Jones: To discuss the Government's carbon tax and the opposition to it, I was joined a short time ago from Newcastle by the Climate Change Minister, Greg Combet.
Greg Combet, thanks for joining us.
Combet: Pleasure, Tony.
Jones: Who advised the Government that it'd be a good idea to announce a carbon tax with no details?
Combet: Well it's a perfectly valid way to approach a development of an important policy like this.
One thing that's extremely important is that we provide a clear indication of what we're endeavouring to achieve to allow stakeholders to have a solid input to the detailed design of the policy. And when I say stakeholders, I mean important members of the business community who have an interest in it, members of the environment groups and the community more generally.
But just imagine a position where we suddenly produced all of the detailed policy without consulting anyone in the wider community or particularly in the business community.
Furthermore, this is not an unusual approach to developing important policy. I had occasion today to reflect on this and how John Howard approached, for example, developing the GST and I pulled out the announcement. It was actually a page-and-a-half announcement that indicated he was intending to develop a GST and it enabled stakeholders to have an important input.
So, it's a valid way of developing policy with integrity. It might be a little uncomfortable politically at the moment, but it is very important that people know what direction the Government is intending to go in and that they have the opportunity to have an input.
Jones: Well, I mean, you cite the case of John Howard, so I've got to say that he actually went to an election putting himself on the line with that tax out there as a policy to be voted on. You didn't do that.
Combet: Well, come off it. There's been years now - the recent years in politics has been dominated by a debate over climate change and over the policy responses to it. I don't think anyone can credibly say that the Labor Party hasn't had a very clear position that we intend acting on climate change.
Jones: To be frank about this, you had a very clear position on a carbon tax: there wouldn't be one under Julia Gillard's government. That was the clear position prior to the election, so you've obviously gone back on that to start with.
Combet: Well, I think the election changed a few circumstances, as the Prime Minister indicated. But let me also be perfectly frank with you: what we have announced is an emissions trading scheme and in order to provide the greatest certainty about how that scheme will start we've indicated that it would commence with a fixed price period of between three to five years.
That will provide certainty about what the pricing is and allow the scheme to get underway with a good degree of stability. And what we have said is that that fixed price period would operate like a carbon tax. And of course there's been a lot of political debate about that issue, but those are the facts of the matter.
Jones: But that's the problem when you say "like a carbon tax" and prior to that you say there won't be a carbon tax, you're obviously going to get a huge public reaction. That's what you're getting - there's going to be rallies in Canberra against this. I mean, are you going to be speaking at that rally?
Combet: Look, I don't think anyone ever expected that this wouldn't be a difficult policy debate, and it is. And I don't think anyone expected, certainly within the Government, that Tony Abbott wouldn't respond with a fear campaign, because that's the only shot he's got in the locker.
Jones: But you've confused a lot of people and you've confused, for example, Tony Windsor, the key independent, or one of the key independents whose vote you'll need.
He says you put the cart before the horse, you reached a conclusion without a number, with a target, without a price. I mean - so I go back to my original question: who came up with this rather radical strategy of releasing information you're going to have a tax without any detail?
Combet: It is complete rubbish to say that this is a radical strategy. Can I just point again not only to John Howard on the GST? It is the same thing that John Howard did in relation to emissions trading as well.
It is perfectly valid when developing an important public policy like this that you release your policy intentions in the way that we have and invite stakeholders in particular to have input into it. Now that cannot be in a secret process. You've got to, I think, identify responsibly to the community what the policy intention is and do the detailed work, and that's what we will do. And in the meantime, of course there's going to be a lot of hurly burly in the national political debate.
Jones: OK. You raise once again John Howard. John Howard said he would not have a carbon tax and he didn't. Julia Gillard said she wouldn't have a carbon tax and now she is. That's a fundamental difference, isn't it?
Combet: Look, John Howard proposed an emissions trading scheme and he took that policy to the election. We proposed an emissions trading scheme and took it to the 2007 election as well, it was a carbon pollution reduction scheme.
Guess what? It started with a fixed price period. All we've got here really is Tony Abbott running a scare campaign about some of these issues. And what is going to be important as this debate goes on is that we get onto the underlying reasons for why it is important for us to take action on climate change, why we need a carbon price in the economy, what a carbon price will do. And what it will do, will cut pollution in our economy - we need to do that - and it will also drive investment in clean energy sources.
And for example, it's very important in parts of industry like the energy sector to have the carbon price signal to provide the certainty for investors to invest in new-generation power plants. For example, gas-fired electricity generation. It's a very important economic policy setting.
We need to have the debate and as we get further through into the detail of the policy issues, you'll find Tony Abbott has nothing whatsoever to contribute, but there'll be a lot of information for people to consider as we go forward with it.
Jones: Alright. You've just raised gas fired power. And the Climate Institute estimates that if the current coal-fired power stations were replaced by combined cycle gas, that's gas fired power, then the electricity sector emissions would be halved by 2020. Is that a key part of your strategy?
Combet: Well it's important we make a transition in important parts of our economy and especially the electricity-generating sector. The pollution in our economy that comes from the electricity generators is about 37, 38 per cent of our overall pollution levels.
If we're going to tackle climate change and cut pollution levels and drive investment in cleaner energy, then obviously we have to be sensitive to the issues in the energy sector and achieve a transformation in it over time. And the next generation...
Jones: But do you agree - just going back to what you said: is the next technology to deliver baseload power gas-fired technology?
Combet: Yes, it is. For baseload electricity generation it will be gas-fired electricity that we see emerge, and for that investment to be committed, we need a carbon price in the economy.
Jones: OK. Well I'm getting to the point. Now I'm going to interrupt you there because we've got to get to the point here. How big is the carbon price you'd need in Australia to make gas-fired power competitive with coal-fired power?
Combet: Well, I'll answer that, but can I just make the point straightaway that how does one have that discussion with the energy sector if we don't at first indicate what the policy framework is that is under consideration. This is precisely the point, to go back to the issue of why the Government would take this approach. We need to have the detailed discussions with stakeholders, particularly electricity generators and the investors in that industry, to talk about scenarios such as that. And of course there's a range of carbon prices that would achieve different outcomes in the electricity generating sector.
A modest carbon price - and I'm not going to put numbers on it at this point in time - would help change fuel sources for example within the existing electricity generating infrastructure.
Jones: OK, but I'm sorry - it is important, yes, and I'm going to interrupt you again because it's important, because the industry says the necessary price to make gas power effective, to make it competitive with coal-fired power is $25 to $30 a tonne.
Combet: Well I've noted those comments.
Jones: Is that the figure that you're operating on? Because that's the effective carbon price they want.
Combet: Well, a number of them have different views about particular carbon prices and I think Origin Energy may have put that number out in the debate, and that's an important thing. The establishment of the framework of what we're trying to achieve of course is generating discussion about carbon price scenarios.
I won't be specific about a price at the moment because it's not appropriate. We have to have the detailed discussions with stakeholders. But as I was saying before, at some carbon prices you'll get more electricity coming from black coal-fired generators than brown coal generators. At higher carbon prices you'll have different investment decisions being made in long-term future generation such as gas.
What's important in that industry is to see that there is going to be a carbon price and what will happen with it over time and how an emissions trading scheme for example will operate over time and how it will link internationally.
Now to have those detailed discussions you've got to first tell the business community what your framework is, what your intention is, whether you're having an emissions trading scheme or not. And that is why the Government has taken the approach that it has.
We will now have a lot of detailed discussions with the electricity generators and with many other sectors of the business community and with environment groups and others in the community who've got a very keen interest in this issue.
But to provide the proper structure and framework for those discussions to be fruitful and for people to have a meaningful input into what is a very important economic reform, they need to know what the policy intention of the Government is. That's why we've made the announcement that we did a couple of weeks ago.
And in fact we're less than two weeks into this debate. There's a long way to go. There is going to be a substantial discussion, and at the end of the day, we're confident that we will achieve a solid level of support for the type of change that we are advocating.
Jones: Alright. Now, a quick question: you never answered my very first question: who was it that came up with the strategy to release a carbon tax with no detail? Did that come from the Prime Minister's office, did that come from your office? Where did it come from?
Combet: It's a decision of the Government. It was a decision of the Government to make the announcement and that is the appropriate way that the issue should be dealt with.
Jones: So this is a collective decision. It's not driven by the Prime Minister, it's not driven by your office, is that what you're saying? Everybody's to blame.
Combet: I'm not blaming anyone; it's the right decision. It's a valid decision in formulating policy. And of course there's been a pretty vibrant political debate over the last couple of weeks, but I don't think that should be a surprise to very many people and we will do the detailed work and we will make sure that we deliver on the commitments that we have given to people and that is that every dollar raised, for example, from the payment of a carbon price by the large polluting organisations in our economy - they're the ones who bear the price tag for pollution - that every dollar raised is used to support households in respect of any price impacts that occur and used to support jobs and the competitiveness of important industries in the trade-exposed emissions intensive part of the economy.
Now, these are important policy principles that underpin what the Government is doing, and it is entirely appropriate that we make those commitments, we announce those principles and we announce such a framework to allow the detailed discussion to ensue. And it might be of course extremely enthralling in the press gallery at the moment, the heat in the political contest.
But this is a very important long-term reform for this country that we have to get right, and to get it right you need informed engagement from members of the community and important stakeholders and especially the business community.
Jones: A final quick question: what is it that's unique about Australia that the fate of political leaders - and I mean many more than one - and even governments, rise or fall on the issue of what to do about climate change?
Combet: I think the issue is very vigorously contested here, Tony, and it's obvious from the last couple of weeks it's - there are diametrically opposed positions. But when you have a look overseas, it's not as equally contested.
It certainly is in the US. But just consider for example across Europe. There's been an emissions trading scheme in place for a couple of years now. The effective carbon price in the United Kingdom for example is around $29 a tonne, I think the last I checked on a report that had been done recently.
There's emissions trading going on in about 30, 32 countries internationally. Even in California an emissions trading scheme has been legislated in the US and of course that's about the fifth-largest economy in the world.
But Australia is not going it alone here. We're not out on our own. We're not leading the world, but we shouldn't be left behind. A report released some months ago by Vivid Economics, a UK-based firm, had a look at the effective carbon prices in a number of countries, and I mentioned $29 in the UK. It was actually $14 a tonne in China and about $5 a tonne effectively across the US. And guess where Australia was: $1.68 a tonne.
Jones: OK, I've got to interrupt you there. So you're saying that Australia is doing less to fight climate change than China?
Combet: Well China is doing quite a lot. In several weeks' time ...
Jones: But in terms of a carbon price.
Combet: Well, according to this report by Vivid Economics, the effective carbon price in sectors of the Chinese economy was $14 a tonne compared to $1.68 in Australia. This is why the Government has commissioned the Productivity Commission to do an independent study of the effective carbon prices in the economies of our major trading partners.
Let's shine the light on a few facts so that we can have a little bit more informed debate about this in Australia, because it is certainly not the case that we are the only ones doing something or endeavouring to do something about climate change. There is a range of things going on in the economies of our trading partners and we need to be well-informed about it.
Jones: Greg Combet, we're out of time. We'll have to leave you there. We thank you very much for coming in to talk to us tonight.
Combet: Thanks very much, Tony. Bye-bye.