HOST: Ms Gillard good morning.
PM: Good morning Neil.
HOST: Okay to be a little bit specific, a cup of coffee, how much will that go up?
PM: Oh look, Neil, it's not like the GST where there was a price impact item by item, that's not what carbon pricing is about.
HOST: But will it go up as a general principle? I suppose it has to doesn't it?
PM: Yes, look Neil, let's just through it and let's just be really clear, it's the biggest businesses that are paying the carbon price.
The businesses that generate the most carbon pollution, they are paying a price per tonne, that sends them a price signal to do what they do in a cleaner and greener way and because they will respond that way we'll have the equivalent of 45 million cars off the road in 2020.
Some of that cost will be passed through to the things you buy, I buy, Aussies around the nation buy.
That price impact will be less than a cent in a dollar and that's why we are giving people tax cuts and pension increases and family payment increases.
HOST: So on a cup of coffee, forget the exact figure but how will it be impacted?
PM: Less than a cent in a dollar. The cost of living increase will be 0.7 per cent, that is less than a cent in a dollar.
HOST: So you're saying, I want to get it clear though because I see electricity that grids the beans to brew the coffee to deliver the milk, to buy the milk at the supermarket, all that adds up to one cent on a cup of coffee.
Well actually it'd be 4 cents isn't it, because it's $4 for a cup of coffee so it'd be 4 cents on a cup of coffee.
PM: Yep, if you want to do it on average, Neil, and say what's it going to cost me, you're cost of living increase is less than a cent in a dollar.
Where is the biggest impa on you, well it will be on your electricity bills where we've said electricity will go up 10 per cent and around the country the regulators that set electricity prices have looked at all of this and have brought in figures that are either at what we were predicting or slightly less than we were predicting.
Which means that the assistAnce that we are giving households has been configured right.
HOST: So if I look at the cup of coffee and say how much is electricity in that and that goes up 10 cents, 10 per cent presumably.
PM: Yes that's right and so look, it's not like the GST where you can go, what did I used to pay and plus the GST, it's not like that.
What's your cost of living impact, it's less than a cent in a dollar.
HOST: So as a rule of thumb, if I look at what I'm paying for something and add a cent for every dollar, is that what it'll cost me extra?
PM: Well across your cost of living, yes.
HOST: Okay, do we really know? I mean it isn't like the GST because we did know there, you're quite right.
Do we really know what it's going to cost?
PM: The single biggest element of the price increment is on electricity bills and we already know that what we were predicting has come true on that. So yes the predictions were right.
The jury is already in on the single biggest element for people.
HOST: Obviously it's the cost of running every and then we add land fill. You see the demolition industry tells me there's a 70 per cent increase at the cost of demolishing a house. That's not a cent of a dollar, that's 70 per cent.
PM: Well I do not see how that claim can be correct and claims like that do need to be tested.
Look Neil, we over many, many long months now have heard claim after claim, you know, incredible claims about what carbon pricing was going to bring, you know, people trying to tell your, you know, roast if you were having the family around for dinner was going to cost you $100; that we'd be a nation that didn't mine coal any more.
All of these crazy claims, they will be proven to be untrue. They are untrue and the important thing about this period now that carbon pricing has now started, is that people can judge for themselves.
They don't have to listen at the end of the day to the pollies anymore, they can make up their own minds because they'll see their tax cuts, their pension increases, their family payment increases, they'll know what the weekly shop costs and they will be able to work it out.
HOST: Prime Minister, you're right about some of the scare stuff but in fairness can spare us the stunts.
I mean, Wayne Swan yesterday, is Vegemite not going up? He's produced his grocery bill, there you are, it didn't go up. I mean that's just nonsense isn't it?
PM: Well I think, Neil, when we have had over 12 months now of the most ridiculous claims-
HOST: But yesterday was ridiculous.
PM: The claims that were being made, claims that were being made from the first moment of carbon pricing, we would see a wrecking ball go through our economy.
We would be entering a permanent depression. You wouldn't see people mining coal anymore.
You know, people would see astronomical increases in their cost of living.
Well I think it is appropriate with all of that doom has been spread around for months and months, for us to say to people, look the doomsayers were wrong.
HOST: But Prime Minister, please we aren't stupid.
A couple of hours into the carbon tax, Wayne Swan, the Treasurer, not some backbencher, the Treasurer, presents a receipt from the supermarket showing it's the same as it was the previous day.
Now are you really saying he's got milk, vegemite, roast lamb, are you really saying now of that stuff's going up or was that just a stunt?
PM: I'm saying that debunks the kind of claims we've heard.
HOST: What 2 hours into a carbon tax?
PM: Yes, the kind of claims we're heard which has led people to believe that the Australian way of life was coming to an end on 1 July.
HOST: Well what about your Ministers in Whyalla pretending to hide in case the town explodes, how offensive is that to the people of Whyalla who might be concerned about their jobs?
I mean that was just a juvenile prank.
PM: Well, Neil, let's just actually go through what's happened here.
What's happened here is the Leader of the Opposition said to the people of Whyalla, your town will be wiped of the map.
You know, no ifs, no buts, no maybes-
HOST: Day one Prime Minister.
PM: Your town will be wiped off the map and then he said it about Gladstone and places around the country.
I think we are entitled to point out that those claims were wrong.
HOST: But we don't know yet, Prime Minister, we don't know yet.
PM: Well these weren't claims that were made about impacts over time, wrecking ball through the economy is not an impact over time.
It is the carbon price has been put up there by the Lead of the Opposition and others as if it would bring doom and gloom from day one.
We are entitled therefore to say to people, all of those doomsday scenarios were wrong, now is your opportunity to judge the facts, judge for yourself, judge from your lived experience.
Don't worry about what the politicians say, actually add it all up for yourself.
HOST: And you're telling me less than, just over 24 hours into the carbon tax we know that all these doom, these predications are wrong do we, 24 hours in?
PM: Yes we do.
HOST: We don't even know how much things are going up, how can we know?
PM: Neil, no don't leave that impression with people because that is not right.
We have had the people at Treasury, who did the modelling of the GST and got it right, do the modelling for us.
The single most important element of carbon pricing is the impact on electricity and already the Treasury prediction is right.
HOST: Prime Minister, did you know the price of funerals is going up?
PM: I've seen that claimed in some places and debunked in others but Neil, you've put a broad question to me about how do you know what is going to happen.
We know what is going to happen because the experts who have assisted Governments of all political persuasions over many long years have modelled in impacts and already the single biggest impact Neil, if I can finish this sentence, already the single biggest impact they've predicted on electricity prices they have got that right.
We know that from what the regulators have said, so Neil if they've got that right, the increase in electricity, there is no reason for you to assume that they haven't got anything else right.
What do their predications show? Less than a cent in a dollar, the economy keeps growing and jobs keep growing. That is what people should expect to see as they get their tax cuts, as they get their family payment increases, as they get their pension increases.
HOST: We'll take a quick call for the Prime Minister. Phillip, keep it short please, yes Phillip.
CALLER: Yes good morning Prime Minister. I'm just wondering, I've got a letter here from TruEnergy that states that my electricity bill - I've got a small engineering business with four people worker for me - my electricity bill will increase by 12 per cent approximately purely because of the carbon tax and it says it in black and white, I'm quite happy to send it to you know.
I do not get any compensation. My workers do, they get their tax and all that sort of stuff. I get zero.
Where do I pass that 12 per cent on?
PM: Well you would be in a position to pass that onto the people who buy services from your business and we have expected that those costs would be passed on and it feeds into that less than a cent in a dollar increase in prices that I talked about.
CALLER: All of my customers, I've got to now say to them, I've got to charge you around about 10 per cent more.
PM: Well I doubt that, you are not selling electricity, so you've seen an increase in your electricity bill, what component of your total business costs in your electricity bill?
CALLER: Around about $2000 a quarter.
PM: And so what component of your total business cost is it?
HOST: What percentage of your costs will be electricity?
CALLER: Well I really don't know it be quite honest but it costs to turn the lights on and operate the lathes and the mills, I would say it's about 75 per cent.
PM: More than your labour costs? Surely your labour costs are your biggest costs in your business?
CALLER: Our labour costs would definitely be the biggest costs but the electricity bill is our next highest overhead.
PM: Right, so if your labour would be about 80-90 per cent of your costs? Something like that?
CALLER: No it wouldn't be that much. Our labours would be around about $25,000 a year and we spend and we turnover about $1.2 million.
PM: Well the only reason for asking you that, in terms of the flow through impact for your consumers, we'd need to know how big a cost, percentage cost for you business your electricity is.
So to make the maths easy, it's a 10 per cent cost for your business and you're seeing that cost go up then that's what you're passing on .
It's not you passing on a total 10 per cent as the total cost of your business because electricity is not the total cost but that's part of the problem, it's the unknown.
But can I ask you about another area, Prime Minister.
You are, you do add say 10 per cent cost to running police stations, charities, medical research-
PM: That's not true, Neil. What's the biggest cost of running a police station, it's paying the police officers.
I mean, let's just be sensible about all of this. What's the single biggest cost of running a hospital, it's paying the doctors and nursing and it's great that we pay them because they're wonderful staff.
HOST: Will there be any compensation to these organisations? What if I run a cancer research institute and I pay big electricity bills, they're going up 10 per cent or 12 per cent, 10 per cent to the carbon tax, will I get any compensation?
PM: Federal Government grants are indexed and changes in the cost of living index effect how much more money we put in those grants.
So if you take a hospital, we have now stepped up to being a full partner in the costs of hospitals, 50 per cent is where we're going - $16 billion extra going into hospitals between now and 2020 and it's indexed so they extend that carbon pricing makes a difference to the cost of living.
It effects how we index those grants.
HOST: Prime Minister, I really know you need to get away, one more very last short question?
Do you feel any guilt or regret today that you broke this promise.
PM: I meant every word when I said during the election campaign, those words that have been replayed so many times about carbon pricing-
HOST: Tax.
PM: On a carbon tax. And during the election campaign 2010 in and 2007 I and the Labor party generally talked about how we wanted to see our nation price carbon and have an emissions trading scheme.
So we will get that emissions trading scheme, Neil, in three years time. Yes it's through a route that I didn't originally anticipate, by having a fixed price, a carbon tax if you like for the first three year
But I stood in the 2007 election saying we should price carbon. I stood in the 2010 election saying we should price carbon.
Now we are pricing carbon to do the right thing for our environment and cut carbon pollution and the vast majority of Australians are getting enough assistance they either come out square or in front.
HOST: Thank you very much for your time.
PM: Thank you.