SUBJECTS: Emissions trading, the global economy, ALP pre-selection.
ADAM SPENCER:
Federal Treasurer Chris Bowen confirmed yesterday that the carbon tax would be dumped a year early. We'll move to an emissions trading scheme next year, a year earlier than planned. Chris Bowen is our guest, his first time on the show since he's been Federal Treasurer. Good morning Treasurer, and congratulations on your recent appointment.
CHRIS BOWEN:
Thanks Adam, good morning, how are you?
SPENCER:
I appreciate the full details will be made known later in the week, but you can confirm that we're going to move from a fixed price for carbon to a floating price a year earlier than planned?
BOWEN: Yes, that's the direction that the Cabinet's decided to head in Adam, and it's a sensible move for the times. When you look at the economic situation in the world, and facing Australia with the mining boom coming off and coming to an end, when you look at the price of carbon around the world – we were always going to move to an emissions trading scheme as you've said. We think the sensible thing to do is to move to it earlier.
SPENCER:
Was it a mistake to fix the price in advance from the start of the scheme? Shouldn't they have just floated right from the beginning?
BOWEN:
No, look I think what we've said is that there was always going to be an emissions trading scheme. New Prime Minister, new Climate Change Minister, new Treasurer, new Cabinet, fresh set of eyes, looks at the issues, looks at the development in the world economy since then, looks at the way we need to spur investment in the non-mining sector as well, looks at cost of living, and says well we think it's sensible to bring it forward.
SPENCER:
When the old minister in the area, Greg Combet, was asked in June why don't you change this, he said it'd be difficult to do, we'd have to negotiate a new round of negotiations for Europe, legislative change and the like. It proved too difficult for Greg Combet only a month ago.
BOWEN:
Well it's not without its challenges, not without its difficulties. It does have an impact on the Budget. We've said we'd do it in a revenue neutral way, which means there are some decisions to be made there, which the Expenditure Review Committee of Cabinet has been working through. And I'll be announcing further details of that in the next day or so. But it's not without its difficulties, but nothing is.
We think this is a challenge worth meeting, we're committed to a price on carbon, we think the market is the best way of doing it. We think climate change is real, we think the market is the best way of dealing with it, and moving to an ETS earlier is a sensible measure.
SPENCER:
It's suggested it will cost anything up to 10-15 billion dollars. Are those sort of price estimates accurate?
BOWEN:
No I've seen those estimates and I have said it's significant, several billion, but those estimates are way off. I've seen Mr Hockey out there saying that. That's way off. But I'll be announcing full details. But look, you know, if you're going to have a carbon price, then there's going to be elements of budgetary impact.
The alternative is the Opposition who says they'll get rid of the carbon price completely and yet still have the measures in place which would see subsidies to polluters. And that's not going to bring down emissions, that's not going to make a difference, but it is going to have an impact on the economy, it is going to mean higher taxes. So we think we, on balance, have the sensible way forward.
SPENCER:
It is being reported that the compensation packages to individuals are not going to be rescinded, is that accurate?
BOWEN:
That's correct. I've said we're not going to amend the household assistance package...
SPENCER:
With the greatest of respect, Treasurer, that package was there to ameliorate the impact of a $24 carbon price. Surely it's weakness on your part not having - if you're looking for the savings, surely you'd take the savings from the compensation for the package that's no longer in existence?
BOWEN:
Well look, people have factored it into their budget, they've factored in that household assistance package, it is there to compensate for a carbon price. Yes, the carbon price will be less, but we think we can sensibly deliver this without amending the household assistance package.
SPENCER:
With the greatest of respect, surely the test of leadership and strength is either to stick with a package like this in the first place, when it is unpalatable but it's the right thing to do. Or, at least, if you're going to rescind the package, also rescind the compensation that comes with it. You've effectively just given people a handout for price increases in their electricity bills that they're not going to see anymore.
BOWEN:
No, I think the test of leadership Adam is to respond to changing circumstances, and to respond to changing circumstances in the world economy, and that's exactly what we're doing. And if we can come up with a sensible package, which pays for this without affecting the household assistance package, I reckon that's the sensible thing to do, and that's what you'll see us announce.
SPENCER:
But since this package has been in place, and since we've been charging $23, et cetera, a tonne for carbon, we've seen electricity use go down by ten per cent, we've seen the increased use of renewables, we've seen all those things heading in the right direction. Surely you're stepping away from that now and we're not going to see that impressive progress?
BOWEN:
That's why a carbon price is important Adam. That's where we probably agree. That's why we think a market mechanism for a carbon price is important. We do think there should be a price on carbon, but it's a sensible thing to do, when you've got price in Europe closer to $6, and our price much more than that, to calibrate it to the world prices.
SPENCER:
On a different topic Treasurer, before I let you go. With the polls now moving massively back in your direction, virtually too close to call a lot of them saying now, the referral of the man pre-selected to run for Bennelong to ICAC must be - that's the last thing you need at the moment?
BOWEN:
Yeah I think Sam Dastyari the general secretary is taking some pretty decisive action here, and it's action which would have the support of the caucus, and the support of the Prime Minister. We need candidates out there, Bennelong is a seat which is very important. We think we can - we should be very competitive in that seat and so we need the best candidate going forward.
It's an organisational matter, but I think Sam Dastyari would have the support of the party in the actions that he's taking.
SPENCER:
Treasurer, thank you very much for your time.
BOWEN:
Good on you. Nice talking to you Adam.