MOORE: Prime Minister, the Government has committed to helping households overcome the cost of an emissions trading scheme. Is that a guarantee, low income households won't be worse off?
PM: What we've said very plainly is when it comes to pensioners and carers and those on forms of social security support in that category, we would provide beyond the normal adjustments to those pension payments additional support to meet any costs arising from the introduction of this Carbon Pollution Reduction Scheme.
MOORE: Is that a no worse off?
PM: Similarly for low income households as well and beyond that we've also indicated a preparedness to support households in general to obtain assistance for energy efficiency measures within those households to bring down their energy cost over time. We think these are practical steps forward. I tell you what I can guarantee, is that if you don't act on greenhouse gases now, if you don't act on climate change, the cost for every household will in time go through the roof.
MOORE: But can you guarantee for low income households that they won't be worse off?
PM: As I said, it is explicitly stated in the Green Paper and you've read it I assume yourself today, that we've committed in this Green Paper to meeting through additional payments, through the tax and payments system any additional costs which come to households as a consequence of the introduction of this scheme.
Of course you are always going to have other things which affect the standards of living and the costs for families. But our commitment vis a vis a low income households, pensioners and carers is clear cut and stated in the Green Paper.
MOORE: What's the cut off, what's the income threshold for a low income household in this context?
PM: Well what we've spoken about is where Family Tax Benefit A starts to reach its base rate, which is around the $53,000 to $55,000 a year per household, and of course below that we have people who are on pensions, carers.
MOORE: So that is $53,000 and below?
PM: Yeah, for households. And then beyond that we have also had a further commitment for middle income households to provide some assistance to assist them as well. And more generically for households we will be examining, when we get to the White Paper stage, other ways of assisting households adjust with investment in new ways of improving energy efficiency at home. Because that is not just good for the environment and for the overall economy, it's good for the cost of the householders as well.
MOORE: But when it comes to some assistance for middle income earners, can you give any guide as to what proportion the 1 per cent or 0.9 per cent increase in inflation the Green Paper is forecasting based on a $20 a tonne carbon price. What percentage of that middle income earners will have to bear?
PM: We will work that through during the course the White Paper consultation process. What we need to make sure is that those who are least able and least flexible when it comes to responding to what is a higher cost for carbon. Let's go back to the underlying facts here.
My job as Prime Minister is to face the scientific facts and the economic facts and to get the balance right for Australia for the long term. That does mean a higher cost for carbon. And the question is therefore, how do you provide assistance to those households least able to adapt and adjust in the here and now and businesses least able to adjust in the here and now to transition through that.
MOORE: So when do we get details of the compensation scheme, when do we know when it starts and indeed whether its upfront so you get the compensation before you pay the higher electricity bill?
PM: Well in the Green Paper as you would understand we've outlined our principles. And principles, design principles force the overall Carbon Pollution Reduction Scheme. It's about emissions trading, it's about support for households and support for businesses. When the White Paper comes through, including exposure draft legislation, it is through that that you will have the full detail in terms of where we will go on these support arrangements both for households and for business.
MOORE: The other area of compensation of course is petrol. Your own climate adviser Professor Garnaut was very clear that compensating people would lead, what he called, ‘a funny signal'. Does it really send the right message?
PM: Well, when you are looking at our Carbon Pollution Reduction Scheme, we're covering 75 per cent of the economy. That includes the transport sector, it includes therefore petrol. But we are very mindful of the fact that households right now are under financial pressure.
Therefore, our response to that is to provide this adjustment support and we've indicated we would do so for a three year period cent for cent for any consequential increase in the price of petrol.
We would take off associated petrol taxes and then we would review at the three year point. I think that is a responsible course of action now in order to transition the system to a lower carbon economy, which is what we need for the economy longer term, what households need for the economy longer term as well as looking after our kids.
MOORE: So what the are the benchmarks for that review?
PM: In terms of..
MOORE: Of petrol. Whether or not you continue to cut cent for cent.
PM: Well lets have a look at that point for example at what the overall impact on household budgets are, where will the price of oil stand at that stage? Etcetera. These are the sorts of criteria which will be de deployed at that time.
But we think it's a fair and reasonable thing to help households who are under real financial pressure now to adjust through. Remember the overall integrity of this scheme is achieved by having such breadth of coverage across the economy, 75 per cent of the economy we think this is the right way to go for Australia for the long term.
MOORE: As Brendan Nelson argues you're asking Australians to take you on trust aren't you. They're getting a carbon trading scheme. Whether or not they will continue to be compensated for the higher cost of petrol after three years, don't know.
The actual format of a compensation scheme for households at this stage, don't know. When it will start, don't know. There's a lot there isn't it that you're asking them people to trust you.
PM: Well in the first six months of this Government's life and its now seven months, we have done more than our predecessors in 12 long years. They sat there as climate change sceptics and then on the eve of the election said that they would introduction an emissions trading scheme. And now that we're across the election hump and we are now the Government they say they are now opposed to one.
Well I really don't know where Dr Nelson stands other than he seems to be engaged in irresponsible short-term politics.
For us, it's laying out, as we said more or less after we came to office, through the Climate Change Minister Penny Wong, building block number one is putting out this Green Paper to outline the design features of an emissions trading scheme as part of a Carbon Pollution Reduction Scheme and our support payments for households and business.
Building block two will be when we produce the finality of that with legislation at the end of this period. It is a sequential way through and it's one part of our overall strategy to bring down carbon emissions as well as a new strategy for energy efficiency which we will be putting out in due course, a new strategy for, on the supply side dealing with clean coal technology, a further supply side strategy dealing with renewable energies. All part of doing our bit for the planet but also getting a decent outcome for all Australians.
MOORE: The Green Paper also includes limited compensation for the big polluters, the electricity generators so they don't become riskier investment prospects. How limited will that compensation be?
PM: We will get to that as we consult with each of the electricity generators. There is a number of them around the country and a number of them, depending on the age of the generator and the age of the plant, the nature of its technology, each of their particular circumstance are different.
There is no blank cheque being offered to electricity generators. But we are mindful of the fact, mindful of the fact that their environment, their investment environment changes as a consequence of the introduction of a Carbon Pollution Reduction Scheme.
So we believe that adjustment support is are necessary but the quantum will be determined after we've had a very hard-nosed, individual negotiation with each of those generators. And we intend to be very tough.
MOORE: The other side of the argument of course is the one the Greens make, and they say that while the whole point of a trading system is to send price signals, they argue, you rush to compensate and you rush to neutralise?
PM: Well you know something we're going to get attacked from the left and that's what the Greens are doing. We're going to get attacked from the right and that's what Dr Nelson is doing. My job to get the balance right for the future.
And if getting the balance right means having a clear sense of our target, our objective, which is to bring Australian carbon emissions down and to do so in partnership with the global community through our negotiating posture and the Bali roadmap, the Kyoto roadmap or the post Kyoto road map as it now is, to do all that and provide adjustment support on the way through.
That's the responsible and balanced course of action.
The Greens on the left out there, they may not like what we're going to do. And they will say it's not as pure as the (inaudible) snow, well I'll cop that on the chin. And you will have the climate change sceptics over on the right corner saying that we shouldn't be doing anything. My job is to face the facts, the economic facts, the science facts and prosecute a balanced course of action.
MOORE: This is, as we have been saying repeatedly, a Green Paper, you are now opening it up for consultation with the business. How do they consult with you when they have no numbers, no economic parameters, no emission target parameters and yet the time of consultation actually closes before they will get those economic parameters from the modelling that Treasury is due to provide in October?
PM: Between now and the end of the year, as you've said, there will be further modelling produced. Remember, though, when we said this Green Paper would come out, its purpose has always been to provide the design of this system.
How fast the system is then driven in terms of trajectories between now and 2050 with the carbon target we have long term of 60 per cent reduction by 2050 against 2000 levels that is to be determined once we've got modelling.
MOORE: But the modelling comes after the closure period of consultation. That's my question how does business give you the consultation when they don't know the modelling?
PM: Well the first they've got here is the design features and that's critical. Secondly, what we've indicated also in the case of the large category of firms, some 1,000 across the economy but, as you know that is 1,000 over literally millions of firms out there who are affected by these changes, they now have provided to them through this Green Paper the design of a system.
For those which are energy intensive or emissions intensive or trade exposed we've already indicated the thresholds of support that we are likely to provide in terms of the possible free issue of permits, that is there.
But we have to take it one step at a time and can I say there will be detailed individual discussions. It's 1,000 businesses out there. We can have reasonable discussions with a large number of them in the time we've set for ourselves. But we have got to get on with it. We can't keep pushing this off. The last mob did that for 12 years, 12 waisted years.
MOORE: But given the modelling has been in fact delayed, hence we are now it getting it in October, the intention is you say is start in 2010. Is it possible that will slip?
PM: What we've said right along is our ambition remains unchanged. We believe it's technically achievable in terms of the consultation process, the drafting process and the legislative process.
Though it will be very interesting to see where the Liberals stand on this in the Senate. Are they going to play blocking strategy or are they going to be constructive partners in the nation's long-term environmental and economic future?
We believe this is deliverable. As I've said consistently in previous interviews, including on this program, we've been very mindful of the implementation arrangements for these 1000 businesses who will be affected. They are large businesses and they will be treated respectfully but our ambition is as I've stated before for 2010.
MOORE: Prime Minister thank you very much for joining us.
PM: Thanks for having me on the program