ABC Statewide Mornings
11 July 2011
SUBJECTS: Clean Energy Future
LEON COMPTON:
Someone we can talk to on the radio this morning is Bill Shorten, Assistant Treasurer, and part of the tour of Australia that Ministers in the Labor Government will be doing to sell the policy that will, according to many, decide is future. Bill Shorten, good morning to you, thank you for your time.
BILL SHORTEN:
Good morning to you.
COMPTON:
Is this about tax or is this about climate change?
SHORTEN:
It's about climate change, the reason why we're putting a price on carbon is because the Gillard Government, and indeed I think many Australians, believe that you can't keep polluting the environment without there being consequences. So we have to send an incentive into the system to say to the big polluters, you don't have an unfettered licence just to put carbon pollution into the atmosphere, with the consequent effects it has on weather and sea levels and the sort of issues that are indirectly touching on the last person you were speaking to.
COMPTON:
But the consequences are going to be borne in financial terms to large extent by ordinary Tasmanians.
SHORTEN:
Well to begin with, there are consequences being borne if we don't act, that's the first thing, this is not a one-idea beauty parade. To judge this idea you've got to look at the detail, which is what you're asking but you've also got to compare it to the alternative and the alternative is not to act.
I mean, these debates are not new, once upon a time it was felt it was okay to put effluent and rubbish and toxins into rivers until we cleaned up our water ways. Once upon a time it was deemed to be okay to put your garbage out into the street and not expect that you have to pay to clean it up. This carbon pollution is just the next step which says that to large companies 'if you want to pollute because of your processes you've got to pay a price,' because that's what is required to help make the economy a cleaner, better place than it is.
Julia Gillard said on television last night, in her National address, she said the amount of carbon we aim to reduce by 2020 is the equivalent of taking 45 million cars off the roads. It goes without saying that no Australian wants to live next to 45 million cars on a freeway, and that's what we're trying to do. We're trying to make sure that our children and grandchildren get a nation which is cleaner and healthier and more efficient than the one which we've inherited.
COMPTON:
And yet in real terms, the carbon emissions in the country will continue to rise, albeit at a reduced rate, and it's hard to understand what this carbon tax will do in the context of global emissions which will continue to rise at an even greater rate on current projections.
SHORTEN:
Yes the proposition, which I believe and the Government believes, very strongly is that what we do in Australia is about making Australia a better place. No one has ever said that when we act to clean up our rivers and to clean up our air that because the air in Brazil or the air in, I don't mean to pick on Brazil, but say a crowded city somewhere in the world has smoggy pollution, just because we don't fix up the smoggy pollution in Los Angeles or Tokyo, that's not a reason against us fixing up our pollution, because if we just waited for the lowest common denominator of everyone else in the world then we suffer a disadvantage. And the rest of the world is acting anyway, there are 89 different jurisdictions who are trailing, putting in place measures to reduce carbon pollution so we're not going first, but I don't believe we should go last.
The other proposition is that, which I think is important when we look at the rest of the world acting and should we act and what will it do, it is this; Australia is a small country, 23 million people, the world doesn't owe us a living. We need to be constantly upgrading our economy. The last typewriter factory in the world closed last week; once upon a time it would have been unthinkable to think that we wouldn't have lots of countries making typewriters. When I was a union rep I used to organise the rope and cordage industry, we don't make a lot of rope in Australia anymore. Times do change and I don't think its political leadership to tell Australian people you never have to change. Forty or fifty years ago you'd have one job for life you know, you'd leave school....
COMPTON:
All this is true but it's market forces that tend to be the wind that blows change or that drives change in economies, not Government taxation policy.
SHORTEN:
A large part of what happens in the Australian economy is market forces but not everything. It is the case, and the whole history of pollution has been, that markets haven't moved to eradicated pollution without some Government assistance and encouragement. And the beauty of what we're doing is that within 3 years we want to have a market traded system. We tried in the first term of the Labor Government to go to a market scheme but the Greens and the Liberals knocked it off three times in the Senate.
We had the election, Prime Minister Gillard wanted to act again on climate change, we have crossbenchers, we have Liberal MP's in the Parliament, we have Labor MP's. Julia Gillard is determined that in order for us to reduce our carbon pollution the best way forward is putting in a interim tax, but what we're also doing is helping people out by putting in permanent tax cuts.
You said at the opening of the interview is this climate change or is this tax? Well it's aimed at reducing climate change but one lever we have to help try and change behaviour is through the tax system, but what we also want to make sure that as we're tackling and taxing the 500 hundred largest polluters, that to the extent that they try to pass these costs onto consumers, we want to make sure that Australians who don't earn a lot of money don't unduly suffer as we got through the process of change.
COMPTON:
1300 222 936 if you'd like to join us this morning, Bill Shorten is my guest, the Assistant Treasurer in the federal Government; Phil in Sandy Bay good morning Phil.
PHIL:
Good morning. I'm one of the great ignorant out here, I just don't have a clue what this is all about, not a clue and if Bill Shorten wants to do something well I'd like to see him up there with chalk and a blackboard and explain to people in the old fashioned way that I personally can understand, I can't meet anybody else that understands it either.
COMPTON:
Well the chalk and the blackboard might make for bad radio Phil but if you were asked to describe your worries about this scheme, what are you worried about?
PHIL:
If they're going to tax big business, what are they going to do? They're just going to pass it on aren't they?
COMPTON:
I think that's a very reasonable question to put to him, for a start you talked about the things done in the first term of your Government, in the first term of your Government you tried an incredible amount of initiatives that came up terribly in a policy sense in a lot of ways, Bill Shorten, people are nervous and have concerns that you will not be able to get this huge policy reform right.
SHORTEN:
Okay there are probably three points there, Phil's first point is why are we bothering doing this? You're right, radio doesn't allow chalk and blackboard, but the reason why we're doing it is that a whole lot of scientists all around the world have had a look at the way we produce materials, and we rely on production processes that generate a lot of carbon into the atmosphere, the view is that the carbon going into the atmosphere is causing negative effects on our climate, so we want to reduce the amount of carbon being used in processes, we want to encourage industry to look at more energy efficient, low polluting ways of doing business, so that's why we're doing it.
We're saying that there is a bi-product of the industrial processes which uses too much carbon and that's causing negative effects to the climate and the environment and most scientists seem to think that that is the case. So then how do you get industry to become less reliant on high carbon pollution? What we're putting in place Phil is a tax on the big polluters.
Then you've said but okay if you do that, if that's the reason why you're doing it and you want to tax big polluters wont they just pass all of that cost back to the punters, the consumers? Well we think that over time industry can't just pass back every price to the customer, over time there will be some companies that will say hey we want to compete, we want people to buy our products and use our product,s what we'll do is we'll move to more energy efficient, less polluting technologies and in turn, by not passing on all the price increases they'll do better than the slower moving companies that say oh no we'll just do business as usual. So we're trying to use a tax to encourage business to look at not having to pay the tax by being lower carbon polluting.
COMPTON:
So let's pull you up there for a moment. We happen to have the cleanest power in the country in Tasmania and yet the price of that is going to go up by 10% as well, so this doesn't just affect the coal mined power, it affects literally everything. Isn't that a flaw in your argument Bill Shorten?
SHORTEN:
Not quite. Tasmania is going to do better than other states because you do have more carbon friendly energy...
COMPTON:
Why is Tasmanian power going up by 10%?
SHORTEN:
Well we don't think it will go up by the same level as all coal fired power, Tasmania is part of the National Power Grid so periodically you use energy from the mainland to supplement your power needs to use your power needs in Tasmania. That element will certainly be affected by the carbon prices but we think that Tasmania sits well placed.
I also have to say that when we talk about Tasmania and how it's going, take for instance GST funding, Tasmania for every $1 dollar of GST it pays gets $1.60 back and that's fair enough. My point is that Tasmania does do well out of the Federal system and we think that Tasmania is well placed with its renewable energy opportunities plus the extra billions of dollars we're going to make available for renewable energy. We think that Tasmania will do well and we certainly don't share the view of the Western Australian Premier that Tasmania is some sort of leech of the national economy.
COMPTON:
How much will the cost of the ferry go up from Devonport to Victorian?
SHORTEN:
I couldn't tell you specifically now the cost of the ferry, I'm happy to find out.
COMPTON:
The diesel will be included will it not in the carbon tax?
SHORTEN:
Yes, in terms of what fuels get included and don't get included, passenger vehicles and light commercial vehicles up to four and a half tonnes won't be included.
COMPTON:
So roughly how much do you think the cost of the ferry will go up?
SHORTEN:
I just I couldn't tell you the precise cost of the ferry going up.
COMPTON:
But the diesel going into that ferry that will be a significant part of their operating cost will be subject to the carbon tax.
SHORTEN:
Yes what I was then explaining is not just diesel in the ferry but indeed all fuels, because there's plenty of people who use different petrol's and fuels in Tasmania not just the ferry, what's in and what's not in is all the passenger vehicles. All the cars, all the light commercial vehicles up to four and a half tonnes are not included. Vehicles used in agriculture and forestry are not being covered by this, what is covered is heavy trucks, is domestic aviation, and shipping.
COMPTON:
So the cost of the Ferry will rise?
SHORTEN:
Yes, and what I can't tell you is how much. What I can also tell you though is that we will get back to you will a specific on each particular example that gets raised and there may well be a viewers who, well not viewers sorry, listeners who might have specific questions on particular business processes, we're happy for your producers if they want to email in questions we'll turn and give you specifics really quickly because we understand say oh this new tax, what does it mean for us? We want to make sure people can get very clear answers as soon as possible.
COMPTON:
Rod is Launceston, good morning Rod.
ROD:
Good morning gents how are you?
COMPTON:
I'm well thank you; you've got a question for the Assistant Treasurer Bill Shorten?
ROD:
Yeah, I have, firstly I have a comment and then a question. I think climate change is real it's a natural part of the earth's cycle if you look at geological time you can see that. Humans on the planet digging things up, chopping things down, burning them over the last couple of hundred years has had to make a significant difference in that process so I think that's where I stand there.
A tax on carbon with these companies, with these 500 companies, money going out of their pocket and then money going back in and the money that goes around in the cycle, how is that going to make any difference to the 500 hundred companies that are out there that are going to get hit with this tax, why are they going to change anything?
SHORTEN:
The answer I'd give you on that is that it's roughly going to apply to companies that are producing more that 25 thousand tonnes of carbon, emitting 25 thousand tonnes of carbon pollution into the atmosphere each year so that's roughly where the dividing line falls, it's how we get to the 500 companies.
What it will do is, that if you're a company producing whatever on whatever industrial process no one in my experience likes to pay any more tax than they have to, so if you can come up with a way of emitting less carbon into the environment then you'll pay less tax, that's the incentive. So that's the first point. If you can develop more energy efficiency then what you will do is pay less tax and the issue is some people say oh well some companies won't care they'll just pass it on the consumer the truth of the matter is that over time if companies want to compete with other companies the ones who do best are the ones who will able to use less carbon in their industry sectors compared to those who don't change at all.
COMPTON:
Chris in New Norfolk, good morning Chris.
CHRIS:
Good morning Leon, good morning Mr Shorten.
SHORTEN:
Good morning.
CHRIS:
Basically, well I totally agree with climate change, I mean a famous man once said that for every action there is a reaction and I think we're copping it in spades over the last few years. Firstly I'd like to congratulate the Government, I think they've done a very good job and it's about time we did something about it. The main thing I wanted to ask you Bill was carbon credits, a friend of mine was asking me this morning about it, would that be like, I think there was a fella from Red Forrest was down here a couple of weeks back and he was talking about this very issue of buying carbon credits here in Tasmania, can you give me an answer on that?
COMPTON:
Let's see how it works, Bill Shorten?
SHORTEN:
Alright thanks for that. What we want to do is three years after we introduce the tax on carbon pollution, is we want to move to a traded system. The Government will issue permits for a certain amount of carbon and what happens is companies will have to pay for permits, a licence to produce carbon and if you're in an industrial process which mitigates carbon you can then, companies can then come to you and either invest in your process or buy your carbon credits to compensate for the carbon they're producing so if you're good at reducing carbon you'll be able to engage in a traded system of carbon credits where for the carbon you're not producing and you're able to...
Say for instance, I'll pick a simple example, say you're able to invest in a carbon farming initiative where your trees will absorb a certain amount of carbon, that creates value and then companies who are producing a lot of Carbon will have an incentive to buy carbon credits and that's how create a system where you get rewarded for dealing and mitigating carbon.
COMPTON:
Thanks Chris for your call for New Norfolk, let's go to North Hobart Peter good morning to you.
PETER:
Good morning Chris, good morning Bill. Given that this carbon is an invisible product that can't be directly measured and there is no identifiable customer, how are you going to levy a tax?
SHORTEN:
I know it can be measured, and again I might just go to a real world experience I had when I was an organiser in the cement industry and the aluminium industry, the fact of the matter is you can record and measure the amount of carbon used in a process and again, to put it in plain English, some of these facilities have bag houses where they catch a lot of the pollution which is coming out of the industrial processes and again, I mean this is a generalisation about pollution as opposed to just carbon, but the reason why they have the bag houses, the reason why these companies have spent a lot of money is because you could go to the end of a shift in these industrial facilities and you can almost see a haze of pollution arising out of the process used in these companies.
That doesn't mean we don't need cement, of course we need cement, that doesn't mean we don't need aluminium, that doesn't mean those jobs aren't good jobs, and I've worked and spent a lot of time in those industries. But what I also know is that these industrial processes do create pollution, and if we try and say they don't create pollution or that nothing can be done to mitigate that pollution then we're giving up and I can tell you what, the rest of the world is going to try to reduce their pollution and Australian political leaders, it doesn't matter whatever your political views, we don't do anyone any favours by telling Australian you can be frozen in the moment, you never need to change, today is not a good day to change, next week is not a good day to change, next year is not a good year to change, the truth of the matter is leadership has got to help people change rather than telling people nothing ever has to change.
COMPTON:
What's it going to mean for Nyrstar, the zinc processing in Hobart, what's it going to mean for the heavy industry particularly in aluminium smelting in Bell Bay in the north?
SHORTEN:
Well I've in the past been to both those facilities so again I have some idea of what goes on, Nyrstar used to be called Zinifex and it was then Pasminco, what I know is with these facilities, is that we will be, for the next 3 years, giving them 94.5% thereabouts return on their tax because they're trade exposed and they use a lot of carbon, we've got to be realistic though whilst we want to reduce pollution if you do it too fast or too quickly then we do badly compared to our competitors. Put a simple way, we're proposing that you pay a tax of 23 tonne of carbon at Nyrstar, what we're proposing to do is to in the first give them back 94 cents in every dollar they pay, so they're only paying a reduced rate of carbon tax.
COMPTON:
What about five years out, once the true impact of these reforms, once we move to an emissions trading scheme in five years time?
SHORTEN:
I believe completely that over time, provide the change is brought in gradually which is what we're doing, these businesses will move to more efficient production processes.
COMPTON:
Or to other places? Are they still going to be viable in five years time?
SHORTEN:
Well lets go to the viability of Nyrstar, we're very pleases that Nyrstar is functioning, it is doing okay. But I was around in 2000... I don't know the exact year, 2002, 2003 where Pasminco nearly wrecked the business all on its own without any Government assistance, this is where they, you know I've been there when there was job security threats, I do not believe the proposition about putting a modest tax on carbon pollution with a long leave time to get acclimatized to it, that's not the threat to job security what some of the previous managers in this joint have been.
COMPTON:
Or Bill Shorten are they the rope manufacturers that you used to represent?
SHORTEN:
No, because...
COMPTON:
What makes them any different?
SHORTEN:
Because I do think there are differences between the rope industry and the smelting industries. The issue with rope is that it was possible to absolutely do the whole process cheaper elsewhere. In the case of access to minerals, access to market, cost of transportation, the sunk cost of investment, I don't accept that heavy industry can ever be successful and competitive in Australia. There is a degree of defeatism amongst some in the conservative ranks who say that the only way that Australian manufacturing can compete is by low wages, and by saying that we just have to be high polluting.
COMPTON:
Okay I understand, we'll move on to that, to more of your calls, we've got the head of Aurora Energy and also Hydro Tasmania talking to us on the other side of news at 9 o'clock this, Bill Shorten is my guest, the Assistant Treasurer. Forestry in the minute we have left between now and news, how do you anticipate this tax will impact on forestry and the environmental benefits that come with forests?
SHORTEN:
Well, Tasmania has been grappling with the future of the forest industry for a long time, there's been plenty of twists and turns, again I had the opportunity to see the forest industry close up through some of the Government forestry workers who I used to organise. There are negotiations about the future of the forestry underway, settlement if not resolved is very close to immanent. I don't think that the carbon tax is a challenge for the forest industry in a negative sense, we are proposing that farming and agriculture is exempt, we are proposing new initiatives, carbon farming initiatives, we think this is good for forestry.
COMPTON:
Appreciate you coming in and talking to us this morning thanks for your time.
