CAMERON: The Finance Minister Senator Penny Wong is my guest this morning. Minister, good morning.
WONG: Good morning Deb.
CAMERON: Now first of all, the top 500 companies, theyll be taxed under this carbon tax regime. Theres a breakdown of industry types on the list that youve published, but not the names of the 500. Now why is that?
WONG: Because Im not sure the point is really to single out and name each company, the point is to put a price on pollution, so that those companies which do pollute have an incentive to reduce that pollution. And also, because you give a signal to investors, so people who are investing are more likely to invest in clean energy and clean technology.
CAMERON: What has been revealed is that 135 of the companies are based in New South Wales or the ACT
WONG: Thats right, here in New South Wales.
CAMERON: The majority of them, according to the list, are energy suppliers and waste disposal firms. So is it fair to surmise that just as they are major contributors to the pool of funds collected through the carbon tax that they will also be likely beneficiaries because it would seem that they are large and therefore best equipped to innovate. Is it fair enough to imagine that theyll dip into the pool, as well as pay into the pool?
WONG: They may, but remember also, if theyre very heavy emitters theyre likely to get access to the jobs and competitiveness package which includes some free permits to companies as transitional assistance. And so you look at these industries, and you say theyre having to pay for something that was previously free, which was to put pollution into our atmosphere. But you give them some transitional assistance over time. That gives them an economic incentive, and also the ability to invest in their own businesses, to reduce emissions. And thats the whole point of this scheme, is youve got to give a price incentive to business to pollute less.
CAMERON: Though, what Im driving at I suppose, is you set up the new sort of banking system, or a new banking fund under this, which will be administered. Will they be able to get a hold of money that flows in for innovation?
WONG: The Clean Energy Fund, if thats what youre talking about, thats a $10 billion fund out to 2020 which is about investing in clean energy. That will be on a commercial basis, so well be looking at it will be run independently of Government, be run by someone who has experience in financing. And were really there looking I suppose at the third part of the innovation chain. So if you think about grants, R&D grants first, and then you look at demonstration projects, and then you have the next bit where you need money to commercialise. Thats what thats focused on.
I have to say that fund youd say, Deb, is more likely to be focused very much on new technology and new industries. Things like geothermal we need to expand that. Weve got fabulous resources in renewable energy in this country. Were starting to use them; weve certainly got wind rolling out, and a fair bit of solar power. But theres a lot more that we can do. Were one of the countries most blessed, in terms of renewable energy, on the face of the planet.
CAMERON: How will the funds for innovation be apportioned under the scheme? Now, if better than a quarter of the companies concerned come from New South Wales, and contribute, lets say just dollar for dollar just because it seems the simplest thing to do, lets say a quarter of the funds, would New South Wales therefore receive a quarter of the revenue?
WONG: (laughs) You and Colin Barnett could have a chat there, Deb. I dont know that were going to be doing a sort of GST-style allocation. Really the $10 billion Clean Energy Finance Corporation is very much focused on projects, not on states. And youd anticipate people theres going to be a lot of firms across the country.
But really what thats about is moving to Australias clean energy future. We have to shift to much cleaner energy sources. And we have to make quite a transformative shift in this decade to much cleaner forms of energy. We havent done as much over the last twenty years as we should have, and this is putting in place a price on carbon, plus these other funds are all about making that step change.
CAMERON: Now how will you protect the probity of the scheme and avoid the whiteboard effect where money is parcelled out according to political imperatives rather than merit?
WONG: Thats why well make sure its set up properly with a governance structure independent of political influence and independent of government. I think if both of the, certainly the Clean Energy Finance Corporation and also the new renewable energy agency, ARENA, are both intended to be at arms length from government. So your question is a very good one, one were very conscious of, and thats why you have these independent bodies.
CAMERON: Now the State Government has already complained that budgetary receipts will decline because of the carbon tax effect, that the New South Wales Premier says that he expects quite a hit on the state income. The Greens say that the Premier should immediately apply for compensation to close the least efficient of the power stations in New South Wales. Does this state deserve special sympathy because of the parlous condition of its aged energy assets? Will the system in other words be weighted to need?
WONG: You certainly had a long history of different energy policy in this state, and its been a focus of a lot of conflict, hasnt it? And youd probably know more about that than I. What we have done is set up energy security funding, which is based on what is most emissions intensive, and assistance to those generators in order to ensure energy security.
The job of this fund and these policies is not to help bail out any government, or any private sector organisation. It is about making sure we have energy security through the transition. So were not doing the funds there are going to be allocated, and the free permits are going to be allocated on the basis of how much pollution a generator emits as part of this transition process.
In addition, and this may be what the Greens are referring to, the Government said we are prepared to buy out around 2000 megawatts of energy and well do that through a tender process. Obviously, we cant speak about how much we are prepared to pay for that and the timing, those are commercial in confidence arrangements. But we have said, we are prepared to look at that through a proper process and that would require a certain amount of energy from the market thats very polluting, so you can put cleaner energy in.
CAMERON: Its really interesting though to think about where most of the population of Australia actually resides where the great demand is, how much growth potential there is in New South Wales, so far unmet. Will any of those sorts of factors - if youre talking about allocating national resources in this way, then surely you have to take into consideration which states will be able to turn that money into potential growth quickly. And that means dealing with issues around population. Weve got a big population, a lot of bright people, want to get their hands on cheap energy, can grow the national economy as a result of doing that. Does that come into it?
WONG: I think that needs to come into it from the perspective of private sector investment. You do have a big market here. Youve got a growing population, youve got very high energy needs. And what this system will do is put a price on carbon give investors the incentive to invest in clean energy. They havent had that; thats important to remember.
Why has this country not invested in as much as it should in clean energy? Its because polluting has been free. So you dont have price incentive for someone who wants to make an investment to invest in cleaner energy. When we get this through, then we will.
CAMERON: My guest this morning is Senator Penny Wong who is the Finance Minister. Among the 500 companies I dare say that News Limited will be there somewhere, so it brings me to a question about the quality of the management of the companies that are going to receive assistance under this scheme.
Lets look at the case of News Limited. The Government has already deferred a decision about the Australia Network which is a licence to broadcast into the region. News Ltd has applied the blowtorch to the Rudd and Gillard Governments, to the NBN Chief Mike Quigley, to the Police Commissioner in Victoria, Simon Overland, to the operators of the Wivenhoe Dam in Queensland. Various aboriginal leaders have copped it from them, an assortment of Greens, the countrys independents and nearly daily sprinkling of others. What theyve always said is those groups have always failed to comply with either with the law, an ethical standards, theyve exercised poor judgment in management, theyve had personal failings, a lack of financial rectitude, bad management, undue secrecy. All of those things have come into the criticisms that theyve made of others. In light of whats happened in the UK, could they be accused of hypocrisy Senator?
WONG: I suspect your listeners will have many, many different views on the question you just asked. I had a late night last night and I did spend a bit of time watching I think its the BBC World channel, and I hadnt really gotten across a lot of the details, so I watched a number of interviews about it and certainly whats unfolding there is quite extraordinary. But obviously thats a matter for News International and they will have to deal with it, as will the British government and the regulators there.
CAMERON: How much movement though do you expect in the top 500 companies? Some might fall out of the top 500? How much movement will there be?
WONG: Thats a good question, Deb, because weve set a threshold of basically how much pollution you emit, which brings you into the ambit of the scheme. It will be interesting to see over time, wont it, how many people reduce significantly their emissions so they end up not having a liability.
If they do, thats a good thing. The purpose of the scheme is not to create a compliance thing, the purpose of the scheme is to put a price on carbon so people pollute less. So if people end up polluting less so they dont have to be within the scheme, I think thats a good thing for all of us.
CAMERON: Is the Government afraid to stand up to News Limited in Australia, Senator?
WONG: (laughs) Were politicians, and youve got to sit in front of Deb Cameron, or the Canberra press gallery, or whoever, and youve got to answer questions. Sometimes the questions are hard, sometimes theyre not. Most of the time, theyre to put you on the spot. And whether its from you, Deb, or from a member of the News Limited or the Fairfax Press, my job is to answer them as best I can.
CAMERON: Senator thank you very much for coming in this morning.
WONG: Good to speak with you.
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