SENATOR THE HON PENNY WONG
LEADER OF THE GOVERNMENT IN THE SENATE
MINISTER FOR FINANCE AND DEREGULATION
TRANSCRIPT
RN BREAKFAST WITH FRAN KELLY
E&OE - PROOF ONLY
KELLY: Penny Wong is the Finance Minister and Leader of the Government in the Senate. She joins us from Melbourne Airport this morning. Minister, thanks very much for your time.
WONG: No worries, good to be with you.
KELLY: This early move to an ETS is being sold by the Government as reducing the burden on the household budget. Is that a concession the carbon tax was hurting families?
WONG: No, it’s a recognition that if we move to a market mechanism with a floating price it’s going to reduce the cost of acting on climate change to Australian households, and to the economy. So that’s a good thing.
KELLY: But the Government’s spent the last couple of years saying the carbon tax is not a burden, it’s not actually hurting families, and all this talk that it is from Tony Abbott, is an exaggeration.
WONG: There’s no doubt Tony Abbott has been exaggerating the impact of a price on carbon – something he used to support, people seem to forget that – in an attempt to whip up a fear campaign.
But the reality is, as you know Fran – a floating price and the market, we believe is the most efficient mechanism to reduce carbon emissions and what we’ve announced is bringing forward that emissions trading scheme.
KELLY: The Government’s own modelling though indicates that the introduction of a carbon tax would lead to only a modest increase in electricity prices of $3.30 a week. So that’s what we’ve been living on the understanding of, and yet now the Prime Minister is telling us by scrapping it, households are going to save $380.
WONG: It is the case that the carbon price has had a much more modest impact on inflation and on prices than Tony Abbott would have you think. And as you know, we’re still creating jobs and the economy is still going, so it hasn’t been the wrecking ball that he’s stated. But if you can reduce Australia’s contribution to climate change, if you can reduce our carbon pollution at a lower cost to households and the economy, that’s a good thing. That’s what we’re doing. We’re obviously also keeping the household assistance –
KELLY: And why would you be doing that given that households won’t be paying as much?
WONG: Well, a couple of reasons. Let’s remember who this assistance goes to. We’re talking about pensioners, we’re talking about people on family tax benefits, people on the Newstart Allowance and so forth. So, a lot of people on fixed incomes and low and middle income Australia. I don’t think it’s a bad thing to continue to assist them.
KELLY: But it’s just extra money in their pocket. You’re saying that their bills will be cut back so they won’t need that compensation anymore; this is just money for jam.
WONG: What I’d say to you as a Labor person is I don’t mind pensioners having a little bit more in their pocket. We’re not talking about people who are earning vast amounts of money. We’re talking, often, about people on low and often fixed incomes. So I think that’s a small contribution we can continue to make as a Government to cost of living pressures for those Australians, and is a good thing.
KELLY: These are tough budgetary times though; it’s starting to sound very much like an election sweetener.
WONG: Well, at the same time we’ve made some savings in the budget for which we’ve been criticised by some groups. So I don’t think you can say the Government hasn’t made difficult decisions in order to ensure we comply with the fiscal strategy, to make sure we offset the impact of a lower price on the federal budget. We’ve done that. And, that said, as the Finance Minister I can tell you there’s no such thing as an easy save. But it’s the right thing to do – as you know, you’ve got to keep your public finances strong.
KELLY: Promising to ease the cost of living burden by winding back the cost of the electricity and gas bills if the carbon tax goes – how can you guarantee that? What if the generators and the retailers don’t pass on the cut?
WONG: We do have markets in electricity which are either competitive or regulated. So in a competitive market, obviously, it’s pretty difficult to price gouge. People are going to have to pass on the lower carbon price, and in the regulated market that can obviously be taken into account by the regulator.
KELLY: Now we should be clear here: all claims of terminating the carbon tax, and that’s quoting the Prime Minister from yesterday, are aspirational aren’t they? This is nothing more than an election promise.
WONG: Well, I think there are two options for the Government. We can either – if the election is after the recall of the Parliament – we can seek to put it though then or if we go to an election and this is the policy and, obviously if the Government is returned, we can seek to legislate it then. I mean if it’s aspirational then what you’re assuming is that Christine Milne will yet again vote with Tony Abbott…
KELLY: Well she said she would vote against this…
WONG: My view is the Greens have got to start to be held responsible for their destructive impact on climate policy over these last years. I mean, we would have had a floating price had she, and others, not voted with Tony Abbott – and extraordinarily Steve Fielding, who didn’t believe climate change was real – in 2009 against a carbon price. Now, are the Greens party really going to continue to make a contribution that is that negative to climate policy?
KELLY: Well, you’ve got to deal with the Senate that is there and at the moment the Greens are saying they would vote against it. So that means even if Labor did win government, the legislation for this move to an ETS wouldn’t come in on 1 July next year because the current Senate, according to the Coalition and the Greens at the moment, wouldn’t pass it so that starting date is false.
WONG: Again, what I’d say to you is this: a week is a long time in politics and the electorate can have a view about these things. We’ve put a policy out there which I think makes both environmental and economic sense. You can reduce emissions, you can make sure Australia contributes to the fight against climate change but you can do it at lower cost to the economy.
So, essentially what the Greens would be saying is, ‘we actually want to impose higher costs than required on Australians in order to meet our targets’. I don’t think that’s a sensible position. And in terms of the Coalition, we know on this issue they are simply completely negative.
KELLY: Maybe, but 1 July 2014 – that’s the date the Prime Minister is promising to bring in an emissions trading scheme and he can’t make that promise given everything, every utterance, made by every other player in the parliament.
WONG: We can make a commitment about our policy position and we can make a commitment about what we will campaign for. And the reason we need to do that is business do deserve the certainty of what the Government’s position is. And I think –
KELLY: Well, if it’s the certainty you’re after then wouldn’t it be better for the government of the day to recall Parliament before an election and have an attempt at getting this through?
WONG: If the Prime Minister chooses to do that, that’s certainly something we will do…
KELLY: That would be putting your money where your mouth is though, wouldn’t it?
WONG: Well I think our money where our mouth is, is making clear what our position is. Whether it’s before or after an election, this is what the Labor Party and, if returned, a Labor Government would do and we will advocate very strongly for that against the really destructive politics of both the Greens and the Coalition on this issue.
KELLY: We’re talking to Finance Minister Penny Wong about Kevin Rudd’s promise to move to an ETS earlier and the incentives that go with it. Minister, the effective price for emissions-intensive trade-exposed industries, under the change will fall from $2 a tonne to 50 cents a tonne; that’s Government figures. Where’s the price signal to heavy industry to lower emissions at that price?
WONG: Let’s remember the sectors you’re talking about are what we call emissions-intensive trade-exposed so these are not just high emitters, they’re also firms who work in markets where they can’t pass the price on because they are trading in global markets. We do have a process of reducing that assistance over time; I think it’s a sensible, balanced policy.
There is also a process in the next couple of years of a review that is in the legislation from memory, which will look at this assistance and look at what the carbon price is offshore. Obviously, if the whole world has a carbon price or our significant trading partners have a carbon price that is broadly equivalent, then the justification for the assistance is reduced and that can be taken into account.
KELLY: Electricity generators aren’t happy. They say, again, they weren’t consulted and they’re describing this change as exacerbating an already uncertain investment. They’re talking about sovereign risk involved in chopping and changing like this.
WONG: If that’s the case then there is an even greater sovereign risk from Tony Abbott’s plan and I hope they are saying the same thing publically and privately to him about a policy that’s about unilaterally removing a price signal.
But the reality is for generators that have a big carbon liability, the argument that a carbon price will affect their asset values, which has some public policy merit – I would think people would expect that value effect would be reduced if you’ve got lower carbon price. And so it’s only sensible that the Government says, if you’re going to have a significantly lower carbon price, therefore we’re not going to give you quite as much assistance as was previously envisaged. I think that’s a pretty reasonable position.
KELLY: Minister, you’ve spent the last three years defending the carbon tax. Now, you’re arguing why it’s a great idea to dump the carbon tax. Do you ever feel confused or conflicted by Labor’s own policy?
WONG: No, because this is precisely where we wanted to end up. I think I’ve been on your program a number of times over the last five years Fran, and you will recall we went to the 2007 election with a commitment to an emissions trading scheme.
We’ve negotiated long and hard with Malcolm Turnbull for an emissions trading scheme; we were unable to get it through the Parliament. We went to the 2010 election wanting to put in place an emissions trading scheme and had to negotiate a fixed price though the Parliament. My view is we’re finally getting to the place which is the best policy position for the country.
KELLY: Penny Wong, thank you very much for joining us on Breakfast.
WONG: Good to speak with you.
ENDS
KELLY: Penny Wong is the Finance Minister and Leader of the Government in the Senate. She joins us from Melbourne Airport this morning. Minister, thanks very much for your time.
WONG: No worries, good to be with you.
KELLY: This early move to an ETS is being sold by the Government as reducing the burden on the household budget. Is that a concession the carbon tax was hurting families?
WONG: No, it’s a recognition that if we move to a market mechanism with a floating price it’s going to reduce the cost of acting on climate change to Australian households, and to the economy. So that’s a good thing.
KELLY: But the Government’s spent the last couple of years saying the carbon tax is not a burden, it’s not actually hurting families, and all this talk that it is from Tony Abbott, is an exaggeration.
WONG: There’s no doubt Tony Abbott has been exaggerating the impact of a price on carbon – something he used to support, people seem to forget that – in an attempt to whip up a fear campaign.
But the reality is, as you know Fran – a floating price and the market, we believe is the most efficient mechanism to reduce carbon emissions and what we’ve announced is bringing forward that emissions trading scheme.
KELLY: The Government’s own modelling though indicates that the introduction of a carbon tax would lead to only a modest increase in electricity prices of $3.30 a week. So that’s what we’ve been living on the understanding of, and yet now the Prime Minister is telling us by scrapping it, households are going to save $380.
WONG: It is the case that the carbon price has had a much more modest impact on inflation and on prices than Tony Abbott would have you think. And as you know, we’re still creating jobs and the economy is still going, so it hasn’t been the wrecking ball that he’s stated. But if you can reduce Australia’s contribution to climate change, if you can reduce our carbon pollution at a lower cost to households and the economy, that’s a good thing. That’s what we’re doing. We’re obviously also keeping the household assistance –
KELLY: And why would you be doing that given that households won’t be paying as much?
WONG: Well, a couple of reasons. Let’s remember who this assistance goes to. We’re talking about pensioners, we’re talking about people on family tax benefits, people on the Newstart Allowance and so forth. So, a lot of people on fixed incomes and low and middle income Australia. I don’t think it’s a bad thing to continue to assist them.
KELLY: But it’s just extra money in their pocket. You’re saying that their bills will be cut back so they won’t need that compensation anymore; this is just money for jam.
WONG: What I’d say to you as a Labor person is I don’t mind pensioners having a little bit more in their pocket. We’re not talking about people who are earning vast amounts of money. We’re talking, often, about people on low and often fixed incomes. So I think that’s a small contribution we can continue to make as a Government to cost of living pressures for those Australians, and is a good thing.
KELLY: These are tough budgetary times though; it’s starting to sound very much like an election sweetener.
WONG: Well, at the same time we’ve made some savings in the budget for which we’ve been criticised by some groups. So I don’t think you can say the Government hasn’t made difficult decisions in order to ensure we comply with the fiscal strategy, to make sure we offset the impact of a lower price on the federal budget. We’ve done that. And, that said, as the Finance Minister I can tell you there’s no such thing as an easy save. But it’s the right thing to do – as you know, you’ve got to keep your public finances strong.
KELLY: Promising to ease the cost of living burden by winding back the cost of the electricity and gas bills if the carbon tax goes – how can you guarantee that? What if the generators and the retailers don’t pass on the cut?
WONG: We do have markets in electricity which are either competitive or regulated. So in a competitive market, obviously, it’s pretty difficult to price gouge. People are going to have to pass on the lower carbon price, and in the regulated market that can obviously be taken into account by the regulator.
KELLY: Now we should be clear here: all claims of terminating the carbon tax, and that’s quoting the Prime Minister from yesterday, are aspirational aren’t they? This is nothing more than an election promise.
WONG: Well, I think there are two options for the Government. We can either – if the election is after the recall of the Parliament – we can seek to put it though then or if we go to an election and this is the policy and, obviously if the Government is returned, we can seek to legislate it then. I mean if it’s aspirational then what you’re assuming is that Christine Milne will yet again vote with Tony Abbott…
KELLY: Well she said she would vote against this…
WONG: My view is the Greens have got to start to be held responsible for their destructive impact on climate policy over these last years. I mean, we would have had a floating price had she, and others, not voted with Tony Abbott – and extraordinarily Steve Fielding, who didn’t believe climate change was real – in 2009 against a carbon price. Now, are the Greens party really going to continue to make a contribution that is that negative to climate policy?
KELLY: Well, you’ve got to deal with the Senate that is there and at the moment the Greens are saying they would vote against it. So that means even if Labor did win government, the legislation for this move to an ETS wouldn’t come in on 1 July next year because the current Senate, according to the Coalition and the Greens at the moment, wouldn’t pass it so that starting date is false.
WONG: Again, what I’d say to you is this: a week is a long time in politics and the electorate can have a view about these things. We’ve put a policy out there which I think makes both environmental and economic sense. You can reduce emissions, you can make sure Australia contributes to the fight against climate change but you can do it at lower cost to the economy.
So, essentially what the Greens would be saying is, ‘we actually want to impose higher costs than required on Australians in order to meet our targets’. I don’t think that’s a sensible position. And in terms of the Coalition, we know on this issue they are simply completely negative.
KELLY: Maybe, but 1 July 2014 – that’s the date the Prime Minister is promising to bring in an emissions trading scheme and he can’t make that promise given everything, every utterance, made by every other player in the parliament.
WONG: We can make a commitment about our policy position and we can make a commitment about what we will campaign for. And the reason we need to do that is business do deserve the certainty of what the Government’s position is. And I think –
KELLY: Well, if it’s the certainty you’re after then wouldn’t it be better for the government of the day to recall Parliament before an election and have an attempt at getting this through?
WONG: If the Prime Minister chooses to do that, that’s certainly something we will do…
KELLY: That would be putting your money where your mouth is though, wouldn’t it?
WONG: Well I think our money where our mouth is, is making clear what our position is. Whether it’s before or after an election, this is what the Labor Party and, if returned, a Labor Government would do and we will advocate very strongly for that against the really destructive politics of both the Greens and the Coalition on this issue.
KELLY: We’re talking to Finance Minister Penny Wong about Kevin Rudd’s promise to move to an ETS earlier and the incentives that go with it. Minister, the effective price for emissions-intensive trade-exposed industries, under the change will fall from $2 a tonne to 50 cents a tonne; that’s Government figures. Where’s the price signal to heavy industry to lower emissions at that price?
WONG: Let’s remember the sectors you’re talking about are what we call emissions-intensive trade-exposed so these are not just high emitters, they’re also firms who work in markets where they can’t pass the price on because they are trading in global markets. We do have a process of reducing that assistance over time; I think it’s a sensible, balanced policy.
There is also a process in the next couple of years of a review that is in the legislation from memory, which will look at this assistance and look at what the carbon price is offshore. Obviously, if the whole world has a carbon price or our significant trading partners have a carbon price that is broadly equivalent, then the justification for the assistance is reduced and that can be taken into account.
KELLY: Electricity generators aren’t happy. They say, again, they weren’t consulted and they’re describing this change as exacerbating an already uncertain investment. They’re talking about sovereign risk involved in chopping and changing like this.
WONG: If that’s the case then there is an even greater sovereign risk from Tony Abbott’s plan and I hope they are saying the same thing publically and privately to him about a policy that’s about unilaterally removing a price signal.
But the reality is for generators that have a big carbon liability, the argument that a carbon price will affect their asset values, which has some public policy merit – I would think people would expect that value effect would be reduced if you’ve got lower carbon price. And so it’s only sensible that the Government says, if you’re going to have a significantly lower carbon price, therefore we’re not going to give you quite as much assistance as was previously envisaged. I think that’s a pretty reasonable position.
KELLY: Minister, you’ve spent the last three years defending the carbon tax. Now, you’re arguing why it’s a great idea to dump the carbon tax. Do you ever feel confused or conflicted by Labor’s own policy?
WONG: No, because this is precisely where we wanted to end up. I think I’ve been on your program a number of times over the last five years Fran, and you will recall we went to the 2007 election with a commitment to an emissions trading scheme.
We’ve negotiated long and hard with Malcolm Turnbull for an emissions trading scheme; we were unable to get it through the Parliament. We went to the 2010 election wanting to put in place an emissions trading scheme and had to negotiate a fixed price though the Parliament. My view is we’re finally getting to the place which is the best policy position for the country.
KELLY: Penny Wong, thank you very much for joining us on Breakfast.
WONG: Good to speak with you.
ENDS
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