JOURNALIST: On the line, Finance Minister Penny Wong joins me. Penny thanks for your time.
WONG: Good to be with you Steve.
JOURNALIST: This pollings a disaster, isnt it?
WONG: Were in the middle of a pretty tough reform, pricing carbon, tackling climate its not an easy reform. Its certainly being opposed quite bitterly by Tony Abbott. But it doesnt mean its not the right thing to do. We need to remember why were doing this. Were doing this because climate change is real and we dont want to keep on kicking this can down the road for our children and our grandchildren to deal with.
JOURNALIST: Its not just being opposed by Tony Abbott; its being opposed by the Australian public. Were seeing a disapproval of what youre doing, an approval for an intended carbon tax from 68 per cent in 2006 down to 41 per cent today. I want to ask you about that. Ross Garnaut in his climate change report, the policy framework for your carbon tax, one of the fundamental premises of that was the observation that Australians are willing to pay for mitigation of carbon dioxide in higher goods and services prices. Do you still believe that?
WONG: Steve I think we all understand that people are very concerned about cost of living issues and people are concerned about what pricing carbon will mean. And were not in a position as yet to put out the details because were still working through them. And what they do hear every day is Tony Abbott running a scare campaign.
But we will be putting out those details when we finalise them because we know people deserve to understand exactly how this reform will affect them and their families.
The Prime Minister has made clear a few things which I think are important. That nine out of ten households will get a combination of both tax cuts and increases to payments thats around 7 million households to help them with the cost of living. Issues that people are concerned about. So weve put forward a very clear policy. We will tax polluters, we will put a price on carbon that the big polluters will pay and well use that money in great part to assist Australian households.
JOURNALIST: But do you still accept Ross Garnauts observation in 2008, which was a fundamental premise for his structuring of his intended reforms, that Australians are willing to pay for mitigation of carbon dioxide in higher goods and services prices?
WONG: Steve weve got an obligation as the Government to put our package out there and explain to people what this will mean for them and explain that 7 million households will get tax cuts of and an increase in payments. To explain to people that we will ensure particularly lower income households will get an additional buffer.
We accept that obligation and if I may say, we have Tony Abbott who puts himself forward as the alternative prime minister. He does also have an obligation to put forward his alternative plan for the nation. He has an obligation to show how hell fund the things he says hell do. Instead what we see is stunts and headlines; that just doesnt cut it. He talks about tax cuts for example but cant say when they will happen or how theyll be funded.
When we talk about tax cuts, when Julia Gillard talks about tax cuts
JOURNALIST: You dont announce them for six months.
WONG: Well we will show people how they will be funded.
JOURNALIST: No, I know you would but the very thing you accuse Tony Abbott of is the very thing you havent done and youre in Government. One of Garnauts observations
WONG: I dont accept that Steve.
JOURNALIST: One of Garnauts observations is that climate change policy needs to be practical. People will need to get their heads around it, particularly consumers need to understand that its practical. How practical is it to allow over six months of avoid without announcing any detail to the very tax thats fundamental to Australians way of life?
WONG: Steve I suppose the other response to that might be, would you have liked us to have announced it before wed finalised the detail?
JOURNALIST: Or announced it when you had the detail.
WONG: (laughs) I think the point is we are going through a process with the independents, the Greens, to resolve what the package will be. As I said to you, I can understand why people are concerned and what Id say to them is we will put forward a policy that does have the detail of how it will affect them and we will be accountable for that and we will be judged on that.
Your point about Mr Abbott, Im afraid I dont agree with you. This is a man who talks about tax cuts but wont say where hell fund them from. We have, we will and we will put that out, just as we did in our Budget. And remember weve just had the budget bills pass the Parliament, which is very pleasing that they have passed. We set out in that a very clear set of decisions which included savings measures to bring the budget back to surplus. Well take that same responsible approach to carbon.
JOURNALIST: So you talk about the detail; bits are being leaked in respect of the carbon tax. You talk that about 90 per cent of people are in some way getting a level of benefit. Do you mean that 90 per cent of people will be restored to their position as if there were no carbon tax?
WONG: What weve said is nine out of ten households, thats 7 million households, will get a combination of tax cuts and an increase in payments
JOURNALIST: But not necessarily sufficient to restore them to their pre-carbon tax position?
WONG: All of these details will be released Steve and were very happy to have discussions about all of these things when theyre released.
JOURNALIST: And when will that be?
WONG: When they are finalised.
JOURNALIST: Yes, but when will that be? I mean its not an unreasonable question given we put you in government, sort of, you formed a minority government. That this is the single biggest policy change that this nation is likely to see for many a decade. And its fundamental and youve announced its going to be a tax. Its not unreasonable for all of the Australian population to say how is this going to hit. I mean, whats causing the delay?
WONG: Well there are a number of questions in there and a number of assertions, but Ill answer the timing question. The Prime Minister has said around the middle of the year and the delay as Ive explained to you is because we are working through the details with other members of Parliament including Tony Windsor and Rob Oakeshott. And I wouldve thought people would want us to make sure we work through those details. We will put forward a policy that is fully costed, where people can see how it will affect them.
But can I just say, you quite rightly said this is a big reform. It is a reform where we used to have bipartisan support, where John Howard went to the 2007 election saying he would implement. We dont have that any longer which is, I think, a pity because it makes it much harder. But I would say to people, if we think forward 5, 10, 15, 20 years and we think about looking back to this time, I suspect that once we put a price on carbon, people will say well that was the right thing to do. Put a price on pollution, we started reducing our pollution, we stopped allowing polluters to pollute for free and we made very large investments in clean energy and cleaner ways of doing business. And our economy is stronger for it, and weve done something for our kids, because weve helped contribute to tackling climate change.
So this is a debate where each day I get, people get questions like the one youve just asked me. But I think its important also that we take a step back and think about where we want to be in the future.
JOURNALIST: I think weve got the principle of it, its the detail that were after at the moment.
WONG: Sure.
JOURNALIST: Can I ask you, Penny, about what happens. So nine out of ten households will in some way be compensated not necessarily restored to their pre-tax position, but in some way compensated, either through tax cuts or through some sort of direct funding. You say that theyll have a choice in respect of energy consumption at that time. When this is instituted, what other choices of energy consumption will they have? For example, with electricity and gas, the fundamentals that currently drive our houses in the big cities.
WONG: And there are some aspects of that where people simply have to keep purchasing energy, dont they. We know that.
JOURNALIST: Yeah.
WONG: Thats why one of the things we have announced and I accept that more detail needs to come. But one of
JOURNALIST: But what will that detail conceptually, what could that detail be? There are no other choices.
WONG: If I could just take you through this. One of the things the Prime Minister has said is that we will focus assistance, tax cuts, and increases in payments on lower income households. Weve said that around 3 million households on lower incomes will get what we call a buffer. That is, an additional up to an extra 20% over and above meeting what the average price impact of a price on carbon will be. And the reason for that is precisely what youve said. If youre on a lower income, you dont have as much discretion around your income and what you pay out as somebody on a higher income.
JOURNALIST: My question though, Penny, is not about them being restored, my question is about this driving consumer change. My question is, what are the alternatives to which consumers could turn, even if theyre restored, or only partially restored, for electricity and gas, as thats the ultimate objective of the carbon tax.
WONG: Remember that part of the reason for a carbon price is to drive a transformation and shift in our electricity sector.
JOURNALIST: So what are the alternatives?
WONG: And were already doing that through the Renewable Energy Target, which will increase, and is increasing, the amount of solar, wind, and other renewable energy in the grid. But it is true, what we need to do is to shift to lower polluting forms of energy, and have that investment in lower emissions technology, whether its renewables or gas.
JOURNALIST: So how will putting the same amount of money in the hands of a lower income earner drive them to be able to purchase a different form of energy, if theres no other form of energy thats available to be purchased. Even if they were minded to make that purchase, because theyre restored completely.
WONG: Well, I dont agree with the way you phrased the question Steve, because we are already seeing a shift in the generation of energy through the Renewable Energy Target. So remember that because this is a price on pollution there is an incentive for the people who produce energy to move to lower polluting ways of producing energy. So in fact what your question demonstrates is that we need to provide consumers with more choice, more options, around energy sources.
JOURNALIST: And thats my question. On day one, when this carbon tax takes effect, there will be no such alternatives available. To the average person in Melbourne or Sydney, inner city person whos just going about their day to day business, theyve got one energy provider. Where do they turn for alternative sources of energy?
WONG: Can I answer the question this way: we know that there has been a real reluctance for companies to invest in what we call baseload generation. So that is the energy that we need, in a word, essentially all the time. And the reason is the uncertainty around pricing carbon. People havent been willing to invest.
We need to make sure we give them the certainty so we do get the investment in cleaner ways of producing energy. And Im not suggesting this will be overnight, Steve. But it is a longer term transition for the economy. So we need to give generators companies that invest in making the electricity we use an incentive to reduce their pollution and to move cleaner forms of energy.
And the cheapest way of doing that is to put a price on carbon. And its fairly commonsense if you think about it. If somethings free, people dont stop doing it, and thats the issue with pollution.
JOURNALIST: Yeah, I understand it, Im just not sure about the mechanism, particularly those who are restored. Can we change the topic to international progress? In his report, Garnaut talks about the appearance of international progress being one of the worst responses that a government can have. If theyre driven by the appearance of international progress on climate change.
He says specifically, the most inappropriate response for a nation is to take measures, and to reach international agreements, that create the appearance of action, but which fail to solve the problem. We read, for example, Congressman Sensenbrenners belief that Obamas climate change targets to reduce greenhouse gas emissions by 2005 levels by 17% by 2020 will neither be achieved, nor approached. He says the targets are unrealistic. We also see that the Kyoto Protocol is increasingly questioned.
In light of these shifts that have happened since Professor Garnaut wrote his report, are we moving in front of the rest of the world? Are we falling prey to the very inappropriate response that hes articulated?
WONG: No, I dont believe we are. And I think people should be aware weve had the Productivity Commission look at this, we know that countries are moving. Its true there are different types of policies in different countries. Some people might use a price on carbon, some people use massive investment in renewable technology. China has the largest installed renewable capacity in the world. Some people use energy intensity targets, and some people use emissions trading schemes. And youll see that South Korea is looking to implement one of those in the next few years.
What the Productivity Commission did tell us is the same thing the John Howard was told in 2006 by his experts: that the cheapest way to make sure we make this transition is to put a price on carbon. Its far cheaper, for example, to do what the government is proposing than to do what the Opposition Leader Tony Abbott is proposing.
Hes proposing to take money from taxpayers, around $720 a year from Australian households, give that money to the big polluters, hoping that that might mean theyll reduce their emissions. Now thats not a cheap way of doing business, its not a cheap way of achieving reductions in pollution. It does make sure you impose further costs on Australian households.
JOURNALIST: Penny Wong, really appreciate your time, always good to talk to you.
WONG: Good to speak with you again, Steve.
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