JOURNALIST: Good morning to you Penny Wong.
WONG: Good morning.
JOURNALIST: And Im sorry you had to leave your toast and Vegemite half-eaten in the staff cafeteria.
WONG: Partaking of the ABC staff cafeteria fare. It was very good.
JOURNALIST: Were quite happy -
WONG: Vegemite on toast.
JOURNALIST: Of course you wouldnt want it burnt with all that carbon in there. And Christopher Pyne, Federal Member for Sturt, the most senior Liberal in South Australia. Good morning to you.
PYNE: Good morning, Matthew, David.
JOURNALIST: Now, Penny Wong. David, sweeping through what is Labor territory, the Iron Triangle, there has been quite a consistent theme he hasnt particularly gone looking for this that we dont trust Julia. Are you starting behind the eight ball?
WONG: This has been a pretty tough debate, and we havent had the detail out there to be able to deal with some of the outlandish scaremongering from the Opposition. But we do have it now, and we can be very clear with people, and upfront with people about what were proposing.
As you know, we have had a lot of negotiation with the steel industry, just as we did on the last occasion. And I was pleased to see OneSteels press release yesterday which described the Governments plan including the steel transformation plan, which is an additional assistance as both appropriate and sensible.
Were a Labor Government, jobs do come first. Weve demonstrated that through how weve approached our term of government 750,000 jobs created since we came to government. The steel industry is important, and thats why we have sat down and negotiated a sensible package.
JOURNALIST: Christopher Pyne, Tony Abbott has been going around warning about dire circumstances. The Governments now got its plan out, including quite significant tax cuts, lifting the threshold from $6,000 to around $18,000. What are you left with? When we were pressing Tony Abbott on his plan, he couldnt even tell us how many trees he planned to plant, and theyre part of your policy.
PYNE: Well, the answer to that is 20 million actually. The answer to the number of trees planned to be planted is 20 million at about $5 a tree. So that
JOURNALIST: You didnt know that two weeks ago, so thats
PYNE: Well, he has a lot on his mind
JOURNALIST: Oh, OK.
PYNE: - a lot to keep in front of him at all times. But can I just, I will respond to that question, because theres plenty from the Opposition. We are a long way from the shore in terms of being safe from this toxic carbon tax, and the smoke and mirrors of yesterdays announcement will be unpacked over this week as people start to look more closely at the impact of the carbon tax on them. Now for example, yesterday we didnt know that if you dont have a Seniors Health Card, you dont get any compensation. So there are at least 300,000 self-funded retirees who dont get any compensation whatsoever from the Government. Thats just a very -
WONG: You may get a tax cut.
PYNE: Thats just a very small example.
WONG: You may get a tax cut.
PYNE: I didnt interrupt you. So thats a very small -
WONG: No, but youre also saying something thats incorrect. People may get a tax cut.
PYNE: Thats a very small example. Penny, if you want to run the show that way, thats fine, if you want to have a mature discussion, thats also fine.
JOURNALIST: Although, if youre being picked up on something thats wrong
PYNE: Well its not wrong.
JOURNALIST: Do you concede that theyll benefit from the tax free threshold going from $6,000 to $18,000?
PYNE: Well yesterday the Government announced that self-funded retirees would receive compensation from the Government in the same way as pensioners, that they would get an upfront payment. Most self-funded retirees would have thought that the upfront payment on July 1 next year was compensation. In fact, 300,000 self-funded retirees wont get that upfront payment because they do not have a Seniors Health Card. Thats just one example of the unpacking of the program that was announced yesterday.
But, can I just respond to your first question to Penny Wong. Julia Gillard does have to overcome an enormous deficit in terms of the respect that people have in the Australian community, given the record of things like the East Timor solution that never materialised, the citizens assembly that never materialised, the promises not to stab Kevin Rudd in the back which were obviously broken, and of course, most important of all
JOURNALIST: Were straying a long way from the carbon tax here.
PYNE: No, because the first question was about whether they had a hurdle to overcome in the truthfulness of the Prime Minister. And the biggest lie, of course, of all, was that there would be no carbon tax under a government I lead, which is one people wouldnt want to forget. And we are now debating, of course, the details of a carbon tax.
JOURNALIST: David Bevan, you want to pick up on any of that?
JOURNALIST: Well, if I could put to Penny Wong a question that we put to you a few weeks ago. And that is, whats the point in putting up prices and then compensating people for the price hike? How does that actually change consumption and emissions? Arent you, as Senator Xenophon suggests, just churning money?
WONG: No, because the key price signal is the signal to polluters. The key price signal is the signal to investors. So what were saying to big polluters is you are now going to have to pay for the pollution you put into the atmosphere. That gives them an incentive to reduce it. Were also saying
JOURNALIST: But wont they be able to
WONG: Just let me finish
JOURNALIST: But if I could stop you at that point.
WONG: If you could just let me finish the second part
JOURNALIST: Minister, if you could break this down into points
WONG: The second part I was going to say, David, is it is also a signal to investors.
PYNE: Never argue with the interviewer Penny.
WONG: No I just wanted to finish the answer if I could. Im happy to take the second part of the question. So, we have a price signal to polluters, giving them an incentive to pollute less, to find cleaner energy ways of doing business and to pollute less.
Then we have a price signal to investors that says dont invest in dirty energy, dont invest in business where you are going to pollute more. Invest in clean energy and invest in business which has lower levels of pollution. Thats how you make the transformation. Over to you.
JOURNALIST: But, youre giving the consumers a greater ability to pay their bills because youre compensating them. So wont the power companies say OK, our costs have gone up, but our consumers have more money to pay, therefore theyll continue to buy dirty power?
WONG: I think what youll find is investors will react to a carbon price, and will increase the investment in clean energy. That is what the energy sector itself says. Remember, the Government has also said there are a range of other policies: potentially buying out some capacity so we can shift to cleaner energy, increasing the renewable energy target, which we already have in place.
But David, if I could just respond to one thing Christopher said, he described this as a toxic tax. This is the same man on 15 October 2009 who said, and I quote the idea that somehow the Liberal Party is opposed to an emissions trading scheme is, quite frankly, ludicrous. Is, quite frankly, ludicrous
PYNE: Is that before Copenhagen or after Copenhagen?
WONG: And at no point, either before Copenhagen, or during John Howards government did the Liberal Party say were not going to impose an ETS; they agreed that they would. Christophers changed position because his leaders changed position.
JOURNALIST: Its a quarter to nine on ABC Adelaide, Matthew Abraham. David Bevans in Whyalla. In our studio Senator Penny Wong, Federal Finance Minister, and Christopher Pyne, who is the Federal Member for Sturt and shadow minister for education, and the most senior Liberal in South Australia. Its a quarter to nine. John from Vale Park, hello, John.
CALLER: Good morning boys, good morning Senator, good morning Christopher.
WONG: Good morning.
PYNE: Good morning John.
CALLER: Ive one question, its in three parts. And I want a straight answer, no pollie talk, no shilly-shallying around the bush.
JOURNALIST: Youre better get to it.
CALLER: This is for Penny Wong. With all of the resources of Treasury, and the calculations theyve made. One, how much are they going to collect? Two, how much are they going to give back in grants, benefits and incentives? And three, whats going to happen to the profit?
WONG: Well, the first point is the last one. We are actually investing more than we will collect in the first four years of the Budget period, and in the first three years of the scheme. There is no return to government from this tax on polluters.
JOURNALIST: So in fact this is a new tax that will result in a $4 billion deficit. I noticed somebody said that was a first: a new tax that actually increases deficit.
WONG: Because there is a
PYNE: In the short term therell be a hit to the budget of $4 billion, which is going to wipe out the surplus.
WONG: (laughs) So, John from Vale Park, I am trying to answer the question, but thats OK.
JOURNALIST: No, no, were just helping you there. Im helping you.
PYNE: Its not a one-way street, you know, Penny. Youve actually got to interact with people.
JOURNALIST: You dont need to coach Penny Wong, thank you. I know youre trying to be helpful Chris Pyne.
PYNE: In the Senate theyre not used to being interrupted.
JOURNALIST: Penny Wong, how much will it
WONG: Sorry, I was just trying to answer Johns question, but he asked me not to shilly-shally, so Im being obedient. So John, the short answer to your question is, we actually will invest more through tax cuts and investment in clean energy, and in the land sector, and in energy efficiency than we will raise. So thats the answer.
JOURNALIST: So how much will you raise?
WONG: I think its about $18 billion from memory, over the forwards.
PYNE: Are you sure its not $21 billion?
WONG: $21, you might be right.
PYNE: Its $21 billion John. Im not the Finance Minister, but I read the documents.
WONG: The net hit John is that we spend about $2.9 billion in 2011-12, and then after that its about $1.3 billion. The important point is, as the Prime Minister agreed, some 50 per cent plus of the revenue raised from putting a price on pollution will go back to Australian households.
And you might recall, if youve seen the news, that we are putting in place very substantial tax cuts. Very substantial tax cuts for everybody who earns up to $80,000 a year. People will get a tax cut because we will increase the tax free threshold.
And I notice Joe Hockey today made some point about loving these tax cuts, so Im very pleased that the Opposition is supporting them.
JOURNALIST: Now, Penny Wong, in terms of your sales pitch, this is the front page of the News website, news.com.au. Thousands and thousands of people will click on that. Theres a great big thing, very simply saying living costs will rise under Australias carbon pricing system, the Government says tax changes will leave most people better off. For the average family, this is what its worth. And theres a great big 20 cent piece there. So theyre saying that average household costs will rise $9.90 a week under a carbon plan, but assistance will leave households 20 cents better off. Is that fundamentally incorrect?
WONG: Thats the average. So if you go across the economy, the average increase is about $9.90 a week, the average increase in assistance through tax cuts and increases to payments is about $10.10. But lets just
JOURNALIST: 20 cents?
WONG: Lets just get this in perspective. Is anybody suggesting theres a cost-free way
PYNE: Theres a bit of a margin for error there of course.
WONG: Is there anyone suggesting there is a cost free to tackle climate change? And of course, Christophers policy would cost people $720 a year.
PYNE: Not true. Its absolutely untrue.
WONG: $720
PYNE: That is fundamentally untrue.
WONG: This is what the same bureaucrats
PYNE: Well if I get the (inaudible) response and a chance to answer, I will explain it.
WONG: Sure, the same bureaucrats who would advise you, advised us the same thing. I just want to get a bit of perspective here. The average increase in the Consumer Price Index, thats prices, is about 0.7 per cent. So were talking about less than one cent in every dollar. So I just wanted to make sure people get the sort of quantum, which is a reasonably small quantum were talking about, in the face of Mr Abbott suggesting that everything would become unaffordable. Less than one cent in every dollar.
JOURNALIST: Every dollar you spend?
WONG: 0.7 per cent CPI in fact.
JOURNALIST: David Bevan?
JOURNALIST: Penny Wong, is the Federal Government included in the scheme?
WONG: Well, Im not sure were one of the top 500 polluters.
JOURNALIST: Well according to the Institute of Public Affairs, the Federal Government is ranked somewhere between the 30th and the 10th largest emitters in the country. And it did ask the question, why wouldnt the Federal Government emissions be controlled in the same way as the large private emitters?
WONG: If we are in the scheme, were within the scheme.
JOURNALIST: Im asking you, are you in the scheme?
WONG: I dont believe we are but obviously what weve said is you have a threshold of a certain amount of carbon pollution you emit in any one year and you have to purchase permits for that amount; thats how you get the price incentive.
JOURNALIST: Now Chris Pyne
PYNE: Thank you.
JOURNALIST: Well you may not thank me in a minute but
PYNE: Well it was nice to get a chance.
JOURNALIST: The Federal Governments increasing the tax free threshold upfront from $6,000 to $18,000. That will be welcomed by a lot of people, particularly low income earners and what have you and people entering the first jobs market. Are you going to roll that back when you roll the carbon tax back?
PYNE: Well Matthew, firstly can I say with respect to the tax free threshold, Tony Abbott has always said that we should raise the tax free threshold in line with the Henry Tax Review suggestions. What Penny Wong hasnt mentioned is that in doing this tax free threshold increase, theyve increased the first rate of marginal tax from 15 cents to 19 cents. And the second rate from 30 cents to 33 cents. The first time that marginal tax rates have been increased since 1984. So this is no tax reform at all. Theyre actually increasing the tax rates from the two lowest marginal tax rates.
JOURNALIST: So you pay no tax until you get to $18,000 as opposed to kicking in at $6,000.
PYNE: Sure.
JOURNALIST: Are you going to roll that back?
PYNE: The effective tax free threshold has been much, much higher than $6,000 since Peter Costellos reforms in the 1990s.
JOURNALIST: And youre going to roll that back?
PYNE: We have said we will have tax cuts at the next election which people will see perfectly transparently as we approach the election.
JOURNALIST: But you will roll that back? See this is going to be funded by the carbon tax is it not?
PYNE: Weve said that there wont be a carbon tax under a Coalition Government; we will rescind the carbon tax when we are elected. And we would expect the Labor Party to support that because unlike Labor, we are going to take that policy to the election, and ask the people to decide. Because the next election will be a referendum on the carbon tax.
JOURNALIST: This is a bit of a whammy for you though isnt it?
PYNE: No its not a whammy because well be offering our own tax cuts and our own package of benefits to the Australian people at the next election, and well let them compare. In terms of the policy you asked me about before, the Coalitions direct action policy, lets compare that because it is fully costed, it is completely capped and it is funded out of savings
WONG: And it wont work.
PYNE: - so theres no cost to the Australian taxpayer at all.
WONG: It wont work.
PYNE: And in fact, Labor has picked up two out of the three elements of it. You can keep interrupting Penny if you like.
JOURNALIST: (laughs) Youre both interrupting. Come on, Chris Pyne.
PYNE: Let me make the point to Matthew about our policy is that we are going to be paying $3 billion overseas in abatements to be able to reach our target of 5 per cent. The great hole in the heart of this policy announced yesterday is it isnt even enough because of all the compromises Labor has made to reach their 5 per cent target without buying 111 million tonnes of carbon abatement overseas, which means were in the ludicrous position of introducing a carbon tax which our competitors dont have, and then paying $3 billion overseas in order to be able to meet our emissions targets.
JOURNALIST: Jeff from Seacliff. Hello Jeff. In a moment, Nick Xenophons called. Jeff from Seacliff, good morning.
CALLER: Gday. Just rang to say that some of you people have got things wrong. Im a self-funded retiree. Because of the way the superannuation system works, my pension is tax free and I get nothing out of this package, and yet I still will have to face up to the extra costs. And this is not the first time. Both parties tend to ignore self-funded retirees who through being frugal through their life, keep getting kicked in the guts.
JOURNALIST: Fair point.
WONG: Well Jeff, what Id suggest you do Im not sure about the particulars of your tax and income position but if you go to the Governments website, there is a calculator there, where you can have a look at whether or not you receive any assistance either if you have a health care card, youll get an increase in the senior supplement. I think you said, you dont pay any tax, so obviously the tax free threshold may not assist you. There is some low income supplement to be paid to people who are on low incomes, but would otherwise miss out. So what Id suggest to you is if youre willing to go to the Governments Clean Energy Future website; that does have a calculator for anybody to put in their particular details and to find out what they will get.
If I can Matt, there are two quick things I want to respond to Christopher. In terms of his policy, the $720
PYNE: Thats not true.
JOURNALIST: (laughs) She hasnt even said anything.
WONG: - from each household is
PYNE: $720 is a bald-faced lie.
WONG: Its not a lie. It is
PYNE: It needs to be nailed each time its mentioned. Its designed to try and penetrate peoples minds, even though its a bald-faced lie.
WONG: I know the truth hurts Christopher. I know the truth hurts Christopher.
PYNE: Its a bald-faced lie.
JOURNALIST: Youve said that, people have heard that -
PYNE: So now they know.
WONG: That is the figure that the same bureaucrats, the same experts who would advise you in government have given us as the cost of your policy. The second point is this. The key difference between the Governments plan and the plan of the Opposition is we have a price on pollution.
Under Tony Abbotts plan, taxpayers funds can put money into a factory, we reduce your emissions here, well use clean energy, well get more modern ways of producing whatever it is. And then a factory could be built next door that uses 1960s technology and the dirtiest energy sources possible. And theres nothing in Tony Abbotts plan that would stop that. So taxpayers would fund cleaning up one factory and a new factory next door could spring up with no price incentive to invest in cleaner ways of doing business. It is the most ridiculous waste of taxpayers money, which is why not a single economist supports it.
PYNE: Not true.
JOURNALIST: Its 8.5 degrees in Adelaide, 14 is the forecast top. And independent Senator, Nick Xenophon, good morning to you.
XENOPHON: Good morning Matt.
JOURNALIST: Do you welcome the scheme?
XENOPHON: No, for three reasons. Firstly, this is a massive money-go-round. If you churn billions, you will burn billions of dollars. Thats why the Frontier scheme proposed by Danny Price is much more sensible, you wont have the revenue churn. Secondly, 18 months ago, the Greens and I, and others rejected a scheme because a 5 per cent target wasnt ambitious enough. Whats changed in the last 18 months for the Greens to come onboard? And thirdly, this $10 billion fund for renewables, Ross Garnaut, the Governments own climate change advisor, and the Productivity Commission have warned against schemes like this because they say, its incredibly inefficient, it will create distortions, and ultimately small business will end up paying the cost of it.
JOURNALIST: Look, theres so much well continue to question. Thank you to Nick Xenophon. Mark from the Adelaide Hills, small business question thats important, well try and get that in at four minutes to nine, then well talk to Ian Henschke. Good morning Mark Marks gone.
PYNE: Can I just quickly respond
WONG: I can respond after Christopher, I was just about to say.
PYNE: You had the word before that.
JOURNALIST: Youve got a minute each to wrap up, thatll be the response.
PYNE: Very quickly
JOURNALIST: Chris Pyne.
PYNE: The Gillard bank of $10 billion that Nick Xenophon referred to is very important, because essentially it will be the Home Insulation Program on steroids. Essentially, this $10 billion program will be the Government deciding which new scheme, which speculative scheme it should fund, and give a Government taxpayer loan guarantee to those kinds of organisations. The other thing about this tax, just very briefly is that the starting price is $23, by 2050, in 2010 terms, it will be $131. This price is going to go up, and up, and up.
JOURNALIST: Penny Wong
PYNE: Which means the compensation which will be one-off will not meet the increase of the price.
JOURNALIST: Chris Pyne youre going to have to wrap up. Penny Wong.
WONG: The assistance is permanent and we will increase it. Thats what you can do when you put in place a price on pollution and redistribute it through tax cuts for households. Just very quickly on the small business, there is an additional tax break for small businesses in this package.
JOURNALIST: Penny Wong, thank you. And I hope we can have more conversations with both of you as we start to get down to the fine detail of the -
WONG: Id be very happy to do that. See you Dave.
JOURNALIST: Bye Minister.
JOURNALIST: You can go back to your toast, I hope. It might be a bit cold.
WONG: I think it might have gone.
JOURNALIST: I think we should ask them to heat you up a new slice. Penny Wong, Federal Finance Minister, South Australian senior Senator, and Chris Pyne Federal Member for Sturt.
PYNE: Thank you for having me.
JOURNALIST: And he is also a senior frontbencher in the Abbott Coalition.
-ends-
ABC 891 Breakfast with Matt and Dave - 11/07/2011
11 July 2011