Topics: Labor’s carbon tax, Direct Action, Labor’s ‘funny money’

 

 

E&OE……………………………………………………………………………………………………………………………………….

 

Mr Robb thank you very much for your time, the Opposition has been critical of the way the government is funding this carbon pricing plan, but wouldn’t the Coalition have more credibility if you provided your own costings for how you would fund your Direct Action plan $3.2 billion worth over the forward estimates?

Well we’ve done that once already in a most comprehensive way. We released a policy, February last year and the cost of that was the $3.2 billion against the forward estimates, we then released $50 billion worth of savings to show how we could quite easily manage within the budget the funding of our program.

 

We’ve got nothing to hide, it’s all out there, it’s been out there in fact for 15-16 months and it never got criticised in the run down to the election, no one said that we weren’t able to fund our Direct Action programs. 

 

So the pressure’s right back on the government, the fact of the matter is that Wayne Swan dismissed the overrun in this package as “broadly budget neutral”, it’s just a total furphy.

 

You are seeing a $4.3 (billion) which they’ve admitted to and then there’s $3 billion to retire 2,000 megawatts of brown coal generation capacity, which they’re all saying contradictory things, but clearly it must come out of the budget.

 

Then you’ve got the $10 billion slush fund, the ‘Bob Brown Bank’, which in other ways has been treated on the budget, in this last budget, this particular program which is very similar to things that are within the budget, is now going to be funded from borrowings, you really should say something closer to $17 billion, but there’s certainly a $7 billion black hole without a doubt.

 

 

OK, well I want to ask you about that fund in a moment, that $10 billion Clean Energy Finance Corporation, but back to your costings, you said they weren’t criticised, they were criticised extensively, the Treasury and Finance found an $11 billion black hole in the costings and then beyond that Mr Robb, you’ve committed to providing your own tax cuts on top of this other commitment for the Direct Action, so you’ve made a number of other commitments surely there needs to be a revised set of costings doesn’t there?

 

 

Well there will be. By the time we lead into the election as we’ve made the commitments there will be a very clear set of costings and policy programs laid out for everyone to examine. What I’m saying to you is …..

 

You’re calling for an election now. The Opposition’s calling for an election now. Should there not be the costings now?

 

If there was an election now the government would be required through the commitments on both sides, the government would be required to lay down the state of the budget and then we would be able to immediately respond with our own costings, but what I’m saying to you is it’s just less than 12 months since we demonstrated that we did have a capacity.

 

Even if you withdraw those items that were in contention between ourselves and Treasury and bear in mind the difference on that was differences in assumptions in all of those programs, so we don’t concede any of those programs to the Treasury, but even if you put those aside, we still had a surplus budget in the other savings that we had identified.

 

So we had clearly funded our commitment to a Direct Action program last year which demonstrates our capacity to find savings and to fund programs that we are going to advance.

 

We will do it again, we will do it again responsibly, we won’t play the sorts of tricks that we are starting to see, the sleight of hand, the smoke and mirrors that’s going on.

 

They are covering up billions and billions and billions of dollars. They have lost control, the economics of this package are unravelling by the day and they are just making it up as they are going along.

 

Julia Gillard said yesterday that the money would come for the $3 billion to retire that 2,000 megawatts of generating power, that that would come out of the Contingency Reserve, well the recent budget said that there is no provision in the Contingency Reserve for anything to do with the climate change package, so it’s funny money starting to enter into the government’s funding of their programs.

 

 

The Opposition leader has said that you will have your own tax cuts. Can I ask you specifically about this reform that a lot of economists have praised and industry groups, this was the one out of, based out the Henry Review recommendations, lifting the tax-free threshold to upwards of $20,000 from its current position of about $6,000, do you welcome that removing about one million people out of the tax system and would the Coalition keep it or wind that back?

 

 

Well we have said since the Henry Review was released that we were attracted to raising the tax-free threshold, but what we wouldn’t do is increase the marginal tax rates as the government has in this package.

 

This is not tax reform, on the one hand they do something that’s got some merit, but they’ve paid for it by taking us back to the 1980s, by being the first increase in marginal tax rates, the 15 goes to 19 and the 30 I think goes to 33 or 35, that is the first increase we’ve seen. 

 

That is a discouragement for people to work longer hours and to make an extra quid to pay for the cost of the carbon tax to pay off their family bills. That’s a discouragement so this government on the one hand does something which is sensible, but pays for it with something that is quite retrograde.

 

 

But how would you fund all of these promises? You are promising tax cuts, tax-free threshold increase which would go right up the scale according to what you are saying there. That would cost billions and billions and billions of dollars as well as that the Coalition is saying you would not purchase the least cost abatement from overseas when there is certified abatement done overseas, Greg Hunt says no we are not going to purchase that, how do you make all of the numbers stack up?

 

 

Well it’s called living within your means Kieran. This government has got no concept of that. We are seeing at the moment eight million families around this country whose savings rate has gone from minus one to plus eleven-and-a-half per cent over the last 12 months.

 

These are people who because they can’t pay for the twelve and a half per cent increase in electricity prices even since Julia Gillard came to power, because they can’t pay these utility bills and their mortgage rates and all the rest, they are cutting back on spending, they are not spending on things they otherwise would do, they’re deferring expenditure, they are going without, they are living within their means.

 

This government though continues to ratchet up their rate of spending; they’ll spend a lot more than they will get even in this financial year. They’re borrowing massively still, extra $107 billion that will go up now another $10 billion with this slush fund that we were talking about, therefore we’ve got to as a country live within our means, that’s first and foremost.

 

 

On that, why wouldn’t you argue with your colleagues as Finance Minister then let’s look at purchasing abatement from overseas if there is least cost abatement overseas rather than what looks like a cumbersome way of just spending all taxpayer money on funding the polluting industries?

 

 

Well you think about it Kieran …

 

If there’s least cost abatement overseas why not use it?

 

 

Well, we don’t need to use it. What we will do is encourage organisations, companies, to introduce changes to the way in which they are doing things to either store more carbon such as in soil or to reduce the amount of emissions such as in the built environment, the city, the buildings and in factories and others. Now we will fund that, we’ve already established how we would fund it, this government’s going to raise $24 billion across the period of the forward estimates in higher taxes from the tax, this carbon tax.

 

Our whole program will cost $3.2 billion, when you take out the tax that is going to go to lower income groups and for all the compensation, when you remove that the actual cost, the cost of reducing the amount of emissions is relatively small against the total tax take of this government. 

 

If you take out of the government’s total tax take all of the compensation and all of the churn and the hundreds and hundreds and thousands of new bureaucrats you will find the actual cost of mitigation is probably about 10 per cent of the total tax take.

 

Now that’s all we have to face is that 10 per cent cost we don’t have to have all that other money.

 

 

What about that promise to increase, just one last question, I know you’ve got a busy day ahead, I just want to ask you about the pension increases, there’s going to be an increase to pensioners, self-funded retirees a couple of hundred dollars above their costs.

 

They are going to get it eight months before the tax comes into play. Will the Coalition keep that magnitude of increase if you are elected at the next election, that you would implement that sort of pension rise?

 

 

The first thing is Kieran the best compensation is no tax and we will rescind this tax … [interruption]

 

 

So you wouldn’t raise the pension by that magnitude?

 

 

No, no, no what decisions we take in regards to the benefits that will accrue to different sections of the community, we will announce in advance, we have already … [interruption]

 

 

So no guarantee then, no guarantee [inaudible] of that magnitude?

 

 

What I do guarantee is we will lay out well ahead of the election, the tax cuts and other benefits that will accrue to other parts of the community, but we will first and foremost live within our means, not this government which is putting Australia in great jeopardy and vulnerability to any sort of downturn around the world by profligate spending and this madness of a tax.   

 

 

Shadow Finance Minister Andrew Robb, great to chat, thanks a lot for that.