STEVENS:
(tape starts) I guess the sad fact about it being 20 degrees here this morning is the fact that it's going to get a whole lot warmer if something isn't done to curb greenhouse gas emissions. How much impact will this emissions trading scheme have, do you think?
TREASURER:
Well, I think it will do the job over time. We're going to introduce this in a measured way but it's very important, absolutely critical, particularly for regions like yours, that we do tackle dangerous climate change. There's been inaction for far too long and of course those areas of Australia that will really suffer if we don't tackle dangerous climate change are precisely those around the Great Barrier Reef and the agriculture that surrounds the hinterlands. We've got to tackle climate change, we've got to tackle it domestically, we've got to tackle it internationally. And of course, we've also got to tackle it because we are a big exporter of carbon, we're a big exporter of coal, it provides a lot of the prosperity particularly in North Queensland and, therefore, putting in place policies which will drive the technology to bring ahead carbon capture and storage and so on are absolutely critical to our future economic prosperity.
STEVENS:
We'll talk about North Queensland industry and its impact in just a moment, but the buzz word this morning seems to be trading scheme recession. What is it and how will it influence your approach to the trading scheme?
TREASURER:
Well, introducing an emissions trading scheme - or a Carbon Pollution Reduction Scheme - is critical. What we do is basically put a limit on what can be emitted and essentially we will be selling permits to the very large emitters. The very large companies that emit all of the pollution will have to buy the permits. That will give a revenue stream and that revenue stream which it gives sends both a price signal for industries and for people to change their behaviour, but also provides money to government to assist those that are adversely affected - to assist those industries to make the transition, but also to assist households that are impacted upon by increased prices.
STEVENS:
Do you believe, though, that this path could take us in the direction of a trading scheme recession? Is the Government....
TREASURER:
No, I don't. I certainly don't believe it can take us down the path of some sort of recession at all. Introducing a scheme like this is absolutely fundamental to maintaining prosperity into the future. If we don't act on climate change the cost of inaction will be dramatic and that will have a dramatic impact on prosperity into the future. So, acting on climate change is the only way in the long term to preserve our prosperity. So, I don't think that those sorts of headlines - if they're around, I haven't seen them - are valid at all.
This is the way to preserve our prosperity because, you see, in the world economy well into the future all countries will be reducing their emissions. If Australia puts this plan in place in a responsible and measured way, we will be in front of the game into the future. There will be a low emissions economy out there and those economies which adjust will be those that grab the great opportunities and the jobs for the future.
STEVENS:
Yesterday the Queensland State Government outlined a proposal for a new coal port at Shoalwater Bay and the output of the coal industry is expected to grow by around 40 per cent in coming years. How do these moves fit in with the Federal Government's plans?
TREASURER:
Well, they're important moves for the future prosperity of the Queensland economy and the national economy. So, we are very supportive of lifting our export potential. But of course as an exporter of coal, we've got a huge interest in developing the technology that captures the carbon. Carbon capture storage is absolutely essential for the future prosperity and growth of the coal industry, particularly in Queensland. And of course, this Carbon Pollution Reduction Scheme will put the incentives in the system to drive the technology which will deliver that carbon capture and storage which is absolutely essential if we are to continue to export coal well into this century.
STEVENS:
The big question about where the money will go from industry as they pay for these carbon trading permits, many people are saying that the money from those permits should actually go into alternative energies research. Others are saying it should go back to the people as in the scheme developed by the Federal Government. Is there reason to look at the possibility of using the money for more research into these alternative energies?
TREASURER:
Well, Aaron, the Green Paper goes through all the options. I just want to make this point very clear: not one cent of revenue that is raised from the sale of permits will be held by the Federal Government. It will go back into assisting households, assisting industry and lifting the pace of technological change and development. So, all of that money will be going back into helping the economy adjust, helping industry adjust and developing future technology. The scheme itself will provide incentives for business to invest in new technology, and over and above that, we will be giving specific assistance to some firms and to some regions in terms of future technological development. We already have a very big fund out there which will assist industry to develop carbon capture and storage. But the overall scheme that we're announcing, the Carbon Pollution Reduction Scheme, provides that incentive for business to invest, and that's a really good thing.
STEVENS:
No doubt you expected some criticism but I'm surprised this morning that some of the widespread criticism is about the timing, suggesting it would be used as a bargaining tool in the next election. Are you disappointed with those comments, considering what sort of issue we're dealing with?
TREASURER:
Well, that's just completely irrational, Aaron. The fact is that we said that we would introduce a scheme in 2010. That's our ambition, that's our aim, that's why we've got a Green Paper out there at the moment. Now, some people are saying, don't rush it. Other people are saying it's being introduced in 2010 because somehow that might be advantageous electorally. Well, let me tell you, introducing this scheme really is a big challenge. It involves some tough decisions and it will test us politically as well as testing us policy-wise. But it's the right thing to do for the country and it's the right thing to do for the future of the economy. So, it needs to be implemented as soon as it can be implemented and our ambition at this stage is to do it in 2010. But we're realistic. We want to be out there talking to industry and talking to the community about this scheme, which is why we've got a Green Paper at this stage and we won't finalise our proposals until the end of the year.
STEVENS:
Obviously one of the greatest concerns with the carbon emission trading scheme was petrol prices. The Federal Government has found a unique way to fix that. Can you explain it to me?
TREASURER:
We have included transport in this scheme but what we will do for the first three years is reduce the petrol excise by the effect of the scheme. Because, you see, what's occurred with petrol is it's gone through the roof in the last six months. It's increased by something like 30-plus cents a litre in the last six months and it doesn't make any economic sense to add to those price increases with further price increases from the Carbon Pollution Reduction Scheme. So, what we've said is that we will adjust the excise for the effect of the scheme for the first three years, review that periodically and then have a look at it at the end of that three year period. We think that's the only economically responsible thing to do.
STEVENS:
Wayne Swan, thanks for your time this morning.
TREASURER:
Good to talk to you.