so but you engage in tax reform for a variety of reasons. I mean, we're pretty keen on getting tax reform in place, not just in the context of carbon pricing, but in a wider context of lifting the productivity and efficiency of our economy. But if we're making further progress in terms of reducing our emissions, I'd see that as a very big benefit over time, rather than a cost.

JOURNALIST:

Kieran Gilbert, Sky News, Treasurer. Marion Le says that the Nauru option would be better than the Government's Malaysia deal. Melissa Parke says that she's got concerns that unaccompanied children will be treated like sacrificial lambs under the Malaysia deal. What do you say to Andrew Wilkie, who says the Government has lost its moral compass on this issue and on the live cattle trade?

TREASURER:

Well, I reject that completely. The fact is that we are engaging in a discussion with Malaysia about a regional solution and a regional framework. We're doing that from the best of intent. It does involve a discussion with the United Nations High Commissioner for Refugees and there are very good reasons why this is a model which will not only be effective in killing the people smugglers' trade, but also will bring a lot more integrity to the processes that are required in third countries and that's why I think the UNHCR has been interested in discussing a regional solution with Malaysia.

It's not very well understood just how many refugees there are in Malaysia, they're not the really high-profile refugees, but there are literally hundreds of thousands of refugees in Malaysia in desperate circumstances. Many of them are Burmese. There is a major advantage in having a regional solution in place where we have the opportunity of killing the model of the people smugglers, but also still shouldering a very significant humanitarian initiative through taking additional refugees in here, killing those two birds with one stone. I think it's a very good outcome for all of those that are really genuinely interested in the plight of asylum seekers.

JOURNALIST:

Simon Cullen from ABC Radio. Given that today you decided to release part of the modelling for a $20 per tonne carbon price, could you not also release a $30 per tonne carbon price and a $40 per tonne carbon price? Logically it follows that work's been done. And also in the interest of having a full and proper debate about this, will you release the assumptions that underpin the modelling? And also just on this issue, don't you risk having this process backfire, given that you haven't given it to the Multi-Party Climate Change Committee first?

TREASURER:

Well, first of all the modelling has generally been discussed there but the modelling has not been completed as yet. And as I've said in my remarks, what I've decided to do was to give a snapshot of outcomes. We will be delighted to supply the modelling in full when it is completed and it will go to the Multi-Party Climate Change Committee and be published for everyone here to go through in great detail but I don't think anybody can criticise the Government for failure to engage or for processing it. I've just run through all of the things that we have done to consult the community – the Business Roundtable, the NGA Roundtable, the Climate Change Commission, the endless meetings and discussions that have been going on right across our country for months and months and months.

What I decided to do today was to give a snapshot, if you like, of the fact that employment will continue to grow strongly, that national income will continue to grow strongly with a carbon price. You wouldn't think that was the case if you were listening to Mr Abbott and some of the other naysayers in the community but I made it very clear that this is not the final material that will be supplied. All of it will be there, a number of scenarios have been modelled, different carbon prices have been modelled and all of that information will be put out when it's completed. I'm delighted to do it.

We have been living, if you like, with the downside, as a Government, of consulting extensively and we've suffered from the fact we've not put on the table a final proposal. We've suffered from that politically, but I believe what we've done is the right process; to talk with the business community, to talk with the non-government organisations, to consult more broadly, as we do put forward what is a very strong economic and environmental reform.

JOURNALIST:

Stephen Scott from the Courier Mail Treasurer. Do you have a view on whether petrol should be included in the carbon price and separately to that do you agree with the argument that Australians should be driving less as part of our fight against climate change?

TREASURER:

Well, that's a matter that's being discussed through the Multi-Party Committee process and we haven't taken a final decision about the inclusion or exclusion of fuel or transport more broadly. This is why we are consulting. We have our strong views about this both ways. The whole point of consulting is that at the end of the day when we take a decision, then everyone will be able to say – well, we mightn't have got what we wanted but we at least had the opportunity to explain why we wanted this outcome.

So we are working our way through the finalisation of the scheme. We're doing it through the Multi-Party Committee and we want to bring that to a conclusion as quickly as we possibly can. We're not too far off all of that now. We're still waiting as I said for the final modelling. When all of that's there, the Government taken its decisions, all of this material will be there for a continued public debate.

JOURNALIST:

Michelle Grattan from The Age. I'm really looking forward to those hundreds of pages, Mr Swan.

TREASURER:

I'm sure you are Michelle. I've got some people from Treasury who might be able to …

JOURNALIST:

We'll need them. If the Coalition won the next election, do you think that Labor should preserve what you're selling as historic reform by voting with the Greens in the Senate to stop it being repealed? Or do you think it should respect the mandate of an incoming Coalition Government to scrap the tax?

TREASURER:

Michelle, they're not going to win the next election because they're a policy free zone and the fact is that they've been able to make a bit of political pain because we haven't been able to put a final design out there. When we get that final design out there we can have a debate about who is fair dinkum about creating wealthy Australia and making sure we've got a sustainable environmental future. So I don't accept the premise of the question.

JOURNALIST:

Treasurer, Karen Middleton from SBS Television. You've spoken today about the urgency of acting but you were Treasurer to Kevin Rudd when he decided to defer emissions trading. So I'd like to just ask you a simple question. Why did you accept his decision to defer emissions trading just over a year ago and was it because it was politically expedient at the time?

TREASURER:

Well, as someone along with Penny Wong and a number of other senior Ministers who spent month after month after month working on the emissions trading scheme it was something I had a fair bit of an attachment to. A point that I made in answer to a previous question, but the fact is that this was knocked off by the Liberal Party. We were voted down on three occasions by the Liberals.

So the Government was then in the invidious position deciding where to go from there. The decision was one which you just referred to and well known to all of you. I don't intend to canvas what was discussed internally in the cabinet about the decision that was ultimately taken, but that decision in no way diminished my commitment or the Prime Minister's commitment to fighting for an emissions trading scheme because it is what we must do to secure our future economic environmental sustainability.

JOURNALIST:

Treasurer, Shane Wright from the West Australian. The carbon tax would be in place for two years, based on your timetable, by the time Australia withdraws finally from Afghanistan. Given that we've lost another soldier overnight and we've now lost 27 since 2002, 181 people have been injured – Australian diggers – a huge amount of money that's been spent on this war and the trouble that is Afghan democracy. Is it worth it?

TREASURER:

Well, our commitment to Afghanistan is part of a wider commitment to deal with terrorism internationally. We remain convinced that this is the right course of action through our commitment there which we do with our partners. Our thoughts go out to the families and all of those that have been lost in this terrible conflict, but it in no way diminishes the Government's commitment to dealing with the fight against international terrorism in Afghanistan.

JOURNALIST:

Marcus Priest from the Financial Review. Treasurer, the 2008 Treasury modelling provided sectoral impacts of a carbon price, and the CPRS package also provided some structural adjustment funds for communities like Latrobe given the impact on industries like coal generation, and (inaudible). Given today you've said that a carbon price, there'll still be an increase of 1.6 million jobs, are you able to say where those jobs will be created and whether there will be any jobs lost sectors like coal and mining? And just quickly I noticed you've haven't mentioned revenue neutrality in your speech. You've stepped around it quite carefully. Can you just provide an assurance that the Government's still committed on a year on year basis to revenue neutrality?

TREASURER:

Well, just a couple of points; whatever the changes there are in the sectoral mix of the employment in those 1.6 million jobs, they will be driven almost exclusively, but not exclusively by changes which are brought about by the change in terms of trade over the currency. They will be less driven by any particular impact of a carbon price.

As you well recall, there was a very informed and detailed discussion of the future direction of the Australian economy in Budget Paper No.4, which just talked about the structural changes in our economy and in particular their impact on sectors and essentially what will drive the mix of where people work will be those broader economic factors and pressures rather than anything that flows exclusively from a carbon price. Although you are correct to play up that there will be one or two regions in Australia where there are coal producers for example, who may change their behaviour in the face of the carbon price. Those issues have been pretty well canvassed. The Latrobe Valley is one of them and that's why it is so important that we work our way through this issue and of course the Government understands how important it is to provide assistance to those communities that are affected by those sorts of transitions.

In terms of the overall financial envelope for the scheme, the Government's still working its way through all of those issues and as we have not taken final decisions about the breadth of the scheme and what's in and what's out, it's pretty hard for me to give you a final conclusion of where we are landing. But what I can say to you is that whatever we do will fit within our current fiscal framework which is pretty clear and pretty strict.

JOURNALIST:

Michael Keating, Keating Media, Treasurer. Last week was Minerals Week held here in Canberra by the Minerals Council of Australia. What were your discussions with the Minerals Council specifically in regard to setting a price on carbon and what was the outcome of those discussions?

TREASURER:

Well, I didn't have a formal meeting with the Mineral Council but a number of my colleagues did, but I did meet with a number of companies that were in town as they usually are for that gathering. A couple of points that really stand out from my perspective and the first one is just how big this investment boom is. We've got something like $35 billion or so being invested last year. It's probably going to be around $50-55 billion this year and it's heading rapidly to around $80 to $80 plus billion next year, and that's in the context of that very big pipeline that ABARES outlined a couple of weeks ago of $430 billion.

So irrespective of the political debates that have gone on about resource rent taxation and for that matter carbon pricing, there is a really, really strong investment pipeline coming through in a number of our key commodities. A number did raise the question of carbon pricing – a variety of perspectives. Many companies who are affiliated with the Minerals Council do favour carbon pricing but they would have unique perspectives about where their sector or their company should fit into all of that. So it's a pretty mixed picture across the industry depending on what commodity they've got and what they're doing.

JOURNALIST:

David Speers from SKY News. Treasurer, you list a number of countries in your speech that are taking various steps on climate change but of all those you've listed only the European Union has a mandatory economy-wide price on carbon. So would a carbon tax here really be in step with our competitors and in particular some other resource-based economies like Canada and Brazil?

TREASURER:

No, the reason we go for a carbon price is because it is the least cost and most efficient way of doing it. That is the experience around the world. So we are driven to a market-based mechanism because that is the best way to price carbon. It's the most efficient. So many of those countries that are relying upon other forms of regulation and so on, are paying a lot more per tonne of abatement than they would actually pay if they had a market-based mechanism in place. So the argument here is not just about what country 'A' does verses what country 'B' does. The argument here is about what is the best, most efficient way to reduce carbon pollution and of course the answer universally is an emissions trading scheme, a market-based mechanism.