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

9 June 2011

Press Conference

Brisbane

9 June 2011

SUBJECTS: Labour Force Figures; Productivity Commission Report; Credit Cards

TREASURER:

Look, I just wanted to say a few words about the job figures today. The unemployment rate has come in. It's steady at 4.9 [per cent]. I think this demonstrates just how resilient our labour market is. We've got an unemployment rate under 5 per cent. It's a very strong position compared to other developed economies around the world. For example, in the United States, they've got an unemployment rate almost twice the unemployment rate that we've got here. And there's been something like 700,000 jobs created in Australia under this Government. So a strong jobs outcome over a period of time, and of course one of the strongest outcomes in terms of the western world.

Now, today what I wanted to talk about was the Productivity Commission report: 'Carbon Emissions Policies in Key Economies'. This is a very significant report, and I think there are two central messages that the community will want to concentrate on. First of all, countries right around the world are all putting in place a whole range of policies to reduce carbon emissions and to transform their economy. And secondly, this report zeroes in on this very important finding and that is that the cheapest and most effective way to reduce carbon pollution and to support clean energy is through a price on carbon – a market based mechanism.

Now the Commission examined activities through seven economies. It found every single one of these economies has adopted policies of one form or another to reduce emissions. They found something like 1,000 policies across all of these economies that were identified as reducing emissions. And what this shows very clearly is that global action is taking place. The report shows that Australia is in no danger of acting alone - far from it. We're in danger of falling behind.

Now I just want to unpack some of these messages that are in the report. The report looks at what's going on in countries like the United States, countries like China, countries like the UK and Germany. What they find is that our effort is comparable to what's going on in China and the United States, and that we're behind countries like the United Kingdom and Germany. So we're currently level pegging with countries like the United States and China. But this is only one point in time. And as we are all aware, many other countries around the world are about to take further actions to deal with carbon pollution.

For example, China; China has just published its 12th five-year plan that covers the years to 2015. And they have a goal there of establishing a carbon trading market. They have a goal of setting up a trading system in key provinces. And they also have a goal of cutting carbon emissions per unit of GDP by 40-45 per cent by 2020 compared to 2005 levels. And of course again in the United States, plans for them to substantially reduce their emissions in the future. So the report makes it pretty clear that this is just a snapshot in time and that more action is also coming as we're aware in many other countries.

So the point I want to make today is that we need to keep moving if we want to keep up. If we don't act we risk being left behind. Now there's a lot of detail in the report and I'll leave the technical commentary to those in the Productivity Commission but I think what the report really shows is that there is a substantial risk that if we don't act we will be left further behind. And of course, we know that as one of the most energy-intensive developed economies, we do run the risk if we don't act of having other countries impose sanctions on us.

The other thing that comes out of the report very starkly is that the most efficient way of achieving carbon pollution reductions is through a market-based mechanism such as a price on carbon. The means to reduce carbon pollution varies from country to country but one thing is very clear from this report: so-called direct action policies like Mr Abbott's are not only ineffective, they are also very, very expensive. So the risk Australia faces if Australia were to go down the road put forward by Mr Abbott, those type of policies have the capacity to simply break the budget. So carbon pricing is the least cost, most efficient way of dealing with carbon pollution and that is the central message that emerges from this report. Over to you.

JOURNALIST:

(Inaudible) report today that Japan and South Korea have delayed an ETS (inaudible)

TREASURER:

No what the report says is that we are making comparable efforts right now, at this point in time, to those countries. So some people assert that Australia is trying to lead the world. We are in danger of being left behind. What these figures show is that we are in the mid-range of effort along with countries like the US and China. And what I've just referred to in my remarks is the fact that both the United States and China are planning to do more. What we are planning to do is to put in place a market mechanism through a carbon price which this report clearly shows is the most efficient way of reducing carbon pollution – that's what it shows very clearly.

JOURNALIST:

Is there a country you have in mind that has the model that Australia should follow?

TREASURER:

Well the model that we have in mind is the framework that we outlined some months ago: a carbon pricing mechanism through an emissions trading scheme with a fixed price for at least three years – that's the model that we have outlined. But that is the model that this report finds is the most efficient and delivers the least cost abatement. That's terribly important. If you go through this report, look at its conclusions, look at how it has studied other approaches around the world, what they find is that mechanisms that are used outside a pricing mechanism don't deliver value for money.

JOURNALIST:

What are you making your cost analysis, after those fixed three years, on?

TREASURER:

Well, we are working our way through finalising all of that detail right now and when we've taken our decisions we will announce a starting price.

JOURNALIST:

What about the expansion of population of some countries such as China and India? Is that factored into what they're going to be doing about their carbon…

TREASURER:

Well, I think they factor that into their decisions. In China, it's a matter of national survival for them to reduce their carbon emissions. It's a question of the air that they breathe, but if you look at Australia compared to the rest of the world, Australia is in the top 20 emitters in the world. We have the highest emissions per capita of any developed economy. So Australia is a very big emitter of carbon pollution and because we are also a very big exporter of coal and LNG it is absolutely in our national interests to price carbon and to do it in a way which is the cheapest and most efficient. And what this report shows is that a carbon pricing mechanism such as an emissions trading scheme is the cheapest, most cost effective way of doing it and it's in our interests to do that.

JOURNALIST:

At the centre of the Opposition's scare campaign has been this notion that Australia is acting first. Now, if that's not true, how do you (inaudible)?

TREASURER:

Well, this report today shows absolutely conclusively that Australia is in about the middle of the pack, along with the United States and China, and because of that we are actually in danger of being left behind. So this report gives lie to the accusation that somehow Australia is leading the world. We are not.

What this report shows is that we are in the middle of the pack in terms of action on climate change and what we also know is that countries like China and the United States and many other countries are also putting forward in the next few years substantial new initiatives to reduce their carbon pollution. What Australia has to do is to keep up or we will be left behind, and we will not be part of the jobs that are generated in the clean energy economy. And to be a first rate, first world economy in the 21st century, we need a carbon price to invest, a carbon price to drive the investment in innovation which will deliver the clean energy future.

JOURNALIST:

(Inaudible) don't we have a different economy to them? Isn't our economy more resource intensive?

TREASURER:

We certainly do have a different economy. We have a much more resource intensive economy and therefore we are a much bigger emitter per capita. You see, because we are such a big emitter, because we have such a resource intensive economy it's absolutely imperative that we deal with reducing our carbon pollution emissions. That's the whole point.

Now, opponents of doing this – the climate change deniers – say it doesn't matter at all. They discount the fact that climate change will bring destruction to our environment and therefore our economy. Now that's not a position which can be easily maintained. So the climate change deniers then move to this notion that somehow Australia shouldn't do anything. Well, given that we are the 14th largest economy in the world, given that we have the highest per capita emissions of any developed economy, given that we are in the top 20 emitters in the world, it is absolutely in our interest to deal with this challenge.

We can't sit by and pretend that there's no reason for Australia to act given the known science of the damage to our environment and the subsequent damage to our economy, and given the fact that we are so energy intensive, it's imperative for us to put a price on carbon, to drive the investment, to deliver to us the clean energy future we need to be an efficient and prosperous economy.

JOURNALIST:

Doesn't that mean the stakes are higher for our economy though?

TREASURER:

Well, what it means is because we are a country which will be very badly effected by dangerous climate change and because we do emit so much it does mean that not acting has incredibly damaging consequences for our economy.

JOURNALIST:

Going back to the jobs figures now. (Inaudible) full time jobs have been lost. Do you think this a concerning figure?

TREASURER:

Well, there's also been part-time jobs created. You can't judge the overall labour market just by one particular set of figures for one month. We've had strong job creation in the past few years, over 700,000 jobs since the Government's been in power. We are forecasting another 500,000 jobs in the next two years. We have an unemployment rate of 4.9 [per cent]. I think they are pretty good outcomes for the country. When you've got an unemployment rate with a four in front of it that's still a pretty good outcome for the country.

JOURNALIST:

(Inaudible) full time and part time jobs?

TREASURER:

Well, as I said, you can't make these judgements on full and part time just on looking at one month's figures. There's been very strong full time job creation in Australia in recent years, but sometimes on a month to month basis that mix will shift around.

JOURNALIST:

It's a global issue, if Australia reduces its emissions it still exports massive amounts of coal. (Inaudible) for a reduction?

TREASURER:

Well, let's talk a little bit about coal because this is very important. Coal is a very important part of the global energy mix. It's a very important part of the energy mix in our country. We have to put a price on carbon and we have to reduce carbon pollution by developing renewable energy and as we move forward and renewable energy becomes a more important part of the energy mix, less coal will be consumed. But the truth is that coal will continue to be for the next 30 or 40 years, a very important part of power generation, and that's why it's so important that we in Australia put a price on carbon. So we can develop the technology that assists with our coal and our coal exports, such as carbon capture and storage when it comes to coal for example. We've got a very big interest in ensuring that that technology is developed and that technology will not be developed for carbon capture and storage for coal unless we put a price on carbon. So as a responsible exporter of coal, it's in our interests to put a price on carbon because coal will continue to be consumed even in a world where renewable energy and other more efficient forms of energy become a greater part of energy that's consumed.

JOURNALIST:

(Inaudible)?

TREASURER:

Well, I think we are moving towards a global agreement and that is very important. We've got substantial commitments from many countries around the world, post Cancun, to move to reduce their emissions. What we must do is that we must get the comparative advantage by pricing carbon pollution in this country so we can become more efficient and become part of the exciting developments that are going to occur in terms of renewable energy as well. So we can be a coal exporter and we could also be a country which innovates and drives the technology for cleaner energy as well. We have to do both.

JOURNALIST:

This report states that we are in the top 20 emitters in the world. We're also one of the best resourced countries in the world and sorry, the report actually said that we're in the middle of the road as far as moving towards an ETS yet. Should we actually be doing more as a country to get higher to the top of the ranks where we can't really emit (inaudible)?

TREASURER:

I think what this report really shows is that we're at risk of falling behind. We're currently at about the mid level, but it's in our own economic interest to price carbon because we are such an important part of the global energy supply chain. That's why it's so important for us to do this, to get it right and to reap the benefits of a cleaner energy economy. Thanks.

(short break, then press conference resumes)

TREASURER:

Well, the Reserve Bank is quite rightly having a look at practices in the credit card industry where some customers are being gouged by surcharging. I welcome the initiative from the Reserve Bank. They are responsible for this area of public policy and I look forward to their conclusion.

JOURNALIST:

What do you think about companies charging exorbitant surcharges?

TREASURER:

Well, I think we've got to have a look at the practice. We've got to examine the extent to which it is gouging customers. These are very legitimate concerns so I do welcome the initiative from the Reserve Bank.

JOURNALIST:

Thank you.