JOURNALIST: Penny Wong is a South Australian Senator and Minister for Finance and Deregulation. Penny Wong, good morning to you.
WONG: Good morning to you both.
JOURNALIST: Good morning Minister.
WONG: Interesting morning.
JOURNALIST: Weve had a great morning.
WONG: Youre in an interesting mood.
JOURNALIST: What do you think about the proposal for a cheer up hut on the Torrens?
WONG: Well, until you explained it to me I did wonder if we were now in the land of, you know, hippy, peace and light. But now I understand it, you know, certainly an interesting proposal.
JOURNALIST: Cheer up hut, World War II, all the soldiers gathered (inaudible) to cheer them up.
WONG: And was it someone in your family played the trombone?
JOURNALIST: My grandfather played the trombone every weekend in the cheer up hut right throughout the War.
WONG: So youre doing the numbers on that one are you?
JOURNALIST: We are.
JOURNALIST: Now, Penny Wong, I dont know if you need cheering up after listening to Bob Brown on AM this morning. But for those who missed it, this is what he had to say. Its a very poignant 19 seconds.
EXCERPT - BOB BROWN: Ill be moving amendments, first to take it back to the Treasury-recommended super profits tax, second, to remove the tax break for big corporations, the 1% tax break. And third, to extend it across to gold and to uranium, to make sure that this country gets a better return.
JOURNALIST: Is that a goer? Are you willing to embrace those sorts of changes to the mining tax in return for support for a carbon tax?
WONG: We made clear in the election, in fact before the election when the Prime Minister engaged in a pretty lengthy set of negotiations with the mining companies, that we have come to an agreement about the architecture of that tax. And we will be proceeding down that path.
JOURNALIST: So Bob Browns dreaming, is he?
WONG: Bob Browns entitled to put his view, his amendment to the Senate; thats what hes saying there, and what hell be doing. But ultimately the Governments position is the one that we have set out publicly.
JOURNALIST: So you wont support that?
WONG: No, we wont be supporting a shift such as the one Senator Brown is suggesting.
JOURNALIST: On any of those three points?
WONG: The Governments got its position clear. Its spent a long time negotiating with the mining sector, also working through the detail. You remember we had a committee which included Don Argus which looked at a range of the implementation details. And weve got our view clear on that.
JOURNALIST: But why shouldnt the tax be extended to gold and uranium?
WONG: There are always arguments about why shouldnt we have more, why shouldnt we have less. You might recall this is the product of a fairly controversial process, to put it mildly. I mean the original RSPT, the Resources Super-Profits Tax, obviously was controversial, and it was very important that the Government focus on what we could deliver and get through the Parliament, and we believe we can do that.
JOURNALIST: Is
WONG: Bearing in mind, of course, we have an Opposition that is going to vote against any taxation regime.
JOURNALIST: Well, no, theyre going to vote in favour of tax cuts, without the carbon tax. So that is a taxation regime, its just a different one.
WONG: Im very happy to talk about that, because its been really interesting, I reckon, this week, because you saw Tony Abbott saying Im going to have tax cuts, but I cant cost them.
And you either blow the surplus, or you have to cut spending elsewhere to fund tax cuts. They dont come out of thin air. And weve said to Tony Abbott, well, if you dont have the resources of Treasury were happy to offer them to you, for the purposes of costing how much this will cost, and working out where youll cut spending, or take from the surplus to fund them.
And he hasnt taken up that offer. I mean, it just demonstrates this is a headline, and a stunt, its not a real tax cut. And I also see Mr Robb saying theyve got 40 policies out there well, wed like to see them costed as well.
JOURNALIST: Under your plan, how many households will receive compensation?
WONG: Obviously we are still in the process of finalising details. But we have said publicly a number of key things. Weve said that at least 50% of the revenue that we get from taxing polluters will go to Australian households. Weve said that around nine out of ten Australian households will receive some assistance. And that assistance will come through increases in payments like pensions or family tax benefits, and tax cuts.
JOURNALIST: Why
WONG: Thats about 7 million Australian households.
JOURNALIST: Right, and theyll be better off, or no worse off?
WONG: Well, weve had this discussion before.
JOURNALIST: Yeah, but youre much further along down the track now.
WONG: Yes. Well I think all of these details will be made public, and Im very happy to come in and talk to you about them when they are. What Ive said generally before, I think on your program and others, obviously what we calculate is the average cost. That is, assuming people continue to behave in certain ways, that the average cost will be x. And we calculate assistance on that, and what weve said is, for people on lower incomes about three million Australians well give them a buffer of around 20%. So, that is, well give them around 120% of the average costs.
JOURNALIST: Will all the compensation be one-off, or continuous?
WONG: Well, thats one of the things that well be talking about a lot
JOURNALIST: Thats not much of an answer. Itd have to be continuous, surely, would it not?
WONG: But if you have a tax cut, a tax cut continues. You dont have a tax cut just for a year.
JOURNALIST: But this is a cocktail of compensation.
WONG: And family payments, if you have an increase in family payments, they would continue as well.
JOURNALIST: But there could be other measures, couldnt there, that would be one-offs?
WONG: There may be
JOURNALIST: To absorb the initial shock.
WONG: There may be a range of other measures
JOURNALIST: Before an election.
WONG: Youre a very cynical man, Matt, but thats not the logic here. The logic is, youre making some pretty significant changes to our economy, and thats because youre pricing something thats currently free, and thats the right to pollute.
JOURNALIST: OK, well lets look at
WONG: So you need to have good transitional arrangements for that.
JOURNALIST: Lets look at the logic here. The aim is to reduce carbon emissions, correct, the aim is to reduce carbon emissions. If the cost of dirty power goes up, but 90% of consumers are compensated, where is the incentive to change consumption?
WONG: Well, the economists talk about a thing called relative prices, which is a sort of complicated way of saying this: if youve got money to spend, and you have a range of things you can spend it on, you obviously want to try and reduce what you spend on certain items and increase what you spend on others. Thats what people do, you say, OK Im going to save on this so I can buy this down the track. If we give people more money, they do have the opportunity to say well, Im going to reduce my electricity bill. Im going to install as many people are doing Im going to install energy efficient lighting, Im going to change the way I heat my house. Those sorts of things.
JOURNALIST: But the cost of your powers gone up, so any extra money you have will have to go to
WONG: You can use some of the extra money towards power, but you also have the ability to spend that money on other things.
JOURNALIST: But not if youve got to pay your power bill.
WONG: Well youre assuming if youve got no capacity to reduce your power bill. What Im saying to you is, were also going to be providing people with tax cuts and increases to payments. Thats more money in peoples pockets.
JOURNALIST: Yeah, but thats to compensate them for the increased power bill. So they get the power bill and think, well Ive got this extra money, Ive got a bigger power bill, Ive got to use that money to pay the power bill. Arent you just going to result in just a churn of money?
WONG: Well what youre assuming is that no one will make any effort and no one wants to make any effort to reduce their energy use. I dont agree with that. People already are, and I think theres a greater incentive for us to do that. And remember, theres also
JOURNALIST: But its (inaudible) a churn of money.
WONG: Theres also the point I think youre missing, if I may say. Which is, this is not just aimed at consumers, this is actually aimed at the big polluters, and its aimed at shifting our energy generation. And we do need to shift to cleaner forms of power generation. And thats going to take time.
JOURNALIST: For those people who have very little capacity to change their power consumption, its going to mean, is it not, that theyre going to be cold in winter and hot in summer?
WONG: Well part of the reason
JOURNALIST: Or is that just tough luck?
WONG: No, not at all. And were a Labor Government, I think those sort of social justice issues and fairness issues are pretty dear to our hearts. And that is why weve said for people on lower incomes, wed be looking at giving them a buffer. So you give them more than your anticipated average cost.
JOURNALIST: What about self-funded retirees?
WONG: Now were getting into different groups, and I anticipated you to ask that, but
JOURNALIST: Well youd have an answer ready then?
WONG: The thing is, and Im not trying to be difficult, and I understand people are concerned and want all the details, including the two blokes in this room quite rightly want to get the details for their listeners. But we are going through a pretty important process of finalising this package. We will ensure when the package comes out, people are able to see how it will affect them.
JOURNALIST: Its almost quarter to nine, were talking to Penny Wong, the Federal Minister for Finance and Deregulation, a South Australian Senator. Bob Brown, the leader of the Greens, wants to close down the coal industry, the coal industry, eventually. The coal industry today are running full page ads asking fairly simple questions. One of them, Minister, could you answer this: what is going to replace $55 billion in coal revenues and 140,000 jobs?
WONG: Its not our policy to shut down the coal industry, and we dont agree with Bob Brown on this.
JOURNALIST: And you dont think that your policies will?
WONG: No, and I think in fact if you look at the previous modelling that the Government released, youll see that coal output in fact grows. Youll remember one of the things the Greens were very critical of in the scheme that I put forward to the Parliament is they didnt like the fact we did give transitional assistance to coal.
JOURNALIST: How are your emissions going to be reduced if your coal consumption and exports increase?
WONG: Exports obviously is to other countries. But can we just take a step back. What we want to do is price carbon to put our price incentive for businesses to use less energy and to use less polluting ways of doing business. And I think its pretty intuitively sensible.
You know if something is free, we dont tend to value it. At the moment what we have as free is the ability to pollute. So what we are saying, we have to price that, we have to give a price incentive so that businesses start to reduce their emissions and you
JOURNALIST: But a lot of businesses will simply pass it on to the consumers, and we get back to where we were before, the consumers have been given an increased ability to pay the price, and you just churn money.
WONG: I dont believe its churning money, and I think if you look at all of the studies which have been done, including the most recent one by the Productivity Commission, but going back to 2006 when John Howard adopted essentially this policy to price carbon. All of the advice and all of the evidence is that if you want to move to lower polluting ways of doing business and a lower polluting economy, the cheapest way to make that transition is to put a price on carbon.
JOURNALIST: Sharon from North Haven has called, youre on 891 Breakfast, Matthew and David, and Penny Wong, Senator and Minister for Finance in the Gillard Government. Sharon, good morning to you.
CALLER: Good morning. Yes, Im just wondering why the Government is going to spend, you know, I believe $15 to $20 million on advertising when were going to have a carbon tax anyway.
JOURNALIST: Sharon, I think your question was asked by the independents who support the Government as well. They werent very happy about it, were they?
WONG: No, they werent happy with the announcement, but Id make a couple of
JOURNALIST: Sharons saying, youve already decided on this, why do you need to sell it to us?
WONG: Its not so much selling it to people, I dont think thats it. I think we need to explain to people what it is, and how it will work.
JOURNALIST: But weve got you here, and youre not doing it.
WONG: But you yourself would agree this is a very big reform. Its a very hard reform, its a highly contested reform, and its a reform where theres a lot of misinformation out there.
I think weve announced some $12 million, which would only be spent if we do get agreement with the members of the Multi-Party Committee, thats people like Tony Windsor and Rob Oakeshott, on what the design of the scheme would be. And it would be spent on making sure people understand how this will affect them and what it will mean for them, and I think thats reasonable.
Can I just say, its less than one tenth, its about one tenth of what John Howard spent on advertising WorkChoices.
JOURNALIST: And when are we going to get an agreement?
WONG: Thats a very good question.
JOURNALIST: Well you dont know?
WONG: (laughs) Im here talking to you, and I-
JOURNALIST: (laughs) In a few weeks time?
WONG: The PM has said wed like to announce it in the middle of the year. Were obviously in the middle of the year, and I think youve seen reports say that negotiations are continuing in Canberra as we speak.
JOURNALIST: As we speak, so it could be later today?
WONG: Theres a lot to work through; I dont know that Id hold my breath for today.
JOURNALIST: Why do three independents get to decide the shape of this, and the Greens, who Julia Gillard
JOURNALIST 2: (laughs) The Minister might be asking herself that regularly.
WONG: (laughs)
JOURNALIST: ... who Julia Gillard has said of the Greens, they dont represent the values of mainstream Australia.
WONG: I dont think these people get to decide. We have been elected as a minority Government, the Parliament elected by voters is a minority Parliament. So to get reforms through, we have to negotiate. That negotiation doesnt mean any one individual gets to decide
JOURNALIST: No, three independents
WONG: No, but its the Government
JOURNALIST: Semi-rural MPs, and a party that doesnt represent the interests of mainstream Australia, quote unquote, from Julia Gillard. Thats the Greens.
WONG: Theres nothing wrong with semi-rural, or rural-
JOURNALIST: No, and a party that
WONG: They bring a different
JOURNALIST: And the Greens, who are shortly to have control of the Senate, and dont represent the interests of mainstream Australia, theyre going to have a big say in how mainstream Australia pays a carbon tax.
WONG: Matt, were also in the room, and were the Government. And there are, we are, we will not
JOURNALIST: Youre not the Government without them.
WONG: But we would not, and we will not, agree to things that we dont believe are economically sensible and in the national interest. And youve just had an example now of some of the differences in response to Davids question about coal. That is Bob Browns partys position, they do want to see an end to the coal industry. Thats not the Labor Governments position.
JOURNALIST: Have had a conversation with Julia Gillard, along the lines of
WONG: I do have many conversations with Julia Gillard.
JOURNALIST: OK, have you ever said, why on earth did you say before the election that you wouldnt, no government you led would have a carbon tax?
WONG: But I think Julia has spoken at length about that.
JOURNALIST: Yeah, yeah, but the fact that Tony Abbotts now preferred Prime Minister, and you can track that from the moment she announced, you can track that decline in her support, poisonous from the moment she announced the carbon tax. So she is seen by some, and she is able to be described, as a liar. And thats poison in the electorate. Has she ever privately said to you, God I wish I hadnt said that? Because you know, wed be cranking along now.
WONG: This is a very difficult reform, and a very tough reform. And its a reform, if you look back, probably played a role in John Howard losing the 2007 election, was a significant factor in Brendan Nelson not being Leader of the Opposition, and of course Malcolm Turnbull not being Leader of the Opposition.
JOURNALIST: So this stuff is poison.
WONG: What Im saying is its a very big, difficult reform. And what I think is important is that Julia is not just talking the talk, shes doing what is really hard, and that is to have a lot of courage and determination in the face of a lot of opposition, to press ahead with a reform she thinks is in the national interest.
JOURNALIST: Now Michael from Adelaide, one last question and then we need to look at the Riverbank precinct and let you go about your job as Finance Minister. Michael from Adelaide here on 891 Breakfast, good morning Michael. Good morning? Gone, thats fine. Youd probably be glad hes gone, he wanted you to give one example of a big reform youve achieved. But anyway.
WONG: Im happy to talk about that.
JOURNALIST: OK.
WONG: I think that achieving the structural separation of Telstra, which has been, the fact that Telstra had both the network and the retail arms integrated, which has meant we had much less broadband, much less accessible broadband, and certainly lower speeds than most comparable economies, has been a very significant reform achieved by Julia Gillard.
JOURNALIST: Penny Wong, thank you very much Senator.
WONG: Good to be with you.
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