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

11 July 2011

Interview with Geoff Hutchison

ABC Radio, Perth

11 July 2011

SUBJECTS: Clean Energy Future; Carbon Price

HUTCHISON:

I'm joined by the Federal Treasurer Wayne Swan. Mr Swan, good morning.

TREASURER:

Good morning, Geoff.

HUTCHISON:

This morning our listeners have been told the average cost to their household would be $9.90 a week with $10.10 in promised compensation. So you're telling them today that with a carbon tax, they'll now be 20 cents a week better off. Is that you're best selling point?

TREASURER:

Well, what we're saying is that we will cover the average expected price increase for something like 6 million households. You're quite correct with the figures that you quoted. It's very important that that additional assistance is provided. As you know what we're doing here is putting a price on the carbon pollution for the 500 largest polluters. That will be passed through to the public through a variety of mechanisms. So there will be a price impact and we expect the impact on the inflation rate to be 0.7 per cent – so a relatively small impact. And the figure you quoted before is the average price increase and the average amount of assistance.

HUTCHISON:

Now I know that it's been quoted that 9 out of 10 households will receive some benefit here but millions won't get enough to fully offset the cost of living increases. What do you say to those people, that that is just a fair price for a carbon tax?

TREASURER:

Well, what I say is that we have endeavoured to provide assistance to families. We've endeavoured to provide tax cuts, additional family assistance and other support to assist as many as we possibly could in a responsible way. And I do understand that not everybody is going to receive assistance in full and there will be some that will receive no assistance at all. What we've endeavoured to do here is to provide assistance basically to the low and middle income earners who have the greatest difficulty in meeting these price increases.

HUTCHISON:

You say that this is the best way to drive the investment in innovation. Is the price signal to major emitters strong enough for them to change their behaviours?

TREASURER:

I certainly believe so and I believe that investors believe that as well. And investors have been crying out for a price on carbon particularly so we can get the investment that we need in our power generation industries and it's very important to send that price signal. I mean, with this announcement yesterday we really fired the starter's gun and now investors will have confidence that there will be a price on carbon. And they will make the investments that we need, particularly in energy efficiency and most importantly in renewable energy. What we've got to do is change the mix. Of course at the moment so much of our power comes from coal but over time we need to see that next change, move towards gas further and of course to renewable energy and that takes some time. That's why we needed to put this price on carbon out there early to end the uncertainty. And of course the sooner you act the less the cost. The longer you wait, the higher the cost.

HUTCHISON:

Mr Swan, you've promised billions for trade exposed industries but still a raft of protesting voices this morning. The Minerals Council says you're taking the baseball bat to the Australian economy. Others say it puts the resources sector at international disadvantage. Chambers of commerce everywhere say a carbon tax will weaken the economy. Now are they wrong? Are they bleating complainers? Or are they genuinely worried that you are taxing whatever advantage they enjoy presently?

TREASURER:

Well, if we don't put this price on carbon then there will be a far higher price paid by all of those businesses. So the truth is that some of those comments are exaggerated, some of them are not justified at all, and others will simply want more information. The fact is we are going to see really strong growth in our resources sector in the years ahead. That is not in dispute and the fact is that the investment pipeline that is going into resources is strong in the full knowledge that there is a carbon price coming. Many of the investors particularly in WA have already factored into their investment plans a carbon price because they're global companies who understand there is a global price as well. So investment in resources will remain strong. All of our modelling shows that but of course we'll have some sectors of the industry that will want to play some politics with this. But we understand this is a very important reform and I believe many of the investors understand why this is an important reform.

HUTCHISON:

Millions of dollars to be spent on green power and clean technology. How will we get to measure whether that money has been well invested and who is going to determine where that money goes?

TREASURER:

Well we are going to set up the Clean Energy Finance Corporation, and we're going to use a model of government, which is pretty similar to a body that we've got at the moment which is called EFIC so it will be run independently and it will be run on commercial line. The investment mandate will be out there for all to see and it will be fully accountable and transparent. It is very important to commercialise some of the innovation that is going on. We're not getting enough of that commercialisation at the moment. We think it's important to fill the gap while the carbon price gets up and running with that sort of additional assistance so we can, if you like, really push along the investment in this sector because the problem here as many of your listeners would realise is that these are all long term challenges and it takes a long time not just to get these investments up and running but to produce the results that we want to see. So the sooner we get stuck into it the better and that is why we've got the investment there in the Clean Energy Finance Corporation to push that commercialisation along so we don't see the situation where some of our most important projects go offshore and are not financed on shore.

HUTCHISON:

And when we talk about independence and transparency that will be welcome to a lot of people because do you accept there is wide concern about your Government's ability to spend billions of dollars of taxpayers' money?

TREASURER:

I think I would accept that most people accept that when the global recession hit this country we moved in a responsible way to support our economy and we got a very good result – one of the best in the western world. I understand that there are critics of that stimulus and I understand that some parts of that stimulus had some challenges but overall a great impact for Australia, a very good result which puts us in a position of strength. They also understand that when we go about carbon pricing its complex and people will want to see everything that we do and we're quite happy to put it all out there which is why we published so much of the background yesterday. It's why we published the modelling and we are up for a very full public debate about all of these issues in the years ahead because this is a fundamental economic reform. You can't be a first-rate economy in the 21st century unless you're powered by clean energy.

HUTCHISON:

Treasurer, the big sell has begun and I guess when everyone arrives the next election is going to be a referendum on the carbon tax. Will you be happy to live or die as a government on this issue?

TREASURER:

Well, putting this policy forward is not about politics and it's not about re-election. It's about getting the economic and environmental fundamentals right. In Western Australia, you understand this. You are already living with the advanced affects of climate change. We've got to move in this area not just for the environment but for the economy because if we don't deal with that we can't have a prosperous economy because our environment is challenged by dangerous climate change. So we're going to put this argument at every level. We'll put it at the environmental level and we'll put it at the economic level and I'm very confident that as we go about explaining this very important economic reform Australians will understand its importance to the future of their living standards and also the future of the environment for their children and their grandchildren.

HUTCHISON:

Thank you for talking to me this morning.

TREASURER:

Good to talk to you.