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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

11 July 2011

Interview with Madonna King

ABC Radio, Brisbane

11 July 2011

SUBJECTS: Clean Energy Future

KING:

Good morning.

TREASURER:

Good morning Madonna, it's good to be with you and good to be home.

KING:

This is going to cost $4.3 billion to the Budget over four years, $2.9 billion in the first year. Can we really afford this now?

TREASURER:

Yes, we can Madonna, but this is a very big economic and environmental reform, and big reforms usually have a significant upfront cost but the charge on surplus over the forward estimates is relatively modest. It is affordable and it's certainly very worthwhile.

KING:

But $4.3 billion, would that be better spent on something that we could see immediately – health care, education?

TREASURER:

Well, this is a long-term reform, Madonna. The whole point of putting in place a price on carbon pollution is to drive the investment in energy efficiency and renewable energy. And of course that takes time and what we have to do is send the signal to the investors through the carbon price that investing in innovation and renewable energy and energy efficiency is the way to go. But having announced the carbon price that begins virtually from today. This will pass the Parliament. This will provide the certainty to investors, particularly to invest in cleaner power generation and for everybody in the economy to be more energy efficient. And that takes time and of course sometimes there's an upfront cost with that.

KING:

You talk about certainty. The most common question into my in-tray overnight is how do you actually model something to forecast the specific price increase and how fail-proof is it?

TREASURER:

Well, we've got a very big team, Madonna, in the Treasury. The team in the Treasury is the same team that modelled John Howard's emissions trading scheme and it's also the same team in the Treasury that modelled the GST, and its price impacts and I'm told that they got most, they got all of that actually, entirely correct. I know there will be a lot of people who will be talking about the price impact. Well, the price impact here is less than 1 per cent.

KING:

That's what you say. The Food and Grocery Council says the modelling perplexes them and they want you to release all the modelling – the Treasury work on food prices. Will you do that, release it publicly?

TREASURER:

Well, the Food and Grocery Council have had access to the Treasury. I will certainly give them access to the Treasury. The Treasury is more than happy to talk to them about how we've done our modelling. They are a very highly professional team that are widely acknowledged as being very professional and the best in the business.

But think about this Madonna, what we're doing here is putting a price on carbon pollution for the 500 largest companies. That's where the price impact is felt first and foremost. Yes, that will pass through the system, but I think commonsense tells you that's it's not going to have such a large impact as it flows through as something much more significant like the GST.

KING:

A lot of people will be thinking this morning though, why trust you when you said we wouldn't have one?

TREASURER:

Well can I deal with that very directly because during the last election campaign I probably said on your program that we were supporting an emissions trading scheme. I said that very clearly. The Prime Minister said that very clearly. But what we have in this scheme is a fixed price period which operates like a tax, moving to a floating price after three years. We've always argues for an emissions trading scheme. John Howard argued for an emissions trading scheme. Malcolm Turnbull favours an emission trading scheme.

KING:

So why the urgency now? Why not put this to voters at the next election so they can have a say on whether they want it or not?

TREASURER:

Because the longer we delay the more costly it becomes and the most important thing is to get the certainty out there for business investment. As you know Madonna, electricity prices have been going up without a price on carbon and one of the reasons has been the uncertainty of investment because nobody has put in place the investment signal they need to make the investment in power generation.

KING:

What impact on global emissions do you believe this will have if China, the US, India are not acting in the same way?

TREASURER:

Well, most other countries are acting and that's the whole point Madonna. A few weeks ago we had the report from the Productivity Commission, which said Australia was in about the middle of the pack when we looked at many other countries including countries like China and the United States. Our target here is minus 5 per cent by 2020. We will remove through the scheme about 160 million tonnes from the atmosphere but there's a lot more that has to be done.

The aim here Madonna is to keep the rise in global temperatures at 2 degrees centigrade by the end of the century. If we don't do that catastrophic climate change is going to impact on the Great Barrier Reef and on our climate. That produces environmental damage and economic damage.

KING:

Couldn't a consequence of this be that you increase the cost of Australian manufactured goods but not affect imports?

TREASURER:

Well, that's why we have put in this package some very important measures to assist those trade-exposed industries which can't pass on necessarily, some of the price rises which flow from a price on carbon pollution. We've paid a lot of attention to this and this is very important in the context of Queensland because we have many industries that are very energy intensive.

So we've paid a lot of attention to this and we've worked very hard on putting together a package of assistance to energy-intensive trade-exposed industries which I believe will assist them to make the transition. But it's even more important Madonna, for us as Queenslanders to get this price on carbon pollution because many of our energy-intensive industries will be threatened by trade barriers if we don't get a credible approach to carbon pollution.

KING:

How many of these top 500 polluters are based in Queensland?

TREASURER:

I couldn't give you the exact figure now but I'm happy to get back to you on that. Sometimes there will be differences in terms of the numbers but I will get back to you with that.KING:

Alright, and on compensation Tony Abbott revealed yesterday that someone on a single income, one child, on $65,000 a year will be $43 a year worse off. Is that an anomaly and how many more anomalies like that are there?

TREASURER:

Well, first of all that's about 90 cents a week, but 6 million households will be covered for the entire or average price impact of the scheme. Now what we are doing is we're providing assistance in a variety of ways Madonna. We're providing tax cuts and, by the way, a really big tax reform here by lifting up the tax free threshold to $18,000.

KING:

That doesn't take away from the fact that someone on a single income, one child, is going to be worse off.

TREASURER:

I'll come to that. So there is additional assistance by way of tax cuts, additional assistance by way of family payments and some other supplements, and of course on some occasions and some rare instances it may not necessarily flow through in full. This would be one of those cases.

KING:

Would you be honestly doing this now if it wasn't for pressure from the Greens?

TREASURER:

Absolutely because this is the fundamental, economic and environmental reform that our country needs. But I don't know what I'd say to my kids or grandkids in 10 or 20 years time if I had to tell them that I sat back at this critical decade and did nothing about climate change. The fact is this is one of the great challenges – economic and environmental – of our lifetime. The fundamental reform that we have to do to secure future prosperity, it must be done. It can't be put in the too hard basket for any longer.

KING:

Do you think if you put this to voters at an election that was held this Saturday it would actually pass?

TREASURER:

Well Madonna, I'm not worried about the politics of it. What I've got to do is get the policy right for Australia. That's what the Government is concentrating on. This will go to an election and we'll be judged on this – I don't think there's any doubt about that – at the next election. This will be a central part of that campaign, but the motivation at the moment is to get the policy right because the longer we delay, the costlier it becomes.

KING:

And the second biggest question into my in-tray overnight. How many extra bureaucrats will need to be employed to deal with this?

TREASURER:

Well, we've got some new bodies that are being established, for example the Climate Change Authority, the Clean Energy Finance Corporation. There certainly will be some additional people working in there, no doubt about that. But this is a very big reform and the monies are going overall to assistance to families and households on the one hand and transition into industry on the other.

KING:

And Treasurer, you said you'll get back to us on how many of the big 500 polluters are here in Queensland. We can expect that later today?

TREASURER:

Yes, I'll get you a figure but it won't be a final figure.

KING:

Wayne Swan, thank you.

TREASURER:

Thank you.