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

12 October 2011

Joint Press Conference
with
The Hon Greg Combet AM MP
Minister for Climate Change and Energy Efficiency

Press Conference

Canberra

12 October 2011

SUBJECTS: Clean Energy Future Package

TREASURER:

Well today we saw an historic vote on one of the most important economic reforms in a generation; an historic Labor reform to strengthen our economy for the future and to make sure that we look after the interests of our children and our grandchildren. As I said, it was an historic Labor reform, a defining moment for our economy and a defining moment for our country, and it owes a lot to the determination and strength of our Prime Minister.

Now today we're going to announce some appointments for some very important bodies, the Clean Energy Finance Corporation and the Energy Security Council.

The Clean Energy Finance Corporation that we will establish will be a $10 billion finance corporation which will support clean energy, particularly renewable energy. It will work hand in glove with the private sector to encourage investment in clean energy and low pollution technologies. I'll get Greg to say a few words about that in a moment.

I'm pleased to announce today that the first chair will be Jillian Broadbent; she will chair the Clean Energy Finance Corporation. Now Jillian is a member of the board of the Reserve Bank, a position she has held for over 13 years. She also serves on the boards of Woolworths and the ASX and was previously a director of Woodside, CocaCola and Qantas. Her first job will be to conduct a review of the investment mandate of the Clean Energy Finance Corporation and its governance structures.

We're also appointing David Paradice and Ian Moore to assist Jillian in establishing the new body. David has over twenty years' experience in funds management and manages a $6.6 billion investment fund. Ian has over twenty years of finance experience and is an expert in risk and return and profiles of debt and equity financing. This is a great team and I look forward to receiving their report early next year.

We plan to pass legislation for the corporation in the first half of 2012, with the corporation to commence operations in mid-2013.

Another very important part of the reform package will be the establishment of the Energy Security Council. This body will provide advice to the Government on measures to address energy security risk that may arise in the coming years. Energy security is crucial in a modern economy like ours. So this body will play an important role as well.

And today I'm announcing that Michael Vertigan will head up the Energy Security Council. He is currently a director of a number of public companies, including Aurora Energy Pty Limited and chair of MyState Limited and chair of the Solar Flagships Council.

Now Greg and I look forward to working with both these bodies in the years ahead and with these people that we're announcing the appointments of today. They are a very significant step forward in the Government's program - putting in place the fundamentals of a modern competitive economy which is powered by clean energy. Over to Greg.

COMBET:

Thank you, Treasurer. Of course, we have of course seen the passage of the Clean Energy legislation through the House of Representatives this morning, which was a hugely important step in building what we need to build for this country in the years ahead to cut our greenhouse gas emissions and to drive investment in cleaner technologies. But a number of other important initiatives of course the Government is determined to see through.

Our colleague, Minister Ferguson, introduced into the House of Representatives today as well the Bill to establish the Australian Renewable Energy Agency. And that will of course be debated and we'd anticipate being passed through the House of Representatives in coming weeks.

The Clean Energy package of course will now transfer to the Senate and the debate will occur there. And we're looking forward to its passage through the Senate.

But in addition, of course the Government is taking these further steps, as we announced our intention on July 10 to establish the Clean Energy Finance Corporation and the Energy Security Council.

Ms Broadbent of course will have a very important role, according to the terms of reference that the Treasurer is releasing today, in establishing the investment mandate and the Government's arrangements for the Clean Energy Finance Corporation. And it's important to understand its role very clearly.

The carbon price mechanism in the economy will be the fundamental reform that drives the changes towards investment in clean energy and drives the emissions reductions in our economy. But the finance corporation will be an important institution to support that change because there are circumstances that many are familiar with of course in the business community that, as we make this change and investment is required in cleaner energy; then there's often an important role to be played by a corporation of this nature to help facilitate the investments. To overcome some of the market barriers that there are for private finance to be made into clean energy investments.

The Clean Energy Finance Corporation will make commercial investments in the form of loans, loan guarantees or equity investments and mobilise private sector finance. It's not there to be replacing private finance but to help fill the gap, if you like, to ensure that the investments to bring those technologies to the marketplace can be made.

And Ms Broadbent's role, in conducting the review and ultimately as the inaugural Chair of the finance corporation, will be to get that investment mandate and the governance arrangements for the corporation in a position where the Government will be able to legislate it in next year, so that it can kick off from 1 July.

JOURNALIST:

So you talk about commercial loans from the Clean Energy Finance Corporation, Mr Combet, are they likely to be concessional ones, to kick things off? Or will the interest rates be the same? What are you thinking at the moment?

COMBET:

Well these are the sorts of things that Ms Broadbent will be consulting about. But this will be a commercially oriented corporation. And we'd expect in time that it would provide returns to taxpayers.

TREASURER:

It certainly will be providing returns to taxpayers. And it will have the options, if Ms Broadbent recommends so, to do commercial loans, it may have the option to do concessional loans, and it'll certainly have the options to do equity investments.

One of the reasons why we've got someone of such high quality and stature as Ms Broadbent is that we want to get the best governance arrangements possible, as well as the best investment mandate we possibly can. That's why we're taking our time. That's why we've announced these three appointments today, so they can work on the investment mandate. They can work on the governance arrangements, because this will operate independently of Government in terms of its investment mandate. That will be out there for everybody to see. And it's very important that it operates commercially.

JOURNALIST:

The carbon price is supposed to be the clear investment for people who want to make investments in different technologies. But is it really going to do that when Tony Abbott has pledged in blood to repeal it within a couple of years.

TREASURER:

Well, the carbon price is what does the heavy lifting and it's what precisely Tony Abbott doesn't get.

The carbon price applies as it does across our economy, drives the investment in the first place into cleaner energy technologies. But as anyone who is associated with this knows, there is frequently a market gap, and that market gap needs to be filled with a body like the Clean Energy Finance Corporation to work commercially with the private sector.

JOURNALIST:

One of the reasons that there's a market gap is that prime investors are concerned about risk in relation to renewable energy projects. How can taxpayers be confident that their money won't be at risk and that there be a repeat of some of the incidents in the United States with Solyndra, where the company went bankrupt?

TREASURER:

Well that is why we have appointed people of such stature to this body, to operate independently of the government and to operate with an investment mandate that they have developed. These won't be decisions that are taken by government. They'll be taken by an independent board, headed by Ms Broadbent - very important that this operates in that way so there is confidence in all of its procedures.

JOURNALIST:

Treasurer, you say this is a Labor reform. The Greens, they claim it very much as a Green reform and have pointed out that without Adam Bandt in the seat of Melbourne, this would not have happened.

TREASURER:

Well I think this is very much an historic Labor reform; Labor to the bootstraps. When you look at the structure of the clean energy package, whether it's the trebling of the tax-free threshold, whether it's the assistance to industry, whether it's the steel transformation plan or whether it's the Clean Energy Finance Corporation, it's Labor to the bootstraps.

JOURNALIST:

Given that there's uncertainty created by the fact that the Coalition have pledged to repeal the carbon pricing mechanism, do you give a guarantee today that Labor in opposition would stand by the package, if you were forced into opposition after the next election?

TREASURER:

We have just demonstrated in the Parliament today that we can pass through the House of Representatives the most significant economic and environmental reform in a generation. That vote has just taken place in the Parliament. What we've seen is a Government and a Prime Minister absolutely determined to put in place the long-term reforms which protect our prosperity.

The real questions to be answered here are to be answered by Mr Abbott. Is he going to rip out all of the pension increases, all of the increases in family payments? Is he going to do that? Or is he going to stick with the carbon package?

JOURNALIST:

But can you send a signal…

TREASURER:

Which one's he going to do? He can't have it both ways.

JOURNALIST:

Can you send a signal today to business and industry that Labor in opposition would stand by the package if there was an attempt to repeal it?

TREASURER:

Well I've just said that this package is Labor to the bootstraps. This is a package that has been developed by ministers who have spent a large slice of their political life working on these sorts of issues, working on the issues of reducing carbon pollution, putting in place an emissions trading scheme. We are committed to this package.

JOURNALIST:

Treasurer, you said that this was a defining moment for our country that this was Labor to the bootstraps and you talked about the Prime Minister's role in it. Small point, why isn't the prime minister here?

TREASURER:

The Prime Minister is out talking about all of these things. She's been out this morning and she'll be there in Question Time to talk about all of these things.

Minister Combet and I have particular responsibilities for these appointments today, and we're pretty proud to be here talking about them, and I think you'll hear from the Prime Minister about them as well.

JOURNALIST:

But it's been very damaging for the Government though, given the Prime Minister's pre-election pledge that there would be no carbon tax under a Government she leads.

TREASURER:

I don't accept the premise of that question. We have all supported putting in place a price on carbon pollution. We have been through a process consulting through the multi-party committee, consulting with industry. We have done all of those things and we have today passed legislation which puts a price on carbon pollution and moves to an emissions trading scheme. That's a pretty important reform and it sits very well with all of the commitments that have been given by ministers in this Government and the Prime Minister.

JOURNALIST:

So basically the new polls are wrong then that show Labor's rating below thirty per cent?

TREASURER:

I'll tell you this about opinion polls. The Prime Minister, myself, Minister Combet will be able to look subsequent generations in the eye and say we did the right thing by our children and our grandchildren and future generations. That's not something that Tony Abbott is going to be able to do. The pages of history are not going to report very well on Tony Abbott.

JOURNALIST:

Let's talk about the carbon price for a minute. So it's $23. The EU price at the moment is somewhere between $14 and $15. So is the Australian price too high given the international price is, you know, almost half of that? And you know - is there an option of getting rid of this floor price that seems to have business worried?

COMBET:

I think it's important to bear in mind that, if you'd asked that question five or six weeks ago, of course the EU price was very different and significantly higher. We're in the midst of, as you're well aware, a debt crisis in Europe in particular that's created a good deal of depreciation in a number of markets, including in the European carbon market, and the price is currently down.

We have a fixed price in place for three years and we'll go to a floating price on 1 July, 2015. I attended a function recently with a number of people who are advisors in carbon markets. And none of them could predict to me just exactly where the European price might be on 1 July, 2015. But with all of the work we've put in, in formulating this carbon price mechanism, we think we've got the price about right, both to drive emissions reductions in our economy and about right for the time when we link up with the international carbon markets.

Upon the passage of the legislation, in addition to establishing these institutions, one of the important things that the Government will turn to, and obviously they're one of my principle responsibilities, will be the development of the relationships with other markets internationally. And I'll start that work in Durban in a couple of months' time.

JOURNALIST:

Minister Swan, can we just come back to your questions earlier? You're saying this is a historic Labor reform. Tony Abbott says that he would get rid of it. But you, in opposition, would have the power, with the Greens, to stop that, if he wins and tries to get rid of it. Why can't you just give a guarantee that you would do all in your power to protect it into (inaudible).

TREASURER:

Well of course we would. I mean, I'm sorry. I don't know if that's the conclusion you drew from my previous answer. Of course we would be supporting the legislation that we took to the Parliament and continued to support it in the Parliament in both of the House of the Representatives and the Senate. But I mean the real question…

JOURNALIST:

(inaudible)

TREASURER:

No we have, this legislation has passed the House of Representatives today and it's going to go to the Senate. We hope that it will pass through the Senate.

JOURNALIST:

Will you do that out of Government?

TREASURER:

And we believe - and yes and we will do that. The question for Mr Abbott is to admit that he's going to rip out the increases in pensions, family payments or he's got to admit - if he's not going to admit that that's the case, that he won't scrap the scheme. There's a big question for Mr Abbott here. Because if he's maintaining his point he [will] scrap the scheme, he has to admit that he's going to rip out the increases in pensions and family payments. Now which one is it? We know he's a weathervane on climate change. Which one is it? That's the question for him.

JOURNALIST:

The Prime Minister said he would not rip out the scheme yesterday. She said he would not repeal it. The Prime Minister claimed yesterday…

TREASURER:

Yeah. That's right. Well because he's got to admit, if he's not going to repeal it - sorry?

JOURNALIST:

The Prime Minister yesterday stated that Tony Abbott would not repeal the scheme.

TREASURER:

Yes. And if he's not going to repeal the scheme, that means he will keep all the increases and pensions.

JOURNALIST:

Will the Government disclose under the Steel Transformation package, which companies are getting the money? How much they're getting and also the benchmarks that they have had to achieve to get the assistance?

COMBET:

There's - there will be some further guidelines that our colleague, Minister Carr, will put together for the Steel Transformation Plan. But the general obligations are described in the legislation and we'll be seeing those through.

I just think it's very important for people to appreciate the difficulties that are confronting the steel industry at the moment that's motivated the Government to take these steps. And I think, as you're increasingly familiar, there's a very difficult marketplace in steel internationally. Our high dollar has meant that our exports are not as competitive as they once were, in steel that is, and that imports are cheaper. And of course we've got the high commodity prices with iron ore and coking coal. It's a very tough time for a steel manufacturing company, particularly when competitors such as China are producing steel at such large scale.

We need large capital investments in our steel industry in the years to come. And the finance providers to the steel companies need to have confidence about the industry as well. And all of this is conditioned the Government's approach to the Steel Transformation Plan. And its importance can't simply be measured by a couple of barometers that we've seen discussed in the media debate in recent days.

The importance is that the Government is standing behind the steel industry, supporting the jobs, supporting important regions like Whyalla, the Illawarra, Western Port in Victoria, and standing up for the industry in tough times.

This support will help those companies muster the private finance as well, that they will need to make investments to modernise their business. And that's the key test.

JOURNALIST:

Mr Combet, this legislation is designed to meet a minimum emission reduction target of five per cent by 2020. But as I remembered that pledge, it was the one that was based on other countries not necessarily doing anything. And you've been telling us a lot about how other countries are doing heaps.

So do you think it's possible, likely that in fact Australia's emissions reductions are going to have to be more than five per cent or likely to be more than five per cent by 2020?

COMBET:

Well of course we've established our targets and a set of conditions that you're pointing to. But this is a matter now for the Climate Change Authority to provide advice to Government. And of course we've appointed Mr Bernie Fraser, the former Reserve Bank Governor and Treasury Secretary, to be the inaugural Chair of the Climate Change Authority. And this is precisely the sort of thing that he's turning his mind to.

I'll be attending, as I said before, the next UN climate change negotiations in South Africa in a couple of months' time or a bit less than that, where I hope we can take steps forward. Individual countries are moving ahead to do various things. And it's not to be underestimated, the significance of the decision by the Chinese Government to implement emissions trading in a number of their cities and provinces. I'll be discussing with other countries that have carbon markets in operation or that are planning to introduce them, when I'm in Durban. And all of this will be taken into account by the Authority, as well as taking into consideration the targets and the conditions that we have described. All of that will be considered when recommendations are put forward.

And you've got to bear in mind too, that it's by May 2014 that those recommendations would need to be acted upon when the Climate Change Authority suggests what the initial pollution caps for the emissions trading scheme should be. So there's a bit to go with that. And there's a bit of work in the international arena as well.

JOURNALIST:

Treasurer, does the - the package does make a cost to the budget for this year and for next.

TREASURER:

That's right, yes.

JOURNALIST:

Does the passage of the bill enable you to cut into the various green programs that the PC has identified as being expensive and inefficient? And would we see those…

TREASURER:

Well they're entirely separate questions.

JOURNALIST:

But will you be able - are you free now to have a look at many of the programs that the Federal Government is running at a cost…

TREASURER:

Well I'll throw that to Greg. But what we have said publicly is that we do want to sit down with the States and talk about a range of programs and where they're going.

JOURNALIST:

But what about your programs, the federal programs, because if this is a main federal driver, obviously there has to be a question mark over those programs?

COMBET:

I can answer that for you. I'm sure you've been following events of the last 12 months or so. But I've been in the process of trying to stabilise those programs and particularly the Solar Credits program that provides support for the installation on domestic household's solar PV panels. And we've reduced, as of 1 July just past, by a significant factor, the multiplier - or the credits that are available to support that. And of course these operate in conjunction with various State and Territory incentives for solar panels as well.

The guiding principle that the Government is committed to is to try and reduce our emissions at least cost. There of course are valid reasons why you would provide support for particular technologies, like solar panels. But our fundamental driver is to reduce the emissions in our economy at least cost. And that will continue to condition our approach to these policies.

JOURNALIST:

Minister Combet, do you think that there is a need to renew Government advertising in order to back in this reform, given that all of the attack advertising against the reform is still obviously playing on people's television screens? And I think the Government ads are off the air. Are you intending to use advertising to support (inaudible)?

COMBET:

No decisions have been made about that at this point in time, but this relevant to some of the other questions that were raised.

We've stared down a very hostile scare campaign to make this reform. And we are not going to be intimidated by what's brought against us. This is in the long-term interest of this country. And we will stand by it and continue to do the work that we need to do to implement these reforms.

JOURNALIST:

Do you see the campaigns being run on television at this time as basically a rip-off of the very successful WorkChoices campaign?

COMBET:

To be frank, I haven't had time to watch television. I haven't seen any of them.