GREENWOOD: I thought what wed do is get the Finance Minister, Penny Wong on the line with us. Of course, shes been going around the country explaining the carbon tax to people, she joins me now. Many thanks for your time Minister, appreciate it.
WONG: Good to be with you Ross.
GREENWOOD: Just explain this to me because we know the United Nations has a program which effectively tries to get developed nations to reduce their emissions, this is what this is a part of, isnt it?
WONG: Look, Im not sure about the detail of the exact project youre talking about but I can say, in the international system there is the ability for companies to purchase genuine abatement in other countries. And thats a good thing. That might mean a polluting company here in Australia might purchase a reduction in emissions, so that theres less going into the atmosphere somewhere else in the world. But I just do want to make this point Ross this sort of linking wouldnt occur under our system until 2015-16. And we would always ensure that you have very high quality abatement that can be verified.
GREENWOOD: So what youre saying is until the actual carbon emissions trading scheme comes in, that companies would not be able to offset their carbon output, their carbon dioxide output by buying offsets overseas?
WONG: Thats right, because were looking at a fixed price period for a period of three years. Thats where it effectively operates like a tax. So you wouldnt look at linking until we move to what we call a cap and trade scheme, an emissions trading scheme. And even then, weve set up a Climate Change Authority, which you might recall weve announced Bernie Fraser to head that. And they would look at things like making sure whatever credits are purchased elsewhere, actually make a net benefit to the atmosphere.
GREENWOOD: Well let me just explain this project to you. Whats happened is its been out there in the last few days and that is the United Nations has basically given a power station in Andhra Pradesh which is a coal burning power station using coal, from amongst other places, Australia.
Its fuelled by reliance power and effectively its going to be able to in todays dollar terms, earn carbon credits worth $165 million. The funny thing is the type of technology theyre using to build this power station is based on some of our more efficient coal burning power stations here that would still have to pay the carbon tax.
Now, in the last day, India and China have successfully blocked a proposal to suspend the United Nations program to earn carbon credits from ultra mega power stations such as this one. So India and China have got together and blocked this because they know that they actually do better burning coal, making their industry more efficient with cheap electricity, and as a result, potentially taking manufacturing jobs off Australia. Where is Australias productivity improved by this?
WONG: Theres a lot in what youve just said to me. Lets go back to first principles. Why do we want to put a price on pollution? Because we know that will reduce pollution. It will also give a signal to investors. So it will say to people who are investing, firms that are investing, we want you to invest in cleaner technology, smarter technology, cleaner energy, and infrastructure that is about clean energy.
JOURNALIST: I agree entirely with that. I absolutely agree 100% with you, Minister. Theres no doubt about that that is the signal you want to send to people.
WONG: Absolutely.
JOURNALIST: Only one thing, and that is that if we find that because electricity is more expensive here because of a carbon tax, and it is cheaper in India because they can sell carbon credits while generating the same energy at cheap rates using Australian coal, then it doesnt make sense, if they, with lower wages and a very high Australian dollar, can manufacture at cheaper prices than we can here in Australia.
WONG: This is about transitioning our economy, Ross, then you know that our economy has gone through a lot of transition over the last 50 years. Weve never secured our prosperity by standing still, and weve certainly never secured it simply by competing on lowest cost.
Were an advanced economy. We have to be smarter; we have to also make sure we can build those things, manufacture goods, provide services that work, and that can be sold in the global economy.
JOURNALIST: But your Government has given a commitment to the Australian Workers Union, and Paul Howes, that no job will be lost because of the compensation that will be handed out to industries that are potentially sensitive.
WONG: And what I was trying to explain is that we are moving. Were an economy in transition. Were an economy that changes, and thats been the history of the Australian economy.
As the Government, what we have to ensure is that, just as you give the incentives for the jobs of tomorrow, you also support jobs today. And that is the transitional assistance, very substantial assistance were providing the steel industry, the coal industry, and other industries such as aluminium, which have very high exposure to a carbon cost.
JOURNALIST: No doubt about that. The Finance Minister, Penny Wong, I appreciate your time as always.
WONG: Good to speak with you.
ENDS