SANDERS:
Good morning Peter Costello, thank you very much for joining us this morning.
TREASURER:
Good to be with you. Thank you.
SANDERS:
How much are you going to spend and why is the money going to the solar industry?
TREASURER:
Well the Government put together a $500 million fund. It is called the Low Emissions Technology Demonstration Fund and it is to get new technology, putting new ways of generating power, which is consistent with lowering emissions, which is carbon friendly, that is, reducing carbon, and which is friendly for the environment. And we are announcing this morning $75 million to build a $420 million solar plant in northern Victoria which will be the largest solar power plant in the world. Now this will bring together essentially mirrors which will concentrate the sun’s rays on a photovoltaic generator and it will put this electricity into the grid, sufficient to power 45,000 homes and it will reduce carbon emissions by 400,000 tonnes a year. So it is a pretty exciting project. If the project works, if the technology is demonstrated of course it can go wider and it can go international.
SANDERS:
So you are hoping to put it into other States as well?
TREASURER:
Well this will be the largest solar power plant in the world. It will put electricity onto the grid and of course that can be used in other States but if this technology works and if it dramatically lowers the current cost of solar electricity then I would expect other plants will follow and indeed not just in Australia but around the region.
SANDERS:
Why then has the Government slashed solar electricity rebates to community groups and phasing out incentives for solar power installations in homes and businesses in Australia?
TREASURER:
Well we are not phasing them out. What happened was that the demand was so great that we had to make sure that everybody who wanted one could get a rebate and the rebate is about $4,000 on a $15,000 generator. So what is that, that is 25, 30 per cent of the costs and it is a great programme and I would encourage people to take part in it.
SANDERS:
Well the Seven Network Sunrise programme has had more than 160,000 people sign a petition, including your own Minister Joe Hockey, calling for the continued rebate for home solar panels. Will you consider reinstating the subsidy?
TREASURER:
Well it hasn’t been stopped.
SANDERS:
But you are going to phase it out.
TREASURER:
No, no, no, no, no, I think this rebate is a very good idea and take it from me…
SANDERS:
So you are saying the rebate will continue then?
TREASURER:
Take it from me, it hasn’t been phased out and it is a very good idea.
SANDERS:
All right, so we can safely tell people they still can get solar rebates then?
TREASURER:
Oh you can get rebates, people are getting them at the moment and…
SANDERS:
And they will continue.
TREASURER:
…what we had to do is we had to make sure that they were available to all of the people that wanted to take it up and that is what we are doing and people are getting it at the moment and I would encourage them to continue doing so.
SANDERS:
Climate change is such an important issue, Mr Costello, with debates over coal solar power, wind and nuclear power, why have you suddenly chosen to back the solar industry?
TREASURER:
Well we set this fund up two years ago and the way to do it fairly is to invite applications so that you get the best technology and the best result for taxpayers’ money. And for two years now the applications have been considered. I reckon this is one of the best, one of the best you will even see. If we can build the biggest solar power station in the world in Australia and if we can demonstrate that it can produce cost efficient electricity, this will not only be good for Australia but it can be exported to other countries around the world.
SANDERS:
All right, just quickly on to another issue, the market is predicting the inflation rate today will come out this morning at 3.8. You have given an inflation target range of between 2 and 3 per cent. Now that won’t leave the Reserve Bank much choice will it, but to increase interest rates yet again?
TREASURER:
I think it is important to understand what our target is. It is 2 to 3 per cent underlying inflation over the course of the cycle. That means that we are looking to average it between 2 and 3 per cent during an economic cycle. Sometimes it will be below 2 per cent, sometimes it will be above 3 per cent but it is the average that we shoot for here.
SANDERS:
All right, well if inflation is much higher than the 3 and it comes out at 11.30 am today, what do you say to consumers who you promised you would keep interest rates low?
TREASURER:
Well, let’s have a look at what the Consumer Price Index is. The important thing to bear in mind is some of the one off factors that we discounted for last time shouldn’t be in this quarter’s figure, you shouldn’t see the increase in petrol prices that we had. You shouldn’t see the level of fruit and vegetable prices that happened as we came off Cycle Larry. So we will actually have to look at the figures and get a picture of underlying inflation. And it is important to keep inflation low, that has been a big part of the success of the Australian economy...
SANDERS:
All right…
TREASURER:
…and that is why we have the target that we do.
SANDERS:
We will find out later this morning. Mr Costello, thank you very much for joining us this morning.
TREASURER:
A great pleasure to be with you, thank you.