MEET THE PRESS

							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.