23-April-2009
Portfolio Media Releases, The Economy, Immigration and Multicultural Affairs, Emissions Trading Scheme
Topics: IMF report, government mishandling of the economy, immigration issues, ETS.
KIERAN GILBERT: This IMF report is you know it’s just the latest in a series of these negative forecasts and another reminder that Australia is just one very small part of the global contagion.
ANDREW ROBB: There’s no doubt that we have to be totally mindful in all the policies that we undertake in Australia over the next two, three, fours years of the fact that we are so connected to the rest of the world. This meltdown which is now confirmed as the worst since the Great Depression is going to affect every part of our economy and we have to be mindful of that. Even though we came into this with a much stronger economy than others, courtesy of the last ten or fifteen years of good management but we are not immune to what’s going on and particularly with the things such as the emissions trading scheme which is on the books, it makes that issue even far more problematic in terms of how far we go, how we go and how the scheme is designed. It puts a very big question mark over what the government’s got on the table at the present time.
KIERAN GILBERT: Well I want get to the ETS a bit later in the show but first of all just want to focus on the economic date. Overnight the Chancellor of the Exchequer in London Alistair Darling handed down his budget, debts, government debt of about 175 billion pounds. Doesn’t that dwarf what our government is facing Mr Robb and doesn’t it also diminish your argument that the government has been reckless in its spending?
ANDREW ROBB: No well what is does tell us is quite the opposite Kieran. What is does say it that there is huge storm clouds have been gathering exist around the work which are going to impact on us potentially for quite some time two or three years could still see material impact on our economy to have fired all of our shots in the first six months and leave us no discretion in the year ahead two years, three years ahead to do things without massive borrowing is reckless, is reckless it was a panic move and a lot of that spending that has been done is like flash flood and really is just greened the bank for a month or two and hasn’t intrinsically helped employers keep their employment base solid keep people in jobs it is adding I think over time the growth that’s now predicted by Wayne Swan of eight per cent unemployment by next year.
KIERAN GILBERT: I want to Greg Combet’s response to that has the government fired all of it’s shots or we’re hearing that there might be third stimulus package in this budget in a couple of weeks.
GREG COMBET: Well we will have to wait for the budget to see what is contained in it but what was reckless really was the opposition by the coalition to the govt nation building and jobs plans just imagine the circumstance we would be in now had the government not taken the steps to provide economic stimulus last December and more recently in February with the nation building and jobs plan. That money is flowing through the economy, it’s helped hold up consumer demand and retail activity over the Christmas and New Year period and right now the money is going into things like our major infrastructure upgrade of schools throughout Australia, throughout the country every school in Australia having maintenance upgrades, new libraries, class room facilities, competition for science and languages labs etc. The biggest education infrastructure investment the country has ever seen, that’s what is helping insulate our economy from some of the worst impacts of the global recession. It’s inevitable of course as Mr Robb said that the country is caught up, but one important point the IMF report has made is that we are certainly better positioned in Australia than most around the world to deal this storm we’re confronting.
KIERAN GILBERT: It was a big spend though wasn’t it, this debt will be around for some time.
ANDREW ROBB: Well the IMF report also makes the point of course that Australia is still a small net creditor at the moment so we are in a very good position to make the investments that we’re making in things like infrastructure to do the economic stimulus packages and to meet the great collapse in government revenue that we are confronting well over $100 billion in the forward estimates the economy is in the best possible position with a lot of the work government has done to meet the challenges that we are confronting
KIERAN GILBERT: The Treasurer was on the Nine network Today Show this morning making a similar point to what we have just heard from Greg Combet let’s recap a little bit of what he told the Today Show.
[CUT TO THE TREASURER]
KIERAN GILBERT: Andrew Robb how can you say that it wouldn’t be a lot worse without those injections?
ANDREW ROBB: Kieran again, I repeat we’re just at the start of this, just at the start and the government has already foreshadowed $200 billion of debt, they’ve have spent over $70 billion since the last budget which was not part of the of the last budget and for Greg Combet to say that it would have been a lot worse. We’ve gone from a unemployment of already four to nearly six per cent we’re heading towards eight per cent this is in 18 months so for the government to suggest that spending in the last few months and the racking up of massive debt and spending on short term stimulus packages has done something substantive to stem the tide of unemployment I think it beggars belief. I think we are seeing the situation where there is rapid growth in unemployment there is no confidence being given to the business sector that their underlying cost of employment and employing people will be addressed, that they can find some sustainable way of maintaining people that they’ve valuable employees on their staff to hold the fort in the years ahead and to come out of the other end in a much stronger position. We have panicked in this country with this government they have spent an enormous amount of money on short term stimulus which not delivered and has not protected jobs, long term. All it has done is racked up massive debt for this country.
[INAUDIBLE]
GREG COMBET: The most important thing to support the business community is to take the decisions that the government has taken. Guarantees for retail deposits, banking system wholesale funding arrangements for the banks to secure the financial system within Australian and to provide confidence to the financial community within the country to support investment and continue lending….
KIERAN GIBLERT: What about specific support for employing people…is there room on that front?
GREG COMBET: The government’s got in place a range of programs that assist in that but it’s the macro level that’s incredibly important. Make sure you have got stability within the financial system, it’s the life blood of the investment in the economy. Short term stimulus packages that we have introduced have helped hold up consumer demand and retail activity and jobs in the major part of the economy and we now having flowing through the investments that we have announced in the national building and jobs plan in the areas like infrastructure and we will have to wait and see of course what the Prime Minister and Treasurer have crafted for the budget, however there is no thing more important to the government than supporting jobs, that is the main game and we will continue to focus on doing that
KIERAN GILBERT: We’re hearing reports form the Australian newspaper that the government got a hollow log of funds, $26 billion in total from its infrastructure funds that it can use for spending in those areas without the bill racking up the deficit any further. What do you know about that?
GREG COMBET: These were the major announcements in the budget last year, in the areas of hospitals infrastructure, education infrastructure, and transport type of infrastructure around the economy, we’ve started to make investments on those fronts. They are a major consideration of course of infrastructure investment, that Infrastructure Australia is considering and we obviously wanting to see come into the economy….
KIERAN GILBERT: This revenue base gives you more scope…
GREG COMBET: Well these were funds that were established by the government in last budget that allow investment…
ANDREW ROBB: By the Howard Government….
GREG COMBET: Well they were made by the Rudd Government in the last budget…
ANDREW ROBB: Generated by the Howard Government….
GREG COMBET: In these critical areas of the economy well, the Howard Government of course failed completely on that front to allocate the funding to these critical areas of investment. They didn’t do much on education, health infrastructure over a long period of time …
ANDREW ROBB: That’s ridiculous…
GREG COMBET: But these things are coming into the economy and of course we are keen to see and support jobs.
KIERAN GILBERT: Ok, what do you make, Andrew Robb, of reports today that the government might means test the private health insurance rebate, is it time to reign in that sort of spend given the economic crisis that we face?
ANDREW ROBB: Look, they’ve been opposed to this all along despite the quite explicit promises before the election that it would go untouched. Clearly there has been a long term agenda from this Government to illuminate private health insurance and to shift everything onto Medicare. It’s been a long term, we can see the ideological attempt. They are using this Global FC and their mismanagement of it in many respects. They have spent all the money, they are racking up debt, they have nothing left other than borrowed monies really to do all the really heavy lifting on infrastructure that needs to be done and we have a situation where the government now will cast around and try and extract monies wherever they can and here is just another example where they are doing something which is quite opposite to the promises they made coming into the last election and it just again reflects on the way in which their panic moves over recent months is going to lead them into all sorts of unfortunate policy decisions.
KIERAN GILBERT: Are you saying there won’t be a means testing of the rebate?
GREG COMBET: Well I am not in a position to speculate about what’s contained in the Budget but what Mr Robb’s just put is all rubbish, the Government has had a commitment to private health insurance for a considerable period of time. Of course the Government also…
KIEREN GILBERT: Not always the rebate though…
GREG COMBET: … the Labor Government previously established medicare. We want to see people have good health insurance arrangements.
KEIREN GILBERT: But you haven’t been supportive of the rebate from the outset. I mean the Labor Party was very critical at the outset.
GREG COMBET: But it’s been our policy, we took it to the last election, we’ve retained it.
KIERAN GILBERT: Latter day converts though.
GREG COMBET: I’m not in a position to speculate about what’s contained in the budget but the observations, the broad brush approach that Mr Robb was just articulating is just nonsense.
KIERAN GILBERT: The asylum seeker issue continues of course. Another boat load of asylum seekers, Sri Lankans, 32 of them, detected by the navy off the coast. It was less than a 100km from the coast of Western Australia. The Prime Minister had a few comments generally on this issue last night at a Community Cabinet in Perth…”The key thing is what I just said before which is getting the balance right, maintaining strong border security and at the same time doing so in a manner which is consistent with this country’s international legal obligations. That is the balance, we have to make sure we adhere to that balance…”
Greg Combet, the Opposition said the boat should have been picked up earlier, why was it let to get so close to the mainland.
GREG COMBET: Oh, as I understand it this was a boat that emanated from Sri Lanka as far as we are aware. It was under surveillance by our border protection forces and monitored and when it hit the migration zone it was intercepted by the patrol boats so it will make its way now to Christmas Island where people will be disembarked of course and processed according to the procedures that are in place.
KIERAN GILBERT: Doesn’t it show the Government’s approach is working Andrew Robb? The fact they monitored this vessel and it looks at this stage thankfully that all those on board are safe and will be transported to Christmas Island.
ANDREW ROBB: Well what it does indicate in my view, it confirms that the cutbacks that have been made in the spending on the monitoring and surveillance of our coast means..
GREG COMBET: We are spending more than any Government previously…
ANDREW ROBB: No, there have been confirmed cutbacks in the amount of funds committed to general surveillance, there’s been also allowed by this Prime Minister the perception that this Government has gone soft on people smugglers, it is why we are seeing such a massive increase in boats coming to Australia and foreshadowed even more and more. They have signalled to people smugglers that Australia is open for business again for their trade and they are reaping now the product of some very bad decisions and some very poor telegraphing to the rest of the world that we have gone soft on people smuggling.
GREG COMBET: Look can I make an observation about this. I actually think this commentary by the Liberal Party is completely unprincipled, it is a hark back to the period when we had children overboard scandals. The fact of the matter is that there are serious conflicts in various parts of the world, like Afghanistan, Pakistan, Sri Lanka, Somalia that is leading to a huge increase in people movements and people smuggling unfortunately around the world. Countries like Italy have experienced a 122% increase in asylum seekers hitting their shores in 2008, we have experienced a 19% increase last year. We have in place a tough border protection regime and the off shore processing and on the issue of expenditure the Liberals of course in Government spent $300 million on the so called Pacific Solution. We are spending more than they did on border protection and surveillance, customs surveillance, that is the fact of the matter.
KIERAN GILBERT: Alright, we could go on that issue all morning. I do want to get to your portfolio areas, the ETS and we are running out of time…. We will get to that debate on the emissions trading scheme…
…The Prime Minister has now responded to all of the recommendations of the 2020 Summit. He did so at a Community Cabinet in Perth overnight….(interview with Ashleigh Gillon. Omitted)
…And it’s welcome back to our Panel now, the Parliamentary Secretary for climate change, Greg Combet and the Shadow minister for Infrastructure and Emissions Trading, Andrew Robb.
Mr Combet I want to get to both of your Portfolio areas now and that is of course emissions trading and climate change. This week at a Senate Committee in Melbourne the two big steel makers, Bluescope and Onesteel warned that your CPRS, your Carbon Pollution Reduction Scheme will cost hundreds of jobs. Now is that the sort of message we want from business given the dire state of the economy as we were discussing earlier.
GREG COMBET: No, look the biggest thing affecting the business community at the moment is the global downturn and particularly in areas that are emissions intensive in the economy, they are especially impacted by the global downturn, the collapse in demand for steel is very significant for example, the collapse in coal prices and other commodity prices in the order of 50 or 60%, that’s the big issue. I have been doing a lot of the consultation with the business community about the emissions trading scheme, the carbon pollution reduction scheme.
KIERAN GILBERT: You must have been busy then because not many of them are happy about it…
GREG COMBET: Well I have been busy but what I have been going through with them is of course the assistance, the transitional assistance packages that the Government has on the table that we have articulated in the White Paper about the emissions trading scheme that are now encapsulated in our draft legislation for the scheme and going through and discussing how those will apply and we will take that process through to conclusion but the real factor that is impacting upon these parts, the economy like iron and steel is the global environment and course it makes it a very difficult environment to introduce a reform as important as this but climate change is real, the Government accepts the climate science that is around, we are determined to press on, it’s a commitment we have given and we wish to take and we believe it important to take a leading role when we get to Copenhagen late this year in international negotiations.
KIERAN GILBERT: Yes but the comments from OneSteel Chief Executive for example, Geoff Plummer, he is warning that the scheme as it is currently formulated will cost their organisation 100’s of millions of dollars in the early years.
GREG COMBET: Well I don’t know that he has taken into account the assistance package we have articulated and we are going through with OneSteel at the moment for example at a departmental level the definition of steel making activities that would attract 90% levels of assistance and 60% levels of assistance in their activities. These are very significant elements of transitional support. In fact they are under attack from the other side of the argument in a significant way by the environment movement but the Government is committed to support jobs in these sectors but also to make a start on the transition to lower emissions intensive, lower levels of carbon pollution in our own economy. That is where we are at, we believe we are getting the balance right and will continue the dialogue with the business community about how these packages will apply.
KIERAN GILBERT: But it’s not just the steel industry, you have got companies like Ford Australia also warning that while it’s, and I will quote you from the Ford Submission to the Inquiry, it says.. “it is difficult to precisely quantify the impact but it would be well in the order of many millions of dollars via increased energy costs. The proposed introduction of the scheme in 2010 will coincide with a drop in the passenger car import tariff as well from 10 to 5% so they are also very concerned about the impact on an already struggling industry.
GREG COMBET: But let’s not forget the economic environment which these comments are being made. The demand for motor vehicles has also dropped significantly in the global economic recession and as I said before commodity prices and a whole host of other elements of demand in emissions intensive parts of the economy are creating a very difficult business environment.
KIERAN GILBERT: So can they cop this further whack….
GREG COMBET: That is the greatest pressure on jobs. Well we are in dialogue with the business community about the real impact of the CPRS applying and working through with them the job supporting transitional packages that we have in place for those sectors of the economy and as I have said before, areas like aluminium smelting for example are expected to receive 90% levels of support for the overwhelming part of their production process. That is that 90% of their liability for purchasing carbon permits under the scheme that we will be introducing will be issued to them free and that is a very, very significant level of assistance.
KIERAN GILBERT: Well this issue is obviously going to dominate much of the May session of Parliament for budget session but this CPRS and the legislation will dominate. A lot of pressure on you Andrew Robb and your team to come up with a cohesive argument and you know Penny Wong this week was making the point that if Australia fails to pass this legislation it will be isolated at that Copenhagen Summit at the end of the year when they try and come up with a new international agreement. Are you ready to be portrayed as the pariah on climate change again?
ANDREW ROBB: Well that was an absurd statement. There is no major scheme operating really anywhere in the world. If you look, even at the European Scheme, it is pretty much a pilot scheme, they auction 3% of permits in the European scheme. The scheme that Kevin Rudd is looking to introduce will auction 70% of permits which will mean an eleven and a half billion dollar government take of monies in the first year, eleven and a half billion dollars in a climate that Greg Combet is talking about where the rest of the world we have such an enormous problem in itself from the global financial crisis. This is not a question of relativities; this is going to go on top of all of that. We have got of hundreds of thousands of jobs already predicted by the Government will go because of the global financial crisis, now they are flirting with adding to that tens of thousands of more jobs because of the impact of this deeply flawed scheme. We support a scheme, the trouble is that this Government has rushed into this scheme for political reasons, they have made a mess of it, it is deeply flawed, no one is happy with it. It is going to cost tens of thousands of jobs, it is going to stop investment in its tracks and it is going to do little or nothing about CO2 emissions so it fails on all fronts. And you have got even people like Ross Garnaut, who is their principal advisor saying they should pull back and revisit this, redesign it. We have got yesterday Tim Costello coming out, we have had the ACF again saying it’s not going to provide certainty for business nor will it do anything of any consequence for the environment so on all fronts they have failed and yet they will not entertain, Penny Wong spoke for 40 minutes on Monday and didn’t spend one second addressing any of the concerns that OneSteel and BlueScope and all of the others have raised, not one second. All she did was make this ridiculous claim that we will be pariahs in some world stage. We ought to get our policy right. If we get our policy right we will influence the rest of the world. Not if we rush into something which puts a major impost on industry. You have got in Greg’s own electorate, you have got in the Hunter Valley there, you have got Kurri Kurri aluminium smelter, they have reduced CO2 emission in 1990 by 75% and yet they are going to put at risk 12,000 jobs.
KIERAN GILBERT: Unfortunately, I mean, this debate will have among us, many times in the next few weeks.
GREG COMBET: There is one important thing in all of this, in all the dialogue I have had with the business leadership all of them want to see a scheme passed. Of course they are arguing about the design of it, the levels of assistance available but they don’t want the Liberals to adopt a position for example of irresponsibility where there is not certainty for the investment environment of the future.
ANDREW ROBB: It’s a take or leave it…
Media Contact: Stuart Eaton, 0433 298 620