HOST: I'm joined now by the Prime Minister Julia Gillard. Good morning Prime Minister.
PM: Good morning.
HOST: Prime Minister one of the men who put you in your job, Paul Howes from the Australian Workers Union says that if one job goes as a result of this package, he'll oppose the carbon tax. Can you guarantee now that not one job will be lost?
PM: Well, don't agree with the premise of your question but I'm very happy to talk about Australian jobs. What our Treasury modelling shows is that employment will increase, there will be 1.6 million more jobs by 2020, there will be half a million more jobs in the next two years and on creating jobs the Government's got a very proud record. We've created more than 750,000 of them since the Government came to office in 2007 including a period of the global financial crisis which around the world literally knocked millions of people onto unemployment queues. So there will be more jobs, we have worked in this package to provide assistance to industry to make the transition, there is assistance for coal, for steel, for manufacturing and of course we will be working with our industries that trade on the world stage, take the world price but generate a lot of emissions.
HOST: Yeah, look I'm sure you'll create plenty of jobs in the finance sector from people who are going to trade in these carbon permits, but can you guarantee -
PM: There'll be growth in jobs in coal, for example.
HOST: How will that happen?
PM: Well the demand for coal will continue very strong. In terms of the impact of carbon pricing on coal mining, average impact is $1.40 per tonne. This is in a situation where coal prices have more than doubled so we will see continued growth in jobs in coal mining. So jobs will continue to grow and there is assistance in this package to work with industry to do the transition we need to, to realise a clean energy future.
HOST: So it's okay if Australian carbon's burned overseas, but it's just not okay to burn it here at home?
PM: Well, what we've got to do is cut carbon pollution. The vast majority of Australians believe that climate change is real and they understand that that's caused by human activity and carbon pollution. The essence of this package is that we will be asking around 500 big polluters to pay a price for the carbon pollution they put in our atmosphere. You and I are having a chat today and as we're having a chat, that carbon pollution is going into our atmosphere for free. From 1 July next year there will be a price of $23 per tonne. That means businesses will find ways of cutting the pollution they generate, there'll be a price signal to take us to a clean energy future and we will see in 2020, 160 million less tonnes of carbon pollution.
HOST: Here, yes, but you just told me that jobs in the coal industry will increase. Now that's clearly, what you're telling me there, is that we're going to be exporting more coal, is that right?
PM: Of course we will continue to export coal and the coal industry's got a good future and the coal industry itself is working through ways to cut its own pollution.
HOST: Where's the net gain for the planet if we're sending more coal to be burnt elsewhere?
PM: Well the net gain for the planet is around the planet, the world is hungry for energy and as nations address climate change, they are looking for a cleaner energy future. So there is an emissions trading scheme in Europe, there's an emissions trading scheme in ten American states, there's one in New Zealand, China is acting, India is acting to realise a cleaner energy future.
HOST: None of these do anything do they? The New Zealand one's just been cut in two because it's ineffective. I mean the one in Europe's-
PM: I don't agree with that at all and that's not what the Prime Minister of New Zealand said when he can and addressed the Australian Parliament.
HOST: The one in Europe's just exported coal industries to China and I think you've just told us that we're going to be exporting more coal to China anyway, so China just burns more coal. I go back to that argument-
PM: And China is moving to change some of its dirty energy pollution into cleaner energy, it's also a huge investor in renewable technology, in the renewable energy of the future.
HOST: Prime Minister from the look of what you've offered us yesterday this is a softly, softly start to a reduced carbon future and the real financial slugs come down the track in a few more years time, would you agree with that?
PM: This is a - well I've made the right decisions for the nation's future. We're going to get this done, we're going to get it started, it's going to start at $23 a tonne, that'll be the price paid by the big polluters. Yes, that price does go up as does the household assistance which will help Australian families with the price impacts that flow through. Those price impacts will be 0.7 percent of the consumer price index of cost of living, 0.7 percent, less than one percent.
HOST: You say a single income family on $65,000 with one child is worse off now, how much worse off will it get for them when the full impact is recognised?
PM: Well compensation is going to keep increasing so that as the carbon price moves, household assistance is permanent and it will continue to increase as well.
HOST: But that group's worse off now.
PM: Of the family you're talking about, yes there are people who are not being fully compensated for the flow through price impact, the 0.7% increase in cost of living, that's true. Nine out of ten households are getting some assistance. Nearly six million households are getting enough assistance to come out square. Over four million households are getting more assistance than the impact of the flow through price of carbon on them so, for example, a pensioner who relies on the old age pension is coming out in front, but you're right there are families that aren't getting fully compensated. You've used an example of one and I think you'll find the impact on them is less than $1 a week.
HOST: Well, yes and that is if you believe the Treasury modelling but -
PM: On the Treasury modelling, we have got the same people to do this as did the modelling when the GST came into effect-
HOST: Yeah and they underestimated the inflationary effect of the GST two fold?
PM: That's not right, that is not right. These are the same people who did the modelling when the GST came into effect, of course that was a far, far bigger price impost of 10 percent increase, we're talking about 0.7 percent on the consumer price index. But when they did the modelling on the GST they got that modelling right.
HOST: Prime Minister you haven't been able to fund this scheme out of the revenue from the tax, you've had to go to the budget for $4.3 billion. How do we know that you just won't have to keep going back to the budget for top up funds because the scheme can't generate enough revenue?
PM: Well we've been very transparent about this and when you look at those budget figures you will see that most of that cost is in the set up period of the scheme. It's the big change for the Australian economy to come with start up and set up costs and it does, so more than two billion dollars of the four billion you referred to is in the first year of the scheme and when you look as the scheme gets up and running, then it becomes broadly budget neutral.
HOST: Yes that's right, that's on the projections but I mean, we have to take that on trust?
PM: Yes, done by the same Treasury that has provided professional advice to this Government in the same way they've provided professional advice to governments in the past and done by the same people who modelled the impacts of the GST and got that modelling right.
HOST: You're putting $10 billion into subsidising renewables, we've just seen a series of state governments pull back on solar schemes because they were economically unsustainable, aren't you just going down the same path?
PM: No, that's a complete apples to oranges comparison. What you're talking about are solar feed-in tariffs at the household level and yes, you're right, a number of state governments have chosen to wind back those schemes. What this is about is working at the production level of renewable energy and clean energy, so to give you an example of some of the things we've done already, we've announced that we are providing some support to major solar developments in Moree in New South Wales and Chinchilla in Queensland, they will be amongst the biggest solar energy generating capacity in the world. So $10 billion is going in to a clean energy development corporation, it will be run by a board that will make commercial loans but the purpose of this will be to turbo charge the development of clean energy for our future.
HOST: I just mention that $4.3 billion dollars which, for initial industry assistance, which is outside the scheme and comes from the budget. You plan to buy back 2000 megawatts of coal fired power capacity, that's about six reasonable sized power stations. Where will the money come from for that?
PM: We have made provision in the contingency reserves so we've put some money aside for that-
HOST: So that's out of the budget?
PM: Well, we've put some money aside for it.
HOST: But it's out of the budget, it's not out of the scheme?
PM: Yes, we've put some money aside for it, it's to retire dirty energy capacity. We can't tell you what that figure is because we are going to get businesses that run dirty coal fired power stations-
HOST: I understand that.
PM: Well just so your listeners understand too, we are going to get businesses that run dirty coal fired power stations to tender, so obviously we can't publicly say how much money we set aside otherwise everybody would tender for that amount of money and we don't want that, we want people giving the best price tenders that they can.
HOST: Yeah, I'm just establishing that's a drain on taxpayers again?
PM: Yes, but if you look at the scheme, you've obviously studied the forward estimates in detail and that's a really good thing. If you look at the last year of the forward estimates of the Government's budget period, you will see that the scheme is basically revenue neutral in that year, so beyond start up it becomes broadly revenue neutral.
HOST: When do you hope to get those power stations out of action?
PM: Look, we will be taking the tenders and seeing what people tender to us. We anticipate that it will take some years for progressive close down and the swinging in of new clean energy sources, because at all times we've got to have our eyes firmly trained on making sure that there's energy security and sufficient electricity supply.
HOST: Just finally on the transport industry, you've put off that fight til after the next election. Is that something you really would have liked to have had included in this package?
PM: Look we've taken a Government decision that we want to include heavy vehicles and we've said the start up time for that would be 1 July 2014.
HOST: Okay, I know you're pushed for time, thanks for your time this morning Prime Minister.
PM: Thank you.