HOST: Prime Minister, good morning.
PM: Good morning.
HOST: Tony Abbott's causing more pain for the Government by making it crystal clear there will be no carbon tax under a Coalition government.
Business looks, above all, for investment certainty. Has he dealt your plan a damaging blow?
PM: I think the damaging blow that Tony Abbott has dealt is to the Australian economy for the long term. What Mr Abbott is saying is after this Government has priced carbon, if he is elected he will roll that back.
Now that message to international markets would be Australia is not a safe and secure place to invest. You make investments on the basis of a carbon price, and then Mr Abbott comes in and recklessly sweeps that away - dreadful for our international reputation. Also, dreadful for the businesses that have made investment decisions on the basis of a carbon price, particularly in our energy sector where we need to see investment. Directors, businesses, boards would make decisions, they would start employing people, and then Mr Abbott would come and sweep that away, recklessly stranding those investments and losing those jobs.
HOST: But Tony Abbott has been opposed to a carbon tax, an emissions trading scheme, for a very long time, so it's no surprise that the Opposition is now saying that it will repeal any carbon tax that you may introduce. The fundamental problem for the Government-
PM: Well Alex, I can't agree with that question.
Mr Abbott has not opposed pricing carbon for a very long time. Mr Abbott has had every position on this it is possible to have.
He has supported pricing carbon, he has opposed pricing carbon, he has believed climate change is real, he said climate change is, to use his words, absolute crap.
Mr Abbott will get up and say anything any given day that he thinks is in his political interest.
HOST: So your problem is that you've had two opposing positions on carbon tax. The fundamental problem is that you broke an election promise. You said before the election there will be no carbon tax under a government I lead and now you've shifted your position. So you don't have a mandate for a carbon tax.
PM: Alex, we went to the 2007 election saying we had to price carbon and the best way of doing that was an emissions trading scheme where the market sets the price for carbon.
HOST: But you went to the last election-
PM: We went to the 2010 election saying we need to price carbon and the best way of doing that is an emissions trading scheme where the market prices carbon. What will we deliver? An emissions trading scheme where the market prices carbon.
Yes, there will be a period where the price is fixed, effectively like a carbon tax, but we will end up exactly where we promised Australians we would go.
Now I understand that Mr Abbott today might want to oppose carbon pricing. He supported it in the past but he wants to run a scare campaign today, that's one thing, Alex.
But it is another thing entirely to say if you are elected in 2013 that you will roll back this major economic reform, jeopardise our reputation in the markets of the world, strand investments that have been made in good faith on the basis of a carbon price, get people sacked who have jobs in those new investments or because of those new investments, and rip out of the purses and wallets of householders the assistance that we have provided them with and which they have factored into their family budgets.
That is what Mr Abbott is saying to the Australian community - that degree of risk, that degree of uncertainty to the economy, to jobs and to the budgets of householders.
HOST: Why should Australian people believe you now when you so emphatically stated just before election day there'd be no carbon price?
Nothing's changed between then and now except that you won power after a deal with the crossbenchers. And that remains your fundamental problem.
PM: Well your question is wrong, Alex. Before the last election I consistently said we needed to price carbon.
HOST: You said no carbon tax.
PM: We needed to price carbon, and what are we doing? We're pricing carbon. Why? Because it's the right thing to do to create a clean energy future for this country. Malcolm Turnbull acknowledges it's the right thing to price carbon. Many Liberals acknowledge it's the right thing to price carbon, and we will get to the emissions trading system that we always said was the best way of pricing carbon.
Yes, in the Parliament the Australian people have voted for, I've needed to work with others to structure how we're going to price carbon, which is why we will have a fixed price period at the start.
And I always understood that would start a political debate. But in this political debate I am going to be saying to the Australian people, ‘We need to have a clean energy future; we need to have those jobs of the future; we have to get on with the job of pricing carbon.'
Meanwhile, Mr Abbott is running a scare campaign, making figures up in order to scare Australians, and worse, now he is threatening the Australian economy for the future, threatening our reputation overseas as a safe and secure place to invest, threatening businesses that if they make investments on the basis of a carbon price those investments will be ripped away from them, and threatening households that when I want to give them assistance to help them through he'll rip that money off them.
HOST: Why then were you so specific before the Federal election, saying that there would be no carbon tax under a government that you led?
PM: There's various ways of pricing carbon and I was clear before the election that I believed and Labor believed the best way of doing it was an emissions trading scheme where the market prices carbon.
You set a cap - you say we won't produce any more carbon pollution than a fixed amount - and you let a market develop in trading permits for carbon pollution and the market fixes the price.
That was the mechanism I wanted to see, I believe that it is a superior mechanism to having a carbon tax for the long-term.
Now in this Parliament I've needed to work with others to get the job done. In order to get the job done I've agreed that we will have a fixed price period - a market mechanism with permits with a fixed price which will work effectively like a tax for a period - and then we will get to what I said to the Australian community we should have.
So what we stand for: cutting carbon pollution, clean energy future, creating jobs, giving households generous assistance, and giving businesses certainty. Mr Abbott wants to rip all of that away.
HOST: Julia Gillard, thanks for joining us on AM.
PM: Thank you.