ABC 891

SUBJECTS: Debate with Finance Minister Penny Wong on Carbon Tax announcement

Matthew Abraham:  Christopher Pyne, Federal Member for Sturt, the most senior Liberal in South Australia, good morning to you. 

Christopher Pyne: Good morning Matthew, David. 

Abraham:  Penny Wong, sweeping through what is Labor territory, the Iron Triangle there has been quite a consistent theme – we haven’t particularly gone looking for this – that we don’t trust Julia.  Are you starting behind the eight ball? 

Penny Wong:  Well, look this has been a pretty tough debate and we haven’t had the detail out there to be able to deal with some of the outlandish scare mongering from the Opposition.  But we do have it now and we can be clear with people and upfront with people about what we’re proposing.  As you know, we have had a lot of negotiations with the steel industry, just as we did on the last occasion.  And I was pleased to see OneSteel’s press release yesterday which described the Government’s plan including the steel transformation plan which is additional assistance as both appropriate and sensible.  We’re a Labor Government.  Jobs do come first.  We’ve demonstrated that on how we’ve approached our first term of Government; 750,000 created since we came to Government.  The steel industry is important and that’s why we have sat down and negotiated a sensible package. 

Abraham:  Christopher Pyne, Tony Abbott has been going around warning about dire circumstances.  The Government’s now got its plan out, including quite significant tax cuts lifting the (tax free) threshold from $6,000 to around $18,000.  What are you left with?  When we were pressing Tony Abbott on his plan he couldn’t even tell us how many trees he planned to plant and that’s part of your policy.

Pyne: The answer to that is 20 million actually.  The answer to the number of trees to be planted is 20 million and about five dollars a tree. 

Abraham:  He didn’t know that about two weeks ago. 

Pyne: Well, he has a lot on his mind and a lot to keep in front of him at all times, but I will respond to that question because there’s plenty for 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 at yesterday’s announcement will be unpacked over this week as people start to look more closely at the impact of the carbon tax on them. 

For instance yesterday we didn’t know that if you don’t have a seniors health card you don’t get any compensation.  So there are at least 300,000 self-funded retirees who don’t get any compensation whatsoever from the Government. 

Wong:  You don’t get a tax cut. 

Pyne: I didn’t interrupt you. 

Wong:  But you’re saying something that’s incorrect.  People are getting tax cuts. 

Pyne: That’s a very small example.  Penny, if you want to run the show that way, that’s fine.  If you want to have a mature discussion, that’s also fine. 

Abraham:  Although, if you’re being picked up on something that’s wrong, can you at least see a benefit for people having the tax free threshold going from $6,000 to $18,000? 

Pyne: Yesterday the Government announced that self-funded retirees would receive compensation from the Government in the same way that pensioners would; they would get an up front payment.  Most self-funded retirees would have thought that the up front payment on 1 July next year was compensation.  In fact, 300,000 self-funded retirees won’t get that up front payment because they do not have a seniors health card.  That’s just one example of the unpacking of the programme that was announced yesterday. 

But can I just respond to you 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….

Abraham:  We’re straying a long way from the Carbon tax here. 

Pyne: No, because the first question was about whether they had a hurdle to overcome the truthfulness of the Prime Minister and the biggest lie of all of course was that there would be no carbon tax under a Government I lead which people wouldn’t want to forget.  And we are now debating of course the details of a carbon tax. 

Abraham:  David Bevan, do you want to pick up on any of that? 

David Bevan:  If I could put to Penny Wong the question that we put to you a few weeks ago and that is what’s the point in putting up prices and then compensating people for the price hike?  How does that actually change consumption and emissions?  Aren’t 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 we’re saying to big polluters is that you are now going to have to pay for the pollution you put into the atmosphere.  That gives them an incentive to reduce – we’re also saying that ….

Bevan:  Minister…

Wong:  Just let me finish. 

Bevan:  if I could stop you there...

Wong:  if you could let me finish the second part. 

Bevan:  Minister if you could break this down into points. 

Wong:  The second part I was going to say Davis is…

Pyne: Never argue with the interviewer…

Wong:  I just wanted to finish the answer if I could I’m 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 and then we have a price signal to investors that says don’t invest in dirty energy don’t invest in business where you are going to pollute more, invest in clean energy and invest in businesses and in business that has lower levels of pollution, that’s how you make the transformation.  Over to you.

Bevan:  But you’re giving to consumers a greater ability to pay their bills because you’re compensating them so won’t the power companies say ok our power costs have gone up but our consumers have more money to pay therefore they will continue to buy dirty power.

Wong:  I think what you’ll 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 and 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 renewable energy target which we already have in place.  David if I could just respond to one thing Christopher said, he described this as a toxic tax, this is the same man on the 15^th 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’.

Pyne: Is that before Copenhagen or after Copenhagen?

Wong:  And at no point, before Copenhagen or during John Howard’s Government did the Liberal Party say we’re not going to impose an ETS, they agreed that they would. Christopher’s changed position because his leader has changed position.

Bevan:  It’s a quarter to nine on 891 ABC Adelaide, Matthew Abraham, David Bevan’s in Whyalla.  In our studio Penny Wong Federal Finance Minister and Christopher Pyne who is Federal Member for Sturt and Shadow Minister for Education and the most senior Liberal in South Australia, it’s a quarter to nine,  John from Vale Park hello John. 

Caller 1: Good morning boys, good morning Senator, good morning Christopher.  

Pyne: Good morning John. 

Wong:  Good morning. 

Caller 1: One question, it’s in three parts and I want a straight answer, no pollie talk no shilly shalling around the bush. 

Bevan:  You better get to it. 

Caller 1: This is for Penny Wong. 

Bevan:  Yeah. 

Caller 1: With all the resourced at Treasury and the calculations they’ve made, one, how much are they going to collect, two, how much are they going to give back in grants, benefits, incentives? And three what’s going to happen to the profit?

Wong:  Uh well the first point is the last one.  We are actually investing more than we will collect in the first period, in the first four years of the budget period and in the first three years of the scheme so there is no return to Government from this tax on polluters. 

Bevan:  So in fact this is a new tax that will result in a $4b deficit. I noticed somebody said that was a first, a new tax that actually increases…

Wong:  Because you know…

Pyne: In the short term there will be a hit to budget of $4 billion…

Wong:  So John from Vale Park I am trying to answer the question but that’s ok. 

Bevan:  No, no we’re just helping you there, I’m helping you. 

Pyne: It’s not a one way street you know Penny you have to interact with people. 

Bevan:  You don’t need to coach Penny Wong thank you, I know you’re trying to be helpful Chris Pyne…

Pyne: In the Senate they’re not used to being interrupted. 

Bevan:  Penny Wong how much…

Wong:  I just want to answer John’s question I was told not to shilly shally so I’m 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.

Bevan:  Ok how much will you raise?

Wong:  So that’s the answer, I think it’s about $18 billion from memory over the forwards.

Pyne: Are you sure it’s not $21 billion?

Wong:  21, he might be right.

Pyne: It’s $21 billion John, I’m not the finance minister but I read documents. 

Wong:  The net hit John is, we spend about $2.9b in 11-12 and then about, after that it’s about $1.3 but the important point is as the Prime Minister agreed some fifty percent plus of the revenue raised fro putting a price on pollution will go back to Australian households and you might recall if you’ve seen the news that we’re putting in place very substantial tax cuts, very substantial tax cuts, tax cuts for everybody who earn up to $80,000 a year, people will get a tax cut because we will increase the tax free threshold and I noticed Joe Hockey today made some point about loving these tax cuts, I’m very please the opposition is supporting them

Bevan:   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.  It’s a great big thing very simply saying living costs will rise under Australia’s carbon pricing system, the Government says tax changes will leave most people better off, for the average family this is what’s it’s worth and there is a great big twenty cent piece there. So they’re saying average household costs will rise $9.90 a week under a carbon plan but assistance will leave households twenty cents better off.  Is that fundamentally incorrect?

Wong: That’s the average.  So the average if you go across the economy. The average increase is about $9.90 a week, the average increase.  The average assistance through tax cuts and increase to payments is about $10.10.  Let’s just get this in perspective. Is anybody suggesting there is a cost free way to tackle climate change, and of course Christopher’s policy would cost people $720 a week. A year, $720 additional. 

Pyne: Absolutely untrue. 

Wong: This is what the same bureaucrats who advised you, have advised us of the same thing.  But I just want to get the perspective here.  The average increase in the consumer price index, so that’s prices, is about 0.7 per cent.

So we are talking less than one cent in every dollar.  So I just want to make sure people get the sort of quantum, which is a reasonable small quantum we are talking about in the face of Mr Abbott which is suggesting that everything will become unaffordable.  Less than 1 per cent in every dollar. 0.7 percent CPI.

Abraham: David Bevan?

Bevan: Penny Wong, is the Federal government included in the scheme?

Wong: Well I am not sure that we are one of the top 500 polluters.

Bevan: Well according to the Institute of Public Affairs, the federal government is ranked somewhere between the thirtieth and tenth largest emitters in the country. And this asks the question, why won’t the federal government’s emissions be controlled in the same way as the large private emitters?

Wong: Well if we are within the scheme, we are within the scheme.  But I don’t think - I don’t believe, that we are.  But obviously what we have said is that you have threshold of a certain amount of carbon pollution you can emit in any one year.  And you have to purchase permits for that amount.  That's how you get the price incentive.

Abraham: Chris Pyne?

Pyne: Thank you.

Abraham: Well you may not thank me in a minute but..

Pyne: I’d like to get a chance.

Abraham: The Federal Government is increasing the tax free threshold upfront, from $6,00 to $18,000.  Isn’t that going to be welcomed by a lot of people, particularly by a lot of low income earners and what have you?  And people entering their first jobs market.  Are you going to roll that back when you roll back the carbon tax?

Pyne: Well Matthew, firstly can I say with respect to the tax free threshold, Tony Abbott always said that we should raise the tax free threshold in line with the Henry Tax Review suggestions.  What Penny Wong hasn’t mentioned is that in doing this tax free threshold increase they’ve 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 for the first time since 1984.  So this is no tax reform at all.  They are actually increasing the tax rates from the first two of the lower marginal thresholds.

Abraham: Sure but to pay no tax until you get to $18,000, as opposed to kicking in at $6,000. Are you going to roll that back?

Pyne: Sure, the effective tax free threshold has been much, much higher than $6000 since Peter Costello’s reforms in the 1990s. We have said that we will have tax cuts at the next election which the people will see perfectly transparently as we approach the election.

Abraham: But will you roll that back?  See this is going to be funded by the carbon tax is it not?

Pyne: There will not 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 next election and ask the people to decide because the next election will be a referendum on the carbon tax.

Abraham: This is a bit of a whammy for you though isn’t it?

Pyne:  No this is not a whammy because we will be offering our own tax cuts, and our own package of benefits to the Australian people at the next election.  And we will let them compare.  And in terms of the policy you just asked me about before the Coalition’s direct action policy, let’s compare that.  Because it is fully costed, it is completely capped and it is funded out of savings.  So there is no cost to the Australian taxpayer at all. 

Wong: (inaudible)

Pyne: And in fact, Labor picked up two out of the three elements of it.  You can keep interrupting Penny if you like.  Let me make the point though Matthew, you asked about our policy. We aren’t going to be paying $3 billion overseas, in abatements to be able to reach our target of 5 percent. The great hole in the heart of this policy announced yesterday is that it is not even enough because of all the compromises Labor has made to reach their 5 percent target without buying 111 million tonnes of carbon abatement overseas.  Which means we are in the ludicrous position of introducing a carbon tax which our competitors don’t have and then paying them $3 billion overseas in order to be able to meet our emissions targets.

Abraham: Geoff from Seacliff.  Hello Geoff.  In a moment, Nick Xenophon has called.  Geoff, good morning. 

Caller 2: G’day, just rang to say that some of you people have got things wrong.  I’m a self funded retiree.  Because of the way the system works, my superannuation is tax free and I get nothing out of this package and I still have to face up to the extra costs and this is not the first time.  Both party’s seem to ignore the self funded retirees who through being frugal through their life get kicked in the guts. 

Pyne: Fair point. 

Wong: Well, Geoff, what I’d suggest you do, and I’m not sure of the particulars of your tax and income position, but if you go to the government’s 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 you’ll get an increase to the seniors supplement.  I think you said you don’t pay any tax so obviously the tax free threshold may not assist you, but there is some low income supplement to be paid to people who are on low incomes, but would otherwise miss out.  So what I’d suggest to you is if you’re willing to go the Government’s clean energy future website that does have a calculator for people to put in their particular details and to find out what they will get. 

But if I can Matt, there are two very quick points I’d like to respond to on Christopher.  In terms of his policy the $750…

Pyne: That’s not true. 

Wong: from each household…

Abraham: She hasn’t even….

Pyne: $720 is a bald face lie and it needs to be nailed each time it’s mentioned because it’s designed to penetrate people’s minds even though it’s a bald faced lie. 

Wong: I know the truth hurts, Christopher. 

Pyne: It’s a bald faced lie. 

Abraham: Ok, people have heard that though. 

Pyne: And now they know. 

Wong: Well, that is the figure that the same bureaucrats, the same experts that would advise you in Government have given us as the cost of your policy.  The second point is this; the key difference between the Government’s plan and the Opposition’s is we have a price on pollution.  Under Tony Abbott’s plan, taxpayers can put money into a factory, say we’ll reduce your emissions and get clean energy and get more modern ways of producing energy or whatever it is.  And a factory can be built next door that uses 1960s technology and the dirtiest energy sources possible and there’s nothing in Tony Abbott’s plan that would stop that.  So taxpayers would fund cleaning up one factory and a new factory next door could spring up with no incentive for cleaner ways of doing business.

Abraham: Ok. 

Wong: It is the single most ridiculous waste of taxpayers money which is why no single economist supports it. 

Pyne: Not true. 

Abraham: It’s 8.5 degrees in Adelaide, 14 is the forecast top.  And independent senator Nick Xenophon, good morning to you. 

Nick Xenophon: Good morning Matt.

Abraham:  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 that’s 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 this scheme because a 5% target wasn’t ambitious enough, what’s changed in the last 18 months for the Greens come on board? And thirdly, this 10 billion dollar fund for renewables, Ross Garnaut, the government’s own climate change advisor and the productively commission has warned against schemes like this because they say its incredibly inefficient, it will create contortions and ultimately small business will end up paying the costs for it.

Abraham: You have minute each to wrap up.

Pyne: Very quickly, the Gillard bank of $10 Billion that Nick referred to is very important because essentially that will be the home insulation program on steroids.  Essentially this 10 billion dollar program will be the government deciding which new scheme, which speculative scheme it should fund and give a government tax payers loan guarantee to those kinds of organisations. The other thing about this tax, just very briefly is the starting price of $23 by 2050; in 2010 terms it will be $131 dollars, this price is just going to go up and up and up which means the compensation which will be one off will not meet the increase of the price.

Abraham: Penny Wong?

Wong: The assistance is permanent.  We will increase it.  That’s what you can do when you place a price on pollution and redistribute through tax cuts to households.  Just quickly on small business, there is an additional tax break for small business in this package. 

ENDS