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 April 2012

Interview with Nicole Chevastek

ABC Radio

SUBJECTS: Pricing carbon pollution and economic reforms; tripling of tax-free threshold; household and industry assistance; returning the budget to surplus; FoI

CHEVASTEK:

First, the Federal Government's flagged a tough budget but the cash, it seems, is still there to compensate low-income earners for the carbon tax and a multi-million dollar advertising blitz is on the way as well.  The Gillard Government is about to start depositing cash bonuses in bank accounts.  Families will get up to $100 per child and pensioners get $250.  The Government calls it compensation for the carbon tax.  The Opposition calls it a con.  Acting Prime Minister and Treasurer Wayne Swan, joins me now.  Good morning.

TREASURER:

Good morning, how are you going?  It's a brilliant day in South-East Queensland. 

CHEVASTEK:

Where are you right at this moment?

TREASURER:

I've just come back from the Sunshine Coast actually and I had a surf pretty early at about 6am.  It was beautiful in the water.

CHEVASTEK:

Action man!

TREASURER:

I just enjoy the surf like a lot of Queenslanders and a lot of Australians.

CHEVASTEK:

Acting Prime Minister, we are in a position where there is going to be a tough budget.  We've got dwindling revenues.  Is this a con, as the Opposition called it?

TREASURER:

Look it's really disappointing to hear that hysteria and scare mongering from Mr Hunt.  He used to be an advocate for carbon pricing, for a market-based mechanism, but of course the Liberals have gone back to the dark ages in terms of their attitude to climate change.  But what we are doing is putting a price on carbon.  That will be paid by around the 500 largest polluters and of course we use the revenue raised from that to assist households and also to assist industry.  That's what the Government said it would do at the very beginning and of course those cheques will be deposited in the accounts of pensioners and families with children who are eligible for family tax benefit.

And of course there's a very big reform here of the income tax system where we're tripling the income tax free threshold.  Those two things combined will provide additional assistance to households when the carbon price starts from the 1 July and of course some of those payments will come before that.

CHEVASTEK:

But how can you flag a tough budget, how can you preside over a budget where revenues overall are down and then say we're going to send you out some cheques to compensate you for the carbon tax?

TREASURER:

Well, there's two things here.  You see, we raise revenue from the carbon price and we use that revenue to assist with the price impacts which are relatively small, but we said at the very beginning we were committed to support households and to support industry.  You see, the Liberals have an entirely different policy.  They will cost households around $1300 per household and they will use that to pay to industry. 

What we're doing is the most efficient and of course the least-cost way of putting a price on carbon which drives that investment in energy efficiency and investment in cleaner energy and renewable energy.  That's what the Productivity Commission has found - this is the cheapest way to do it, it's the most efficient way to do it, so that we can as a nation in the 21st century be driven by cleaner energy and renewable energy and we must do that to have a prosperous economy into the future. 

You see, in Queensland and right along the coast there's a lot of people who've got an interest in us taking action against dangerous climate change because the consequences of that are not just environmental, they're also economic.

CHEVASTEK:

But Wayne Swan, you'll also be paying compensation to industry.  It's not just the Liberals.

TREASURER:

We are paying compensation to industry but what we are doing…

CHEVASTEK:

You're paying compensation to the big polluters.  I mean, to those of us on the outside it just sounds like a giant money-go-round…

TREASURER:

It's not that at all.

CHEVASTEK:

…where the polluters get compensated, the consumers get compensated, but no one actually pays in the end to stop polluting.

TREASURER:

No the people who will receive some assistance in industry are those trade- exposed, energy-intensive industries, but this is the least cost way of doing it.  And what this means, and what it will drive, is that essential investment that we need in cleaner energy and renewable energy.  That's how you make the adjustment.  You see, per capita, per head of population, we are the most [emissions] intensive users in the developed world and therefore we must combat that problem and we make this adjustment gradually, and that's how you go about doing it.

CHEVASTEK:

Where's the incentive though for the big polluters to stop polluting if you say we're going to whack a carbon tax on but we're going to then compensate you for the impact?

TREASURER:

Well, because what we are providing here is assistance to those trade- exposed industries which are really energy intensive.  This will drive and is beginning to drive investment in renewable energy and that's the whole point of a market based mechanism. 

Mr Abbott and Mr Hunt have a policy they call ‘direct action' which is going to cost the taxpayer an enormous amount of money and they will then use that to assist industry.  It's the wrong way to go about it, it's not the most efficient, it's not the fairest, and it doesn't drive that essential switch to cleaner renewable energy.

CHEVASTEK:

There's a major advertising blitz accompanying this compensation policy.  How much will that cost?

TREASURER:

Well, the Government is taking decisions on that at the moment.  We will have to advertise some of the important parts of this package so people know what they're getting and why they are getting it.  There's nothing unusual about that at all, nothing unusual at all.

CHEVASTEK:

Labor often attacked the former Liberal government's tendency though to spend taxpayer dollars on advertising campaigns and now you're doing the same thing.

TREASURER:

No, there's a difference between essential advertising and some of the political aspects that came in the advertising of the Liberal Party.  This is about payments…

CHEVASTEK:

This could be seen as political too.  I mean, the carbon tax is associated with incredibly low polling for Labor.

TREASURER:

Well, the carbon price is something that has passed the Parliament and it is a very significant economic reform and you're right, it has been really hard fought.  But most long-term important reforms for Australia have always been hard fought politically.  There has been a cost to the Government but what we are determined to do is the right thing by the economic and environmental interests of this country long term and we won't be deterred in doing that by a bit of bad opinion polling. 

The fact is we've got to look our kids in the eye and say we did the right thing.  We did the right thing to reduce carbon pollution into the atmosphere, to combat dangerous climate change, but also to assist people with the price impacts of that.

CHEVASTEK:

Acting Prime Minister, isn't it time to rethink this commitment to delivering a surplus?  Tim Colebatch wrote in the Age earlier this week that this was a reckless policy and he says that no Australian Government has ever proposed such a huge withdrawal of spending from the economy.

TREASURER:

Well, it's funny that critics of what we're doing in terms of coming back to surplus didn't make that criticism when we outlined our transition to surplus a long time ago.  Now, a number of them including Mr Colebatch have become quite loud in recent times so I certainly do welcome the opportunity of explaining to Australians why we need to return to surplus, because basically a return to surplus is Australia's best defence at a time when the global economy is changing dramatically.  It sends a very important message to the world about the state of public finances in Australia, which is strong. 

It is entirely appropriate to do this when we have growth returning to trend, when we have unemployment at 5.2 per cent, when we have a very big investment pipeline and of course this has been recognised by the rating agencies.  We've got the gold-plated AAA rating from the three global agencies for the first time in our history.  It's very important given this global instability and uncertainty that Australia sends a message to the world that our financials are strong but also giving the Reserve Bank room to move, should it wish to do so, in terms of interest rates at some stage in the future.

CHEVASTEK:

Well, this commentator who is not associated with the Opposition in any way says it sends the message that Australia is at risk of being sent into recession.

TREASURER:

Well, I've read that and I just disagree with Mr Colebatch and a number of others who are making that point.  The Government has to take some important decisions in this budget. 

When we moved to support our economy during the global financial crisis and the global recession we were criticised by many people then, and what I say to people is that you can't be Keynesians on the way down and not be Keynesians on the way up.  We have an economy returning to trend, we have an unemployment rate of 5.2 per cent, we have a huge investment pipeline in Australia, not just in resources, and because of those reasons and given global conditions it's really important that we bring our budget back to surplus.

CHEVASTEK:

Just before I let you return to the surf Wayne Swan, the Age is also reporting this morning that the Government spent $10 million on high performance shredding machines in the FOI department...

TREASURER:

…just complete rubbish.  The fact is that this Government has reformed FOI.  We put a very big importance on it.  It costs the Government and taxpayers of Australia a lot of money and we spend an enormous amount of money, and time, and energy implementing our FOI laws.  The story is complete rubbish.

CHEVASTEK:

Have you spent $10 million on high-performance shredding machines in the FOI department?

TREASURER:

I'd have to go check all of those facts.  The thing that I know is that we spend a lot of the public's resources on FOI and that takes a lot of time and a lot of effort.  We take it seriously…

CHEVASTEK:

How can you deny the story if you don't know if the…

TREASURER:

Because the implication in the story Nicole is that we don't put any effort into FOI laws.  We put an enormous amount of time, effort, and money into FOI laws and the fact is that that amount of money would far exceed any expenditure on any particular item they want to mention in that article.  That's my point.

CHEVASTEK:

Acting Prime Minister, I know your time is tight.  Thank you very much for joining us this morning.

TREASURER:

Good to be with you.