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MEET THE PRESS 17 JULY 2011 INTERVIEW WITH WAYNE SWAN AND HEATHER RIDOUT DISCUSSIONS ABOUT CARBON TAX. PAUL BONGIORNO, PRESENTER: Hello and welcome to Meet The Press. Archaeologists use carbon dating to determine the age of fossils and the debate over a carbon tax does seem to have been going on for millions of years showing no sign of ending quickly. No sooner did she unveil her carbon pricing package then the Prime Minister was off and running with the big sell. Tony Abbott out of the blocks just as fast. The exhausting pace taking its toll. JULIA GILLARD, PRIME MINISTER (THURSDAY): But I do not forget where I came from, why I'm here or what I have learnt a along the way. PAUL BONGIORNO: One lesson, circumstances may change but words remain the same. WOMAN (WEDNESDAY): At the very end you said "There will be no carbon tax under my Government". JULIA GILLARD (WEDNESDAY): What I said before the election I cannot un-say now. PAUL BONGIORNO: Bullying intolerance from one Liberal supporter marred a hand-picked forum. REPORTER (WEDNESDAY): Is this a party meeting together? DECLAN STEPHENSON, CARBON TAX OPPONENT (WEDNESDAY): No, this is a community meeting. But she does not belong here. WOMAN: You are intimidating me, Sir. You were following me from the community forum and you are intimidating me. SECOND WOMAN: What is your purpose? DECLAN STEPHENSON: None of your business! TONY ABBOTT, OPPOSITION LEADER (WEDNESDAY): It is important in a democracy that all voices are heard. PAUL BONGIORNO: The Government struggled to be heard above the din. WAYNE SWAN, TREASURER (WEDNESDAY): The carbon price will have a very modest impact on the cost of living. PAUL BONGIORNO: Treasurer Wayne Swan is a guest. And later business leader and former Government tax advisor Heather Ridout joins us. But first Josh Murphy has what is making news this Sunday, July 17. JOSH MURPHY, REPORTER: Here are the major stories this morning - the Government is launching a $12 million television advertising campaign featuring Australian workers and organisations involved in creating a clean energy future to sell the carbon tax. Budget papers show $25 million has been allocated for the campaign. Homeowners are holding out hope that interest rates will begin to fall later this year. Westpac has predicted the first cut in December but other economists are still forecasting possible rate rises. Media magnate Rupert Murdoch has apologised for the phone hacking scandal in full page ads in major British newspapers. The day of atonement came as the UK Government denied it was too close to the Murdoch empire. Aid workers in the world‟s largest refugee camp in Kenya say thousands of children are in danger of dying of malnutrition. The drought in the Horn of Africa has forced tens of thousands of refugees from Somalia to cross the border into Kenya. Those are the headlines this morning. Back to you, Paul. PAUL BONGIORNO: Thank you. Welcome back to the program this morning, Wayne Swan. Good morning, Treasurer. WAYNE SWAN, TREASURER (BRISBANE): Good morning, Paul. PAUL BONGIORNO: The advertising campaign starts tonight, $25 million all up. Can those television advertisements succeed where the Government so far has failed? WAYNE SWAN: Well, Paul, this is a big structural reform, a big change to our economy and it has big implications for the environments. As I move around the country, I have been from Perth right through to Cairns in the past week, there is a real hunger out there in the community for more information – for the facts. People want to know why we are doing it and they want to know how we are doing it. When it comes to the „why‟ it is all about driving the investment into renewable energy, into clean energy technology whether it is wave technology or whether it‟s wind power, it is making sure we change the energy mix from the dirty fuels over to the cleaner energy fuels and also, people want to know how we are going to do it. They want to know what we are doing in terms to assist households and they want to know what we are doing to assist business. So there is a real hunger for information and that is why there is an advertising campaign. PAUL BONGIORNO: The fact of the matter is it is not yet law so this is basically party political at taxpayers‟ expense, isn't it? WAYNE SWAN: No. I completely reject that. The Government made its policy announcement. There is enormous community interest in this issue. There is a need to get the facts on the table and that is what we are doing. We are going to put the facts on the table. This is so important for the future of our country, so important in terms of future economic growth and so important to reduce carbon pollution and create that clean energy future. PAUL BONGIORNO: Labor was highly critical of the Howard Government for doing the same thing. WAYNE SWAN: The Howard Government spent a lot of money on very blatant party-political advertising. There is always a case for factual advertising and that is what we are doing here. There is a public interest to do this. When I go out and talk to business, when I run into people in the street, they want to know the facts. PAUL BONGIORNO: All right. The Government, according to a lot of questions we have on both Twitter and on Facebook even, is struggling to establish trust on a carbon tax. As I said, we have a number of questions to this point. A couple pointed to what you said just six days before the last election. Here is a reminder. WAYNE SWAN (15 AUGUST 2010): Certainly what we rejected is this hysterical allegation that somehow we are moving towards a carbon tax from the Liberals and their advertising. We certainly reject that. PAUL BONGIORNO: These words keep coming back to haunt you, don't they? WAYNE SWAN: Yes. I spoke about that on your program, Paul. I think the question I was asked was about a cap on carbon pollution, that is, we have always favoured an emissions trading system. I argued that on your program that morning. We have come to that through a three-year fixed price and that is a carbon tax, that is true, but what we are doing is moving to an emissions trading system. That is what we have always favoured. I‟ve favoured it for years and of course it has been the policy of both sides of politics except for Mr Abbott in the past 12 months. PAUL BONGIORNO: Do you concede it looks like you have broken faith with the Australian people? WAYNE SWAN: We argued during that campaign we would go towards an emissions trading system. We said we would work with the community to do that and we have worked through the multi-party committee. We have come up with a three- year fixed price that is a tax but we are moving to the position that we argued during the campaign which was for a floating price and an emissions trading system. PAUL BONGIORNO: Does Labor bear any responsibility for the fact that Australians do not see this as urgent - as urgently as the Government, the Greens and the Independents seem to and that is because you yourselves put it on the backburner for about 18 months? WAYNE SWAN: No, it was put on the backburner by the Liberal Party who defeated it in the Parliament. That is why we are having this debate. We have got to get this done, Paul. The time for action is now. The more we delay, the more costly it is for the nation. We have to make this change. I was in New Zealand during the week. They have bought in an ETS there. All of the scare campaigns occurred there like they are occurring here. When it was introduced people saw how it was operating and much of that concern went away. PAUL BONGIORNO: Treasurer, we have a question from Twitter from Lezli. She says or he says (editor‟s note: Lezli is a she) – “The Government should call an election for a carbon tax mandate as they have no carbon tax mandate”. This is a call we hear daily from the Opposition Leader as well. WAYNE SWAN: Yes, Mr Abbott is now calling for two elections. He just wants to run around and wreck things. You see, Mr Abbott is out there talking down the economy every day. The fact is what we need is certainty. Our country needs to deal with carbon pricing. That is what we are doing. We need to do the business to invest. Very simply, Paul, we went to the last election arguing for a carbon price. We have come to it through a three-year fixed price. There will be an election in a couple of years‟ time and people can pass their judgement. PAUL BONGIORNO: Time for a break. When we return with the panel, are we heading for big spending cuts to fill the carbon tax black hole? The „runner of the week award‟ goes to Tony Abbott as picked up by the 7PM Project. „RUNNER OF THE WEEK AWARD‟ - TONY ABBOTT (TUESDAY): I'm trying to be as open and accessible to the Australian people as I possibly can be and I suggest the Prime Minister should do the same. 7PM PROJECT PRESENTER: This is five minutes later, five minutes later! TONY ABBOTT: Thank you. REPORTER: We followed you around all morning. We have been out here since 9:00. PAUL BONGIORNO: He has been in training for a while. Mr Abbott has been doing a runner from this program all year. PAUL BONGIORNO: You are on Meet The Press with Treasurer Wayne Swan. Welcome to the panel, Alison Carabine from ABC National Radio Breakfast and Simon Benson from the Daily Telegraph. Good morning. One of the questions of the week, when is revenue neutral, revenue neutral? The Government itself identified a hit to the budget as it puts the carbon tax in place. The compensation and exclusions do cost real money. JOE HOCKEY, SHADOW TREASURER (TUESDAY): The Government needs to come clean about how they are going to pay for the $4.3 billion black hole they have in the budget now. They were so concerned a few months ago about a $1.8 billion hole. They imposed a new flood levy. So does this mean that we are going to have a carbon tax levy on top of the carbon tax they announced on Sunday? ALISON CARABINE, ABC RADIO NATIONAL BREAKFAST: Well, Treasurer the carbon tax will blow a $4.3 billion hole in the budget. Considering the latest round of turmoil sweeping Europe and the US, is there a danger that the hole could be blown even bigger, meaning that you sooner rather than later are going to have to hand down a budget with some pretty tough spending cuts? WAYNE SWAN: Mr Hockey gets more bizarre by the week. The only hole around the place is the huge hole in the program he took to the last election, an $11 billion black hole. We will bring our budget back the surplus in 2012-13. We are operating within our fiscal rules. Yes, there is an up-front cost for this program. No doubt about that, but modest calls on the surplus over the surplus years. It is entirely affordable. Yes, there are challenges in the global economic out look. We are seeing uncertainty in Europe and we are seeing weaker growth in the United States but our region remains strong. When I brought down the budget I pointed to the fact there was short- term softness in the Australian economy but medium-term strength. We are seeing out there a cautious consumer but the fundamentals underlying our economy are strong. One of the challenges we have at the moment is the scare mongering from Mr Hockey and some media outlets that are talking our economy down and scaring the pants off consumers. ALISON CARABINE: But Australia is also at the mercy of international conditions and all the reports from overseas are decidedly gloomy. Do you fear that we may be on the brink of a global financial crisis Mark II and how can you be so certain you can deliver that surplus in 2012-13? WAYNE SWAN: We are not immune from global economic developments. That‟s for sure. Our region remains strong. Chinese growth was strong. There was a figure that came out in the past week and we did come through the global financial crisis in very good shape. Our economic regulators are first-class, our budget position is strong. So we have the strength to withstand adverse international events, although we are not entirely immune from them. SIMON BENSON, THE DAILY TELEGRAPH: Treasurer, given the global economic uncertainty, are there any circumstances you could foresee under which you might consider delaying the introduction of a carbon tax? WAYNE SWAN: No. We need to introduce a carbon price because we need to give business certainty so it can drive in the investment in renewable energy and particularly in power generation. But if you look at the modelling which we have published it shows we can cut carbon pollution and continue to grow strongly. That is what the modelling shows. We have an underlying strength in our economy. We have low unemployment, we have a strong investment pipeline and we have record terms of trade. Now is the time to put in place this reform because if we delay it gets more costly by the year. PAUL BONGIORNO: Treasurer, as you mentioned earlier, consumer confidence has plummeted, in fact back to global financial crisis levels. Tony Abbott says "Don't blame me". TONY ABBOTT, OPPOSITION LEADER (THURSDAY): If the Treasurer wants to restore confidence, he could do it at a stroke by saying "We have thought again, there will be no carbon tax". Whether people believe him or not will be another story. SIMON BENSON: Treasurer, you talk about mining boom Mark II. There are some people now talking about the potential of a GFC Mark II. Have you taken your eyes off the ball of the bigger picture here and have you been too focused domestically on the carbon tax? WAYNE SWAN: We brought down a budget a couple of months ago which was absolutely devoted to lifting the productivity of our economy, to spreading all of the benefits of mining boom Mark II and at the centrepiece of that was a whole package about spreading opportunities through training Australians, lifting work participation. These things are all very important but when you talk about consumer confidence, we have another senior Liberal out there today arguing to bring back the worst aspects of WorkChoices. That is what Mr Howard said today. I cannot think of anything more damaging to the confidence of working Australians than the Liberal Party putting out a policy saying they were going to bring back the worst aspects of WorkChoices. ALISON CARABINE: But people are the moment are engaged in a carbon tax debate, not over a debate about industrial relations. You are trying to sell a carbon tax from a base of just 27% primary support. Is the problem, Treasurer, the product or is it the sales person? Would you be doing better if it was someone other than Julia Gillard doing the spruiking? Voters do not appear to trust her. WAYNE SWAN: I just reject that completely. She is a leader of courage. She is a leader of conviction and we are together putting forward a reform which will lift our prosperity, which will cut carbon pollution and protect the future for our children and our grandchildren. Now, these reforms are tough and in the past when government have put forward big reforms like this, they have lost at bit of paint along the way. There is no doubt this has happened in this debate. This reform is right for the country and this is a reform that the country does accept and will accept as we go through putting all the facts out there and getting rid of all the garbage and scare campaign that has come from Mr Abbott and some of his allies. SIMON BENSON: Treasurer, you would have to admit, though, Labor's stocks are pretty low. Some of your backbench colleagues are even talking about the prospect of even forcing Julia Gillard to resign within six or 12 months if things haven‟t improved. If things are still the same for Labor in 12 months time, what do you do? WAYNE SWAN: I just completely reject that entirely! What we are doing here is putting forward a fundamental reform that goes to the core of Labor values, creating prosperity and spreading opportunity. You cannot be a first rate, first world economy in the 21st century unless you are powered by clean energy and that view, that vision and that objective is shared by everybody in our caucus and they understand that it is a tough reform and they understand we‟ve got a lot of hard work to do and we are out there doing it together. SIMON BENSON: But there is a political reality here for you too, isn't there? In 12 months‟ time and you look at the prospect of going to election within 12 months of that. If you are on a primary vote of 27% still, what do you do? How do you turn that around? What do you do? WAYNE SWAN: Simon, I got into politics and Julia Gillard got into politics to make a change and to make a better country And that‟s why we are here. And, of course, nothing is more important to our children and our grandchildren than dealing with dangerous climate change. What would we say to them in 10, 20, 30 years time if we squib this in the critical decade because of bad opinion polling? PAUL BONGIORNO: Thank you very much for being with us this morning, Treasurer Wayne Swan. And coming up - Heather Ridout from the Australian industry group. Cartoonist Nicholson in the Australian has the Opposition Leader haring off to the next election. “Who wins? You have to read the whole fairytale.” (Theme music to Chariots of Fire plays under cartoon) PAUL BONGIORNO: You‟re on Meet The Press. Never stand between Paul Keating and some free advice on the economy. On Thursday, the former Prime Minister and once world's greatest Treasurer put out this challenge for critics of the carbon tax. PAUL KEATING, FORMER PRIME MINISTER, LATELINE (THURSDAY): Do we want a first-rate industrial economy or do we want an economy with a brown, fat under belly? Do we want to get into the new age with the new industries or do we stay in the old ones talking as Tony Abbott is talking about industries that were important 100 years ago? PAUL BONGIORNO: Good morning and welcome Heather Ridout, CEO of the Australian Industry Group. What do you think of Paul Keating's challenge there? Do we talk about industries of the past or look to the future? HEATHER RIDOUT, CEO, AUSTRALIAN INDUSTRY GROUP: I'm not sure what he is talking about really. Is he talking about manufacturing industry? That employs 1 million Australians and pays more wages and salaries than any other industry in Australia, that adds more to value-added than any industry in Australia. So I'm not sure what he is talking about. Brown coal, fire industries, we are making a transition to black coal, we are making a transition to gas, we are making more transitions to renewables. Australia has 100 years of these resources. Other countries who are putting a lot of money into renewables and clean energy they have energy security problems, Australia does not have those and this is a very different ball game we‟ re dealing with here. PAUL BONGIORNO: On that point, we have a question from Twitter from JR who says “does the AIG foresee growth for renewables in Australia”, I guess he means manufacturing renewable in Australia, “to be developed then exported the world?” HEATHER RIDOUT: Look, I think we have been doing some of that, but I think we have missed the ball a lot. We used to be great world leaders in solar. We really missed the ball on wind turbine technology, so I think in a way we have kind of missed that run and it is hard to recapture that but it doesn‟t mean we are not world leaders in certain things. With alumina, we make the cheapest and best alumina in the world using the best technology. So there are a lot of things we do well in Australia and we shouldn‟t discount that. SIMON BENSON: You said that the $23 price has come as a shock to industry. Has it really? Some of your member groups such as the steel industry have even welcomed it and there are some pretty generous subsidies in there? HEATHER RIDOUT: I think that the $23 price is a risk to the economy. We have not seen the blood flow through the veins on this system yet. There are a lot of risks to electricity prices, there is a lot of risk to jobs, there is a lot of risk to competitiveness and these things really need to be known, so we said you should start very slow and build-up and still enter it at a reasonably market price. We also believe that this price does not take account of the huge regulatory burden that‟s already in place that was identified in the Productivity Commission report which already put us middle of the road in the world in terms of an implicit carbon price. So this is going to be layered on to an already existing carbon price that neither side of politics has really embraced getting rid of. SIMON BENSON: Your group was a critic of the renewable energy targets and the subsidies to renewable energies because of the input costs for electricity prices. Would you be happier with a carbon price of $23 if some of those programs were removed as the Productivity Commission suggested? HEATHER RIDOUT: I think they have to be rationalised. They definitely have to be. There‟s a whole lot of state schemes, there are feeding tariffs, the small solar stuff shown to be very expensive. All good feel-good stuff but I think we do have to be ruthless. If we want a $23 price and that to work for the Australian economy, work for competitors, competitiveness, work for jobs, we need to be ruthless around these issues and we are not being. We‟re wanting our cake and eat it too and this will give us a world-leading carbon price. ALISON CARABINE: Heather Ridout, business craves certainty. Once the tax is introduced on July 1 next year, if it is bedded down and the sky hasn‟t fallen in, if the Coalition is elected at the next election, would you support Tony Abbott to rescind the tax or would that be too disruptive? HEATHER RIDOUT: From the 1st of July next year, a lot of our members are going to start incurring higher costs with no cash in the hand to pay for them. They are going to have to take this out of their profits and margins. That is a fact. While a lot of companies or some are getting support through this scheme, an awful lot of them are not. In terms of certainty, yes, our members who supply the generating industry have seen a drying-up of investment into that area which will be risky for the economy down the track because we will have electricity supply problems. So there are issues of certainty. The other issue for business is we are not really confident how this thing can be rescinded or repealed. It is a very complex package. It looks like it will go through in its current form. What I want to do is sit down with a Government is to work out how we can ameliorate further some of these impacts, particularly when we are intent on having such a high carbon price from the get-go. ALISON CARABINE: Another possible disruption for your members are the gathering storm clouds overseas. What‟s your assessment of the international outlook? Do you think we could be in for a repeat of 2007? HEATHER RIDOUT: Look, my concern is we are already having a very disconnected debate in Australia about the economy. We have the official view. We have the view on the ground from my members, interest rate sensitive, dollar-sensitive members, big employing sectors under big stress. If you look at Europe, it‟s in a very dangerous state. The US is facing a long period of adjustment. Our region is doing well but really the world is a very interconnected place these days and what we are trying to do in Australia is put another layer of structural adjustment over an economy that is struggling. I think the men and women in the street, they don‟t see this turbo- charged economy with high terms of trade, etc. What they see is Struggle Street. I think this is a disconnect between managing of the aggregate and looking at the micro impacts. ALISON CARABINE: Do you think the government has become too focused on the carbon tax and is paying scant attention to what is going on overseas? HEATHER RIDOUT: Look, I think the Government needs to pay attention to what‟s going on in manufacturing industry in Australia, and I think they are getting that message. I think they need to see what is happening ton retail. There is a lot of pain. These are big employing sectors who are under stress. In terms of the international stuff and then we do need to be mindful. I think Obama in his first term was hell bent on doing health reform but he would have been better focusing on jobs and do health after he got that fixed. I think timing is everything on these reforms. We have had two shots at carbon and this is the third one, and the timing could not be worse. PAUL BONGIORNO: Just on the interest rate discussion, people obviously would welcome lower interest rates but, of course, the flip side of that is interest rates, but if they have to be lowered it‟s because the economy is stalling. HEATHER RIDOUT: I think that is right. Everyone suspected and expected rates to rise over the next 12 months. We‟ve got these big terms of trade booms, big income booms that‟s going to flow into over-activity, huge demand. It is not happening. What is happening is the big employing sectors - manufacturing, retail, education etc -- are struggling under higher interest rates and under the dollar at a level we have not seen on a sustained basis for many years. The big concern is that is the dollar‟s going to stay there and interest rates will be too high. PAUL BONGIORNO: Just very briefly because we are out of time, tax reform - do you welcome what they have done there as tax reform, a la the Henry review? HEATHER RIDOUT: Indeed I do. I think it is very important. And I hope the Opposition embrace it. I know they have been interested in that concept. It‟s good for participation, it‟s good for simplification and I think it‟s putting money in the hands of taxpayers. There is no deceit in this. It has been well and truly recognised by tax experts. I think that argument is spurious. This is a reform and it is a good one. Whatever happens on carbon, I sincerely hope it continues. As with the small business write-off provision, they were also issues raised by Henry. PAUL BONGIORNO: Thank you very much for being with us today, Heather Ridout. HEATHER RIDOUT: My pleasure. PAUL BONGIORNO: And thank you also to our panel, Alison Carabine and Simon Benson. A transcript and replay of the program will be on our website and our Facebook page. Until next week, goodbye.
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