JOURNALIST: The Federal Minister for Finance, Penny Wong, welcome to the program.
WONG: Good to be with you.
JOURNALIST: Now, youve said in the past that a carbon tax is less efficient and doesnt have the environmental clarity that other models do. So then why did the Government go with this particular model?
WONG: Remember the end point of this policy is an emissions trading scheme. And the quote youve read out is in the context of a discussion about the relative merits of a carbon tax or an emissions trading scheme. What we have opted for with this Parliament is three years of a fixed price. That does operate like a tax, but with a transition to an emissions trading scheme, which is a more flexible market mechanism, and which is where the Government has previously said it wants to go.
JOURNALIST: But doesnt this just give business more uncertainty because the game will just change again in three to five years?
WONG: No, I dont agree. In fact, the way I see it is as a steady transition to a market mechanism, to a flexible price. In fact, in the previous iteration of the Governments policy we had one year of a fixed price.
So a fixed price is a pretty sensible way to ensure you get the economy, and business, used to how a carbon price will work before you transition to the flexible mechanism, which is the emissions trading scheme. Which is something that many economists say is the most efficient way of dealing with climate change.
JOURNALIST: Now, there has been criticism, though, that the term tax creates a lot of it creates the anxiety and the resistance from both the general public and business. So, wouldnt it have been less damaging to the Governments reputation to sell this under a different banner?
WONG: People have different views about what is easier to sell. What were very focused on is whats the right thing to do? And the right thing to do is to
JOURNALIST: But it would have made your job easier if you hadnt have called it a tax. Because people do kind of curdle at the term tax.
WONG: Whats important here is the right policy. And the right policy is one that moves Australia to a clean energy future. The right policy is one that provides transitional support for jobs, for industries. The right policy is pricing carbon to give a signal to investors and polluters about ensuring we move to that clean energy future. And thats the package the Governments put forward.
JOURNALIST: Now, what will the Government do to give business more certainty over this issue?
WONG: You ask a very good question Whitney because I think part of the difficulty over these last years, where weve seen so much political conflict, where we previously had bipartisan support on this issue. From five years ago when John Howard, the former Prime Minister, endorsed an emissions trading scheme and took it to the 2007 election. But in the interim, as you know, theres been a lot of political fighting about this, and a lot of opposition from the Coalition.
What we do need is to get on with it. Business does need certainty, and were pleased that weve been able to get out there to the Australian business community, and the broader community, the details of how this will operate so people can get on with the job. One of the things thats important here is remembering, what does this price signal do?
It does really two key things. It gives an incentive to highly polluting businesses to reduce their pollution. And it gives an incentive to capital about where to invest, to invest in cleaner energy, cleaner ways of doing business.
JOURNALIST: Both the Australian Industry Group and the Australian Chamber of Commerce and Industry are deeply concerned, though, that this will impede Australias ability to compete both domestically and internationally. What do you say to that?
WONG: This is one of the significant policy issues you have to look at when youre pricing carbon. And theres a few principles that you need to apply.The first is to recognise that Australia is not going it alone, that many other countries are also acting on climate change some through pricing carbon explicitly, others through regulation, which as you know imposes an implicit price or implicit costs.
But we have a very substantial set of assistance in this package that recognises those industries in Australia which trade on world markets, and are emissions intensive, that deals with some of the competitiveness concerns that youve raised. Some $9.2 billion in the jobs and competitiveness program for the export sector. And of course, additional funding for the domestic sector to ensure that people can move to less polluting ways of doing business.
JOURNALIST: You were the previous Climate Change Minister and now of course youre in the Finance portfolio. How difficult was it for the Government to come up with a program that caters for the seemingly competing interests of environment and business?
WONG: This is a very big policy reform. Its a very big reform because its about changing the direction of the economy. Its about saying were not going to become more polluting. Were actually going to move to a clean energy future.
JOURNALIST: But it must have been a frustrating process at times because you did have these two competing, or seemingly competing areas to deal with.
WONG: Look, politics can be frustrating, cant it? When I was previously Climate Change Minister, I used to say sometimes that this debate can be defined from the extremes. And we have to find the middle ground.
I think what has been really good about this package is that it has been negotiated through a committee across members of Parliament. Different parties, obviously the Government but also independents as well as the Greens. There are a lot of policies in this that we had to get the balance right. I think this is the right package for Australias future. And its time for us to move to acting.
JOURNALIST: Now the share market dropped off the back of this news and trade yesterday. Steelmakers, mining companies and retailers, they all lost ground. Doesnt this signal though that there is quite a degree of fear in the market over this?
WONG: No doubt it will take people some time to digest the detail but what Id say is this. The Treasury modelling that the Government has released shows that our economy can continue to grow, our incomes can continue to grow and our jobs can continue to grow out in the future with a carbon price.
It is a big reform, there are also very significant amounts of transitional assistance for industry. And Id make the point, in fact in your introduction you spoke of Peabody Energys bid for Macarthur Coal. A $5 billion bid which really shows a lot of confidence in the future of Australian coal despite some people choosing to make a political point about it.
JOURNALIST: Were getting close to time Minister Wong but Saul Eslake from the Grattan Institute says that there will be a gap in jobs, being lost from emitters, from those who work for emitters to those jobs that are created by the greener energy producers. Are you concerned that there will be in fact people that are lost in this gap?
WONG: Well one of the reasons that weve put a significant amount of assistance on the table is because you have to support jobs through a transition. But if you look at the Treasury modelling 1.6 million more jobs by 2020 in this country it really demonstrates we can have strong economic growth, strong jobs growth, increases to our national income by putting in place a price on carbon.
JOURNALIST: But is a precarious position to put yourselves in. There will be people who could be caught in this gap and they will blame the Government for that situation. Do you feel youve set yourself up to fail on that issue?
WONG: This is no doubt a tough reform. But I think what would be a precarious position would be to say as a Government, this is too hard and were not going to try and shift Australia towards clean energy and clean technology. Were going to continue going on as normal as the rest of the world acts because what that would do is say to Australians were not going to be competing well in a globe that increasingly places a premium on low carbon goods and services. Thats not a future which secures Australias prosperity. Leaving aside of course the environmental issue which is very significant. Were a hot and dry country and we have a lot to lose from climate change. We need to be part of acting to respond to it.
JOURNALIST: Alright, Penny Wong, well have to leave it there but we thank you for your time today.
WONG: Good to be with you Whitney.
ENDS