HOST: Prime Minister Good morning.
PM: Good morning
HOST: Beyond your determination to wear out shoe leather, what do you have to do to counter bad polls and an impression many people have stopped listening to you?
PM: What I've got to do is keep explaining the reason that we're putting a price on carbon pollution. I'm determined that we make this change so our nation can have a clean energy future and yes, it requires explanation and I will keep doing that.
But at the centre of all of this is really a fairly clear concept, around 500 big polluters, today can put carbon pollution into the atmosphere for nothing, but there is no incentive to stop putting it into the atmosphere. There is no incentive to reduce the amount that is going into the atmosphere. It is all done for free.
From 1 July next year they will pay a price per tonne. That will drive a change in behaviour where businesses look for cleaner energy sources and they look to reduce their carbon pollution. That's what I want to achieve for our country's future.
HOST: You are saying to the rest of Australia, you're seeking to reassure us that we will be suitably compensated for things like electricity prices rises; but already airlines have said they will be passing on costs to passengers. Builders have said the home and land package is now potentially $5000 more expensive. The Food and Grocery Council is saying that bills could rise by three times your estimate and the new Commodore could rise by several hundred dollars. Isn't that twenty cents of saving and of advantage going to disappear very quickly?
PM: We've modelled here, through our experts at Treasury. I expect you'll see all sorts of claims in the public domain, of course you will. But, what we've done is we've had the experts at Treasury look at this and work out what will happen in terms of costs being passed through to Australians who buy things at the shops, or perhaps, buy an airline ticket. And the same people who have done this modelling are the people who modelled when the GST was introduced and they got the effects of it right.
That's why I'm very confident when I say that our Treasury modelling, looking at the factors, the things that Australians buy has concluded that the flow through from putting a price on carbon that big polluters pay is less than one per cent of the Consumer Price Index. A less than one per cent increase in the cost of living, and then of course we are working with families and households to deal with that flow through price impact. That is why we're providing tax cuts and payment increases to nine out of ten households.
HOST: Are you actually saying that Treasury might have done some modelling on how much an air ticket between Perth and Sydney might rise as a result of Qantas putting up their prices in a post-carbon tax world?
PM: Yes, Treasury has modelled through all effects including the effects on transport and air travel.
HOST: Whether or not this is scare mongering or self interest talking, it's a powerfully damaging argument isn't it? Because you have to convince an anxious public, firstly that there is not going to be personal financial detriment here, and then beyond that that there is a greater good. Now, we understand the notion of greater good, but all politicians understand the hip pocket. Is that an area of great concern to you?
PM: Firstly, I do think Australians are interested in what you're referring to as the greater good. Overwhelmingly, people believe climate change is real, that it is caused by human beings and that it is caused by us generating carbon pollution. And I think overwhelmingly people say well, can we do something about all of this carbon pollution and the change that it is making in our climate? We can do something, we can put a price on carbon, we can drive change that means by 2020 we will reduce the amount of carbon pollution by 160 million tonnes, the same as taking 45 million cars off the road. Now there are 12 million cars in Australia driving around today. You imagine all of the cars in Australia in one place and then try and imagine 45 million, that's the difference we're making.
On the cost of living impacts, I understand people are rightly concerned about making ends meet and how they are going to pay the bills, which is why we have provided and will provide real assistance in the form of tax cuts, and pension increases, and family payment increases to nine out of ten households. And, almost six million households will receive enough money so they're either square or better than square in terms of the flow through of price effects.
HOST: My guest this morning is the Prime Minister, Julia Gillard. We were told a carbon tax would be budget neutral, how is it that Wayne Swan is now admitting the package is going to cost more than$4 billion in those first four years?
PM: Well, that's the figure over the four years of the government's budget period.
HOST: But we accept that's not budget neutral.
PM: Well, when you break that down, almost $3 billion of it is in the set up, the start up costs. In the first part of the forward estimates; that is in the first financial year, so it's understandable I think for people, when you are setting up something that's big and new that there are start up costs.
Then, of course, as the scheme gets up and running it becomes broadly budget neutral. And, just on the question of what's this all about? Can I perhaps just say to you, let's look at it another way, I do believe people want to cut carbon pollution. Well, we can do that whilst our economy grows strongly; whilst employment grows strongly.
1.6 million new jobs will be created by 2020, and whilst we assist nine out of ten households with the flow through of price impacts. Now if you can cut 160 million tonnes of carbon pollution by 2020 whilst the economy grows, employment grows and people overwhelmingly get assistance with the flow through price impacts, why on earth wouldn't you do it?
HOST: I'd like you to consider a couple of comments. Gina Reinhart was speaking at a mining conference in Perth yesterday. She said the combined impact of resource rent tax and a carbon tax will really hurt the competitiveness of the mining sector.
PM: Well, front page of today's Australian has got a big story about the biggest ever take over of coal mining business in Australia. Now, I think when we're talking about commercial prospects and the outlook for businesses, it pays to have a look about where the money is going. That's a big mining company saying it wants to take over an Australian coal mining company because it knows coal has got a great future in this country; that's after we announced the package on Sunday.
HOST: And, at the same time because this is such a debate about statistics and how they are interpreted something like $7 billion of value was wiped off the ASX yesterday.
PM: Look, I am not going to comment on share market movements, I don't, and I don't ever, but I am commenting on the story on the front page of today's Australian, because I have said consistently that mining, including coal mining, would have a great future in this country, that jobs would continue to grow in mining, people would still run hugely profitable mining businesses.
The amount that is paid for a tonne of coal is basically doubled over the last few years and I think we are seeing on the front page of one of our big newspapers today the fact that people in the industry obviously see a great future for coal mining, otherwise why would you be shelling out for the biggest takeover of an Australian coal mining company we have ever seen?
HOST: That bloke who sells a lot of televisions, Gerry Harvey, reckons no one is going to save the compensation handout to pay the electricity bills anyway and that they will just go and buy a new television with it.
PM: Look, people will make their own decisions about how they want to arrange their budgets, people do that all day, every day and they will continue to do it as we provide assistance in the forms of family payments and pension increases and tax cuts.
We live in a free society and people have got the opportunity to work out how they are going to spend their money.
HOST: Would you be advising those people, given the cost rises that are likely to come, to be rather circumspect with that money?
PM: Look, I think Australians are smart people, they manage their budgets all day, every day and they will continue to manage their budgets all day, every day. They will see a consumer price effect, a cost of living effect of 0.7 per cent, and of course the way we are providing compensation means over four million households will get more than they need to, to assist them with that flow through price impact. For example, pensioner households will come out $210 in front. People will make their own decisions about how to spend that money.
HOST: Prime Minister, my last question. Whatever the merit of this carbon tax plan, there is that great shadow of an election promise broken and questions as to whether you truly have a mandate to impose such a huge reform on an Australian electorate. How do you convince those people otherwise? Because today, and from what I saw on Q & A last night, people remain deeply sceptical about you?
PM: I would say to the Australian people, we have been debating pricing carbon in this country for the best part of a decade. Prime Minister Howard went to the 2007 election saying that if he was re-elected he'd put a price on carbon. After the 2007 election we did everything we could to get the Carbon Pollution Reduction Scheme through the Parliament and it ended up smashing into a brick wall.
I went to the 2010 election saying that we need to act on climate change, it's real, it's threatening for our country; we're a hot dry place and we need to get to an emissions trading scheme, a system where you price carbon and you cap the amount of carbon that your economy will produce.
Now, we are going to get to that emissions trading scheme, not by the route I originally foresaw. There will be a temporary carbon tax followed by a permanent emissions trading scheme. Acting on climate change is the right thing to do for this nation's future and I am doing it.
HOST: Are there times you look in the mirror and think ‘I will be able to introduce this in to law and this great new reform will arrive but I might not be Prime Minister beyond two years'?
PM: The important thing for me is doing what we need to today, to make sure our nation has got the best possible future; a clean energy future where we are doing the right thing by our environment. And a clean energy future where we're getting our share of the jobs of the future that will come from turbo-charging investment in renewable energy.
So, the thing that drives me as Prime Minister is doing what is right to create that future and I am Prime Minister of a country that has got a strong economy and I look back in history and I know we've got that strong economy today because Prime Ministers in the past had the guts to get the big reforms done. This is a big reform; we are going to get it done.
HOST: I hope when you come to Perth you might be in a position to come into the studio and take some questions from our listeners. Thank you for speaking to me today.
PM: Thank you.