Sky Lunchtime Agenda with Laura Jayes - 16/07/2013

16 July 2013

JAYES: Penny Wong, thanks so much for joining me.
WONG: Good to be with you.
JAYES: Now, these decisions means the environment will be worse off, surely, rather than under the original plan of 2015. How can there be the same incentive there if the price has dropped 75 per cent?
WONG: Lets remember what moving to an emissions trading scheme is about. Youre putting a limit, a legal limit, on the amount of carbon pollution we can emit across the economy and were allowing the market to set the price for that. So its a more efficient way of reducing our contribution to climate change as a nation. And, of course, what this does do is ease the cost of living pressure on Australian households because it means that they will be paying a little less on electricity and gas than they would have under the higher fixed price. So thats obviously a good thing.
JAYES: Well, Kevin Rudd this morning has said $308 a year for the average family but thats only for the first year, isnt it? Because beyond that the Government cant control it because of the floating price and, at that amount, its only $3.30 a week anyway.
WONG: I think its $380 a year for an average family
JAYES: But only for the first year
WONG: That is the 2014-15 modelling, but then we continue under an emissions trading scheme. And as someone whos argued for that for some time, I think that is a much more economically efficient way, a cheaper way, for the country to reduce its emissions.
The contrast is Tony Abbotts Soviet-style plan of direct action. Where hes going to slug you and your family more in tax, pay the polluters, and it will cost people $1200 more a year.
JAYES: Ill get to direct action in a moment, but $1.8 billion is saved because of the fringe benefits tax changes. It affects 26,000 people thats a lot of money to be pulled out of an already struggling local industry. Do you see there are ramifications here?
WONG: Well, in terms of the car industry, Id make the point that we are the party and we are the Government that has demonstrated
JAYES: But this will make it more difficult for that local industry, wont it?
WONG: I dont accept that. What I say is this: we are the party and we are the Government that has put on the table our support for the car industry. The only people who are wanting to rip that away are Tony Abbott and, apparently, Sophie Mirabella from what she says. Thats the first point.
The second point on this is: all were saying is the current tax arrangements for fringe benefits tax are more generous than the reality of how much some people not tradies and people like that who are in their car all the time and its part of their work but are more beneficial for some people than the reality of how much they use their car for work.
JAYES: So is it being rorted at the moment?
WONG: No, its not. I wouldnt call it a rort because people are entitled to that. But we have a statutory fraction which doesnt reflect the reality of how much business use some people use their car for and so what weve said is you move to the log book method. If youre using your car a lot for work you can still claim the same sort of tax benefit but if youre not, then obviously theres a higher cost for that private use.
JAYES: OK, when we look at the design of a floating price and an ETS, by design it does go up and down, obviously. How does that give business any certainty? And by moving a year forward, arent you taking some of that transition time away from them?
WONG: Lets start with why you want to use the market, which is what a floating price is about. You want to use the market because, ultimately, you think that business is better at working out how to find reduce their pollution than public servants in Canberra.
JAYES: How does this
WONG: ... so that is the issue. If you have a market, youre saying to business, all that ingenuity and all that creativity in your business, why dont you apply it to reducing how much pollution you put into the atmosphere.
JAYES: But when the market is largely dictated by the European price, which has been up and down, and the forecast has dropped dramatically, doesnt that affect Australian business doing their forward planning?
WONG: Yes it does, and it means that they can actually reduce emissions at a lower cost. I mean, the important thing here
JAYES: But there are also forecasts that it could go up to $70 a tonne
WONG: Well Tony Abbott cant really decide which of the scare campaigns he wants to hook in on. Whether its that itll go up and up and up or its going to be too low for the budget, and the various things that theyve said. The reality is this: I am on record for quite a long time saying weve got to act on climate change, and I think most people agree that we should do something. The key question is how do you do it, and how do you do it at the lowest cost to the economy? An emissions trading scheme does that.
JAYES: A large number of the savings has been scrapping programs like the Coal Sector Jobs Package, the unused allocation of the Biodiversity Fund returning to the budget over $2 billion in saves. These programs are only a few years old. So is this either, not giving these programs enough time to flourish, or have they failed in your eyes?
WONG: Look, the issue is we always said we would be fiscally responsible, that we would make sure we manage the budget in moving to a floating price. You have to find savings, so obviously theyre not popular but, remember, weve done this move a very substantial reduction in the price that businesses and, therefore, households will pay. We havent touched household assistance and we havent touched the renewables sector. So the funding for renewable energy remains the same.
JAYES: OK. This $1,200 figure Ive been hearing from Kevin Rudd, Chris Bowen today, and also from you, that it will cost, under direct action, families $1,200. But where are you getting that figure from?
WONG: This is something I think Minister Combet put out when he was Climate Change Minister and what you have to look at is this: first, the Coalition say they have the same target as the Government by 2020. The reality is what they say they can do to get there wont work. So, if you look at what they have to do to get there how many trees theyd have to plant, how much solar carbon theyd have to engage in, all of the things they say theyre going to do that will cost a lot more than putting a price on carbon through an emissions trading scheme.
JAYES: Just finally, the difficulty with moving this forward is linking with the EU scheme. Are those negotiations under way, or is this merely just an election promise, something to do post-election?
WONG: Minister Combet had already engaged in a lot of negotiations with the EU
JAYES: But not about bringing it forward?
WONG: Bringing it forward, we obviously will have to have further discussions with them. But, obviously, theyre pretty keen to make sure there is linkage. Because once you get linking around the world then, you know, we can all work together more effectively to reduce carbon and tackle climate change.
JAYES: Penny Wong, thanks so much for joining us.
ENDS