WONG: Good morning to you Grant.
GOLDMAN: Gday. Thanks for taking the time this morning. You got a pay rise?
WONG: Well, yeah, apparently
GOLDMAN: Apparently. Now, I think that the Greens leader Christine Milne is thinking about giving it back what about you?
WONG: Every time theres any discussion about politicians salaries I think it becomes quite you usually get a whole range of questions. I think that the best way to deal with it is the way weve tried to deal with it, which is to take politicians out of the equation and to give it to an independent tribunal and they set politicians salaries. In terms of donations, Ill keep giving to the charities I give to, Grant.
GOLDMAN: Id like that independent tribunal to work for me, but thats another story (laughs). Now, as far as the carbon tax... gee, its been a tough sell, because Ive never heard so much debate about anything thats ever happened in this nation while Ive been alive.
WONG: Well, it is a change. Its a change because were saying that something that was previously free now has a price thats pollution, the carbon dioxide that we put into the atmosphere. And, obviously, what its meant to do is to try and encourage businesses, particularly those large businesses that emit a lot of carbon pollution, to reduce how much they put out, to reduce how much they put into the atmosphere. Its also meant to give an incentive for investors to invest in cleaner technologies, cleaner ways of doing business, clean energy.
GOLDMAN: Isnt it interesting that we have a situation now, with the carbon tax, and later on, of course, the ETS where the Greens are very, very happy, because were talking about the greening of the planet and of course reducing global warming and doing our best in that area, but the top end of town love it for investment purposes, where the trading scheme would be much more suitable. And that is down the track, isnt it?
WONG: Certainly many people see what I see, and what others see, which is that the world is continuing to pay a premium for low-carbon goods and services, for clean energy technologies. Were a very highly polluting country, and we want to be able to compete in ten or twenty years time in a world where we know that carbon will increasingly be constrained, and will be priced.
Remember, China in 2011 was the biggest investor in renewable energy. We see lots of other nations really upping their investment in clean energy. Theyre not doing it just because they think its a fashionable thing to do, theyre doing it because they know this is the way in the future theyll be competitive.
GOLDMAN: With the carbon trading of course many people changed their mind, including the Prime Minister, who said that therell be no carbon price in any Government we lead, she changed her mind, as did the Treasurer. And I suppose in many ways you did too. Can I just play without being confrontational about it can I just play you some of the things that youve said? Here we go.
[RECORDINGS]
WONG: A carbon tax is a less efficient way, in the Australian Governments view, of dealing with this issue.GOLDMAN: And of course I might before you go on, I must say, at one stage it was true that the Leader of the Opposition Tony Abbott said that he was looking forward to supporting a carbon tax at some stage. So, I guess people can change their mind, and in your case
WONG: Unfortunately, a carbon tax is not the silver bullet some people would think.
WONG: We know that you cant have any environmental certainty with a carbon tax.
WONG: Im very happy to answer that because the context of those answers was, a, as you say, Tony Abbott saying we should have a carbon tax and, b, the Greens saying well lets have a carbon tax.
Ive always thought ,and the Government has always thought, that the best and most efficient way is to use what we call a trading mechanism an emissions trading scheme. And the reason for that is it really leverages the market to operate. So, it encourages firms to rather than someone in Canberra deciding what they should do it encourages firms to work out what is the best way for them to reduce emissions.
Remember were not putting in place a carbon price or a carbon tax as a permanent fixture. Were putting it in place as a transitionary measure until we get to an emissions trading scheme in a few years time.
GOLDMAN: Which is what the top end of town is really looking forward to (laughs) the trading scheme. Look, it is true that there are nations around the world that are backing off, and one in more recent times is New Zealand. We learnt this morning the carbon tax has been rolled back somewhat because they dont want to place households in the productive sector under further pressure. What does that mean?
WONG: Lets start by remembering that New Zealand has had emissions trading for some time, and what they are doing is not removing their scheme or dismantling it
GOLDMAN: Even though I heard on another radio station this morning theyre removing the scheme, theyre not doing that. Theyre just backing off on it.
WONG: What they had in place was a series of stages. So when they first introduced their trading scheme they said, Well stage one will mean X, stage two will mean X, so they progressively brought different parts of their economy into the scheme. What theyve decided to do is extend one of those stages a little longer than they previously agreed. But its wrong to say that they dont have a scheme. In fact, their scheme is going to include agriculture and as you know weve excluded
GOLDMAN: Well, theyve excluded agriculture for quite some time. I dont think that will happen until 2015 if it does at all. WONG: Thats right yes, its 2015. But of course Australias already said were not going to include agriculture in the scheme. We are going to invest in the Carbon Farming Initiative but were not going to include agriculture in the scheme.
GOLDMAN: You cant get around the fact that it is going to be a situation where there will be price rises everywhere. And I know that theres some money coming from the Federal Government for families who probably need a little bit of help along the way. Would it be easier for an Australian Government to say, Well, look maybe we can wind it back to be more on a parity with the rest of the world. I mean when you look at India their carbon price is a dollar a tonne. And in other parts of Europe its around seven to nine dollars, and even they, at this stage, are backing off somewhat. So is it politically advantageous and maybe even smart for the Australian Labor Government to say, Well, maybe well wind it back because its not the right time.
WONG: I think its first important to understand precisely how much will be paid. For those businesses who trade on world markets and are what we call emissions intensive, so they put a lot of carbon out for what they produce, were providing free permits, so the average liability for those most emissions intensive sectors is about $1.30 a tonne. So when people talk about the carbon price I think we need to factor in weve put in place a lot of transitional assistance for industry.
In terms of households, theres a lot of talk about how much prices will increase. The assessment by Treasury is that prices will increase by about an average of 0.7 per cent. So thats much less than the increase when the GST was brought in. And, as youve already reasonably pointed out, were accompanying this change with a whole range of tax reforms. So, everyone earning up to $80,000 will get a tax cut because were tripling the tax free threshold. That of itself is an important tax reform measure.
GOLDMAN: What if were wrong about all of this? What if were wrong? And there are some climate scientists were hearing about overnight now that want immunity from prosecution if their predictions for the future as far as global warming etcetera are wrong. I mean, doesnt that send some kind of an alarm bell? WONG: First, Id encourage people to look at what Australias own institutions people like the CSIRO and the Bureau of Meteorology have said on this, about where the evidence is pointing. But the second point is, well, if were wrong, what weve done is weve created an economy which produces less pollution and it has a greater focus on clean energy. I wouldnt have thought thats such a bad thing.
GOLDMAN: The other thing we heard about overnight look, I know its a power plant theyve been trying to talk up a power plant thats been inoperative the power plant on the Central Coast, its called Munmorah Power Station, has now officially closed. And theyre saying that the carbon tax is partially to blame. In fact the words are the final straw.
WONG: I understand Munmorah has actually not been operating since 2010 and this is a decision to decommission, which I also understand has been on the cards for some time. Its a pretty old plant its older than I am... and Im getting older these days (laughs).
GOLDMAN: (laughs) Arent we all. I know that there are people who do work there but its only in a minor operative state at the moment, so with the closure it still means that there are jobs lost.
WONG: And any job loss is always regretted. But I just make the point that this has been on the cards for some time as I think can be seen by the fact that it hasnt been operating.
GOLDMAN: Do you agree that the carbon tax itself is electorally damaging for the Labor Party? I mean, there are people who will say its because of this that youll not make power at the next election.
WONG: Its a pretty tough reform, isnt it?
GOLDMAN: Oh yes, theres no doubt about that. In fact, if anything, its very brave or stupid of the Government to do it... somewhere in the middle, I suppose.
WONG: I dont doubt that its the right thing to do. There was a reason even John Howard and hes not known for his strong environmental focus went to the 2007 election promising a price on carbon and an emissions trading scheme.
And the reason he did that is because so many economists, so many scientists were saying, even to the Howard Government, this is what you have to do to try and change how the Australian economy works. But it is, youre right, it is a reform where its easy for there to be a scare campaign, and certainly Tony Abbotts run a very good one.
GOLDMAN: Just finally, its little old Australia leading the way. No ones got a carbon price like us, no one as high. Would it be easier to say, okay, maybe we should have just tested the water like the rest of the world and wed be more on a parity with the rest of the world and the way that theyre approaching it.
WONG: The first point Id make is that there are actually pretty substantial equivalent carbon prices in a number of countries; Norway springs to mind. So, I think, remember, that were not actually leading the way, a number of countries have got substantial carbon prices and have had
GOLDMAN: But not as substantial as our $23 a tonne...
WONG: Well, I dont know that thats right because if you look at, for example, as I said, at Norway, they got a very substantial tax. But I think that the point is that we have to get going on this. We know that we have to make an adjustment and we know that the longer we wait, the harder it is.
GOLDMAN: And I guess really we just have to wait and see if the sky falls in, as Tony Abbott says. Were going to leave it there, but thank you for your time this morning.
WONG: It was very good to speak with you.
ENDS
