HOST: Julia Gillard, welcome.
PM: Thank you, Chris
HOST: Now, is the aim of this plan to cut taxes or to cut carbon?
PM: It's to cut carbon pollution and tackle climate change and so by putting a price on carbon pollution and getting around 500 big polluters to pay that price, being sensible business people they will find a way of innovating, of reducing the amount of carbon pollution they generate and that will cut carbon pollution by 160 million tonnes in 2020, the equivalent of 45 million vehicles.
HOST: 100 million tonnes of that though will come by buying permits to pollute from offshore though won't it, it won't come in Australia?
PM: Yes, this is going to be an internationally linked scheme and so it should be. I want our economy to transform to a clean energy economy and I want us to cut carbon pollution at the lowest possible cost and international linking is part of having the lowest possible cost.
It's the way you protect Australian businesses, the way you protect international competitiveness and therefore protect Australian jobs. Anyone who is telling you that they don't want an internationally linked scheme is saying to Australians, ‘Do this for a higher cost than you need to pay'.
HOST: How do you think Australians will feel though, that $3 billion of Australia's wealth will be exported overseas and how can we be certain with what they buy overseas will be worth?
PM: Certainly in the design of the scheme that we've announced today, for any credits that are bought from overseas there will be rigorous processes to ensure that that's a quality credit and that there is a tonne of carbon pollution that is not going in the atmosphere attached to that credit. But, Chris, if I can re-engineer your question, why should we pay more to get the job done of cutting carbon pollution than we need to? Why on earth would you do that?
HOST: Certainly, but I think most Australians might be a bit surprised to learn that in fact our emissions will rise til 2020, in fact they'll double by 2050, even under an 80 per cent reduction target.
PM: Well, I think Australians probably have the sense, the intuitive sense that the way in which our economy has developed is as our economy's grown, our carbon pollution's grown. So, every year our economy grows, more carbon and that would happen literally til the end of time if we didn't take a step to decouple economic growth from growing carbon pollution.
That's why you price carbon to send a price signal to big polluters that investment decisions they make in the future, the growth they make in the future should be growth that is looking to clean energy sources and doing the job with less carbon pollution generated.
HOST: Is $23 a tonne the highest carbon price in the world at the moment?
PM: Well, $23 a tonne we believe is the starting price for our economy. We are making decisions for Australia. That's what the government has had its eyes on, our future, our economy, as we've made decisions about this scheme. We've picked a starting price of $23 because it will give us a smooth path to when we go to a full emissions trading scheme and then, of course, with international linking, we basically take on board the international price.
HOST: The international price at the moment though if you were looking at the European Union with be $17 a tonne?
PM: But if you're looking at the futures market, at the market predictions of what carbon pricing will be at the time we move to an emissions trading scheme, you will find that's $29 which is why we've picked a starting point of $23, so over the three years of the fixed-price period, working effectively like a tax, we move smoothly to what we anticipate to be the price when we go to an emissions trading scheme.
HOST: You say the market is the best way of doing this, but in fact you've got a mix of things - you've got a market which covers part of the economy and you've got direct action, so why isn't your direct action as inefficient as you say that Tony Abbott's is?
PM: What we've got is a market-based mechanism, pricing carbon and complementary measures. They're called complementary measures deliberately because they need the carbon pricing mechanism to do the work that we want done. So, for example, in our energy sector, through putting a price on carbon we will be sending a message right throughout electricity generation that we want this done in a cleaner way.
As a complementary measure, yes, we will take some special steps to retire the dirtiest coal-fired power stations out of the system but the two work together as a transformation of our electricity system. Other people would suggest to you, well you don't price carbon, maybe you just walk around and say, ‘Oh, I think I will shut that power station or that power station'.
That's not going to transform our whole energy sector.
HOST: But you are making a decision, you're going to shut a brown-fired coal station somewhere, probably Hazelwood, something like that, what happens to those jobs?
PM: We are going to ask people in the energy generation sector to tender to us as to retiring of assets and of course we will be looking to retire the assets that generate the biggest amount of carbon pollution. We would certainly do that in a measured way, over time, so that we that we are bringing new technology, new clean energy into the electricity grid so we've got energy security for Australians, and to the extent that we need to work with particular regions in the nation for that kind of structural adjustment, then we will, and there is $200 million set aside in the package for that kind of structural adjustment.
HOST: Why do you need to over compensate people?
PM: Well, for our lowest income Australians, take for example an elderly Australian who lives on a full pension, their budget is really tight and of course we can model - the experts in Treasury can model the expected impact on them of us having put a price on carbon paid by the big polluters. But we know their budgets are tight and so we want to give them that buffer, of compensating them, assisting them 20 per cent more than the expected impact of the carbon price.
HOST: But doesn't it just look then like income redistribution dressed up as a carbon tax?
PM: I think what it looks like is what it is, that we have taken special steps and special care to make sure that our lower-income Australians have sufficient, in their pension or in their pay packet or through their family payments, to make sure that the carbon price that they will experience in their lives, they have assistance for.
HOST: Right, a couple of quick things, the six cents a litre cuts to the diesel fuel rebate, will that also be levied on mines so they have to pay a carbon tax and that price as well?
PM: Yes, for fuel that is used in mining activities there will be a change in the fuel credit system so that they will feel the impact of that change, as well as-
HOST: -Isn't that a double hit?
PM: Well, we want fuel generally used in mining and aviation to feel the effect of what is a carbon price, a shadow carbon price. You get there through a different mechanism by changing the fuel credit scheme.
HOST: Will domestic air travel costs rise?
PM: Yes, you will see some flow through impacts and of course that's modelled into the anticipated rise in the Consumer Price Index of 0.7 per cent, less than 1 per cent, and of course when we've designed the package of tax cuts and increases in family payments and pensions, we've done it on the basis that we want to assist people knowing that we will face rises of 0.7 per cent in the Consumer Price Index.
HOST: Finally, can you sell this? Does your job depend on this?
PM: Well, the nation's future needs to be a clean energy future. Now, I understand that people will write about the politics and the political contest and people will talk about that on the TV, Chris. That's for you to do.
What my eyes are on is that clean energy future for this country. We've had a long and difficult debate. Now is the time to get this done. I announced the package today. I will bring it to the Parliament, we'll legislate it and it will start on 1 July next year.
HOST: Julia Gillard, thank you.
PM: Thank you.