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

8 June 2011

Interview with Jon Faine

ABC Radio 774, Melbourne

8 June 2011

SUBJECTS: Carbon Price; MRRT; Livestock Trade; Afghanistan

FAINE:

Treasurer, good morning to you.

TREASURER:

Good morning Jon. Good to be with you.

FAINE:

Despite your best endeavours it seems most Australians, from what they know already about the idea of a carbon tax, say they don't want one.

TREASURER:

Well, I think Australians do want to do something about dangerous climate change, and we are having a pretty vigorous debate about what must be done. And I think there is general agreement that we do need a market-based mechanism. And of course what I said yesterday was that this is a pretty fundamental structural reform for Australia. If we want to continue to be a first-rate economy, we've got to have a clean energy future. What I talked about yesterday was the economic modelling which shows that we can still have strong economic growth and strong job growth while substantially reducing carbon pollution and that's the key.

FAINE:

Well, but it seems that your efforts to explain it are either so far… well they're not good enough, not persuasive enough, and you've got a long way to go before you'll get some sort of endorsement from the population who are going to have this foisted upon them.

TREASURER:

Jon, this is a pretty big, tough reform and in the past in Australia in the 80s and the 90s when big, tough reforms were put in place, say like national superannuation, there were pretty tough debates and I don't think it's any different on this occasion. This is a very important reform. It goes to the core of our future economic prosperity as well as our economic sustainability and environmental sustainability.

FAINE:

So how do you persuade people that they're not going to be worse off because at the moment everyone thinks they will be.

TREASURER:

Well Jon, we've been consulting as people would expect because it is a big reform, as well we're getting new modelling done. That's also very important. We're working with industry as well as community groups and the community more broadly. That takes time and in that period you'll have people like Tony Abbott running the mother of all scare campaigns and that's what he's been doing. But what the modelling I pointed to yesterday shows is that you can have strong growth and still substantially reduce carbon pollution and still have strong jobs growth and strong income growth.

FAINE:

Well, you might be able to. We don't know. We have to take your word for it. Joe Hockey, amongst others, say well you're not releasing the modelling and the Greens who are supposed to be your partners in this are furious that they're not being included in the modelling either.

TREASURER:

Well, they have been included and they have been briefed. The fact is…

FAINE:

Well, that's not what Christine Milne said yesterday, quite frankly.

TREASURER:

Well Jon, they have and all of this will be published in good time, but in the meantime what I wanted to do was to give a snapshot of the modelling And of course it will be all made available and people will be able to go through it in great detail. It's in our interest that that occurs and it's in our interest to get all that done as quickly as we possibly can and that's what we've been doing over the past few months; methodically going through the consultation that is required, working with industry, talking to the community about a really important structural reform for Australia.

FAINE:

Instead of this being seen as some bold and important innovation or a necessary reform, it's pretty much just seen and characterised as a great big new tax as Tony Abbott keeps reminding us.

TREASURER:

Well, by Tony Abbott, but the fact is…

FAINE:

He's getting away with it because there's very little coming the other way.

TREASURER:

Well, we're going to continue to argue the case strongly, that's what I was doing at the Press Club yesterday, and we will continue to do it as we go through and release all of the detail when we've taken our final decisions and what people will then be able to compare is the fact that Tony Abbott doesn't have any sort of solution to this problem. What he's got is a policy that he calls 'direct action' which will cost billions and billions of dollars and will not be effective in reducing carbon pollution. So that compare and contrast will be there for everybody to see, and his scare campaign will be exposed for what it is.

FAINE:

Yesterday you hinted that there would be incentives to superannuation for instance, to invest in new technologies. If that's the only way you can get people to invest in it, with tax concessions and the like, there's not much of a climate for that incentive at all, is there?

TREASURER:

Well, it's not the only way. The whole point about a price on carbon is to provide the incentive for the investment in the clean-energy technology to drive the innovation. And of course on top of that there may be particular sectors that we may seek to target but I was just raising that as one of many options. The Government hasn't taken any final decisions in this area, but the most important driver of investment, particularly into renewable energy and greater energy efficiency is the overall price on carbon.

FAINE:

It's hardly surprising, but the Minerals Council yet again have produced what they say is independent research commissioned by them but done by the respected Centre for International Economics saying that if we introduced a tax that effectively is a tax on coal, we would be at a comparative disadvantage to all the other major coal producing economies. And they go through and list all the different countries that haven't done and aren't about to do what you say we have to do.

TREASURER:

Well, first of all I haven't had the benefit of reading the report but I certainly will do that but the Centre for International Economics has in the past been a supporter of carbon pricing, but I'd like to make a couple of points about our coal industry because it's a big export industry for Australia. It is a very important export industry for Australia and we do have a very big comparative advantage in coal in that we have plentiful supplies of what is regarded as cleaner, higher quality coal.

So the coal industry does have a very big stake in this whole discussion because one of the challenges we may face as a nation overall and the coal industry will be at the centre of this, is that if we don't price carbon - because we are in terms of the developed world the highest per capita emitter - if we don't price carbon we could well find ourselves on the end of trade sanctions from other countries and of course the first in the queue for that would be our coal industry. So I've said to the coal industry that I think they've got a very big stake in making sure that Australia as a whole gets a price on carbon in the most efficient, cost effective way.

FAINE:

The recent experience of the attempts to introduce the mining super profits tax has in some ways, Wayne Swan, emboldened industry to take on the Government, has it not? They got a terrific return on their $20 million campaign against the mining super profits tax. They probably recovered a couple of billion dollars worth by spending $20 million on a campaign against you. They're going to just do all that again, aren't they?

TREASURER:

Well, they may do that. I don't know, you'd have to go and talk to them but they don't have a case to do it and of course…

FAINE:

No but there's a great quip in, I think it's The Economist, that says they got a better return on their $20 million campaign than they ever got investing in mines.

TREASURER:

Well, I'm happy to come back and talk about the MRRT at great length if you want to but first of all I do want to make this point. That much of the propaganda that was used in that campaign last year has all proven to be completely incorrect because what's occurred since that debate is that we've seen massively more investment in our mining industry. Investment in mining last year was about $35 billion, this current year it's about $50 billion and next year it's going to be $80 odd billion. Their profits…

FAINE:

But they succeeded in staring you down.

TREASURER:

Jon, let me finish. And their profits in that time have gone through the roof yet again on the top of a record terms of trade, but can I just come back to the tax…

FAINE:

So it was wrong to buckle on the mining super profits tax?

TREASURER:

No, we ended up with a better design in the end as a result of them coming to the table and talking with us, which is what they didn't do for a long period of time. We fully support strongly, and so does the industry, the final outcome. It's a good one for Australia. It gives us a source of revenue whereby we can give a tax cut to small business, we can invest in infrastructure and we can boost superannuation. So at the end of the day…

FAINE:

Sorry Treasurer, the reality is you're getting a fraction of what you would have got under the original design and the investment would have gone ahead anyway because the profits are still yet to be got.

TREASURER:

No, I don't accept any of those characterisations. We got a better design of the tax. We've got a good source of revenue to do the economic reform that we said we wanted to do with it. So it was a pretty big debate. They ran their campaign, but at the end of the day common sense prevailed and Australia now has a source of revenue to put in place further economic reforms, particularly to assist those sectors of the economy which aren't in the fast lane.

FAINE:

Do you think the mining billionaires pay enough tax?

TREASURER:

Well, what we have to do is to get the taxation system for mining right, that's what the MRRT is all about and that's why we fought so hard for it.

FAINE:

But you didn't answer my question.

TREASURER:

Well, of course they pay their tax in Australia and we've got to get the tax regime right and that's why we fought for the MRRT to make sure it is as fair as it possibly could be and that's what I think.

FAINE:

Do think they pay enough tax?

TREASURER:

Well, I think they pay their taxes in Australia as they should and that's why we went for a resource rent tax to make sure that Australians got their fair share of the resources they own 100 per cent.

FAINE:

When your activity is resulting in super profits the likes of which, not even in your own wildest dreams you ever expected, you can kick in a bit more can't you?

TREASURER:

Well, that's why we got the MRRT in place Jon. That's precisely why we fought so hard for it.

FAINE:

Alright well let's not go around in circles anymore on that. The Government's backflip on stopping live cattle exports. The industry of course is saying this will cost jobs. It's going to cost the Government money to compensate people and why should we tell the Indonesians how to run their abattoirs anyway, Wayne Swan?

TREASURER:

Well, because we do have to treat our animals decently and it's essential to the integrity of the trade. If we want to export animals we've got to make sure we do it in a humane way. We've got to make sure that there is decent treatment of our livestock. I think all Australians agree with that and that's what we're going to ensure by this temporary suspension.

FAINE:

You weren't prepared to do it until there was a public outcry and growing pressure over the course of the week has dragged the Government to this conclusion.

TREASURER:

No, I think what the Government has done is the right thing.

FAINE:

Eventually.

TREASURER:

No, we've taken the time to look at the footage which appeared, to talk to the industry, to make all the proper enquiries, and as a result of that we've decided to have a suspension.

FAINE:

What business is it of ours how the Indonesians run their abattoirs? We either sell them cattle or we don't.

TREASURER:

Well, we're a first-world country that should have the best practice in place for all of our industries and that includes the animal export industry.

FAINE:

And in Afghanistan is our policy now that we'll just follow whatever America says?

TREASURER:

No, not at all. I mean we're committed along with our partners to make sure that the terrorists don't take over Afghanistan. That's the mission and we are there training Afghan troops to make sure they can secure their country against terrorism and that's the mission we remain committed to.

FAINE:

Well, America seems to be winding down and yet we seem to be saying that we're staying the course, I think were the words used by the Prime Minister yesterday, whilst the rest of the world are realising the futility of the…

TREASURER:

No, we're staying the course on our mission there which is primarily to train the troops and that's what we're doing there, to make sure that they've got the capacity in the long term to stand on their own two feet. That's the mission that we've got there and we're engaged in that mission with our partners.

FAINE:

It's a dreadful situation with almost every week now, more Australian casualties.

TREASURER:

It's shocking for the families. It's a terrible thing but what we have to do is to stay the course in our mission of training the troops in Afghanistan so that country can combat, if you like, domestic terrorism which is not only a threat to them, but a threat to us and a threat to the world.

FAINE:

And just finally Wayne Swan, have you read Lindsay Tanner's book Sideshow?

TREASURER:

I had a bit of a flick through it the other day and I've got it in the bag and I will have a detailed read of it when I can get some time, but it looks like a good read.

FAINE:

Do you think he's right when he says Australian politics has become a bit like a circus sideshow, ignoring the major issues and consumed with the 24-hour media cycle?

TREASURER:

Well, I think we've got an example of part of that in the carbon debate at the moment. We've got a very serious proposal out there. We want to have a very informed public debate about that. Sometimes in this sort of frenetic media cycle a lot of that gets distorted but what we in politics have got to do is stay the course. That's what we're doing on pricing carbon.

FAINE:

I'm grateful to you for your time this morning in a busy schedule. Thank you.

TREASURER:

Good to be with you.