THE HON GREG COMBET AM MP
Minister for Climate Change and Energy Efficiency
Minister for Industry and Innovation
2 July 2012
TRANSCRIPT OF INTERVIEW WITH RICHARD KING – 2HD NEWCASTLE
SUBJECT: Carbon pricing
E & O E – Proof only
KING: Joining me now, obviously with the Government’s perspective on carbon pricing and the carbon tax which came into effect yesterday, he’s local, he’s the Member for Charlton and now climate change Minister, Greg Combet. Good morning, Greg.
COMBET: How are you Richard?
KING: Good, thanks. You’ve certainly been doing a lot of talking over, well, not just over recent months but recent years. It’s with us now, the sky hasn’t fallen in yet. But firstly, why has your Government decided to price carbon emissions and bring in this tax?
COMBET: Well, because we are amongst the highest polluters in the world. That is, the highest emitters of greenhouse gases in the world despite a relatively small population. And, in fact, we’re the highest emitter of greenhouse gases per person amongst all the advanced economies, higher than the United States, and there is an international effort that’s needed to tackle climate change and we have to play our fair part. But beyond the environmental goal, Richard, it’s also important for us economically. By reducing the amount of pollution we generate per unit of our economic output, we can improve the competitiveness of the economy. It drives technological change. It makes the coalmines utilise methane gas rather than just ventilate it into the atmosphere. It makes the electricity generators use coal far more efficiently. That’s the sort of thing we’ve got to do if we’re going to become more competitive in the years to come, particularly in the Asia Pacific region.
KING: And just on the subject of electricity, here in NSW the price has gone up 18 per cent and I think nine per cent of that is credited to the carbon tax. I mean, it begs the question, if I can just change the subject, why we’re paying GST on electricity, Greg.
COMBET: Well that was the way it was put when it was introduced.
COMBET: And, electricity prices have been going up for some time which we’ve discussed previously Richard.
COMBET: 55 per cent in the last three years, and that’s nothing to do with carbon pricing.
KING: No, no, no.
COMBET: It’s got everything to do with the investment in the poles and wires and the generation capacity. And I know the pressure that creates, but when you look at electricity prices and the component that carbon pricing represents, it averages a cost of $3.30 a week across all households in NSW and it is the only component of electricity prices that’s being offset by Government assistance. That is, it’s only the Federal Government that’s providing an average of $10.10 a week to help people with it.
KING: Alright. Look, obviously the argument is that concerns over the tax are likely to dissipate once people start receiving their compensation, which you say for the average family is about $10.10 a week?
COMBET: Yes, that’s right. And for the lowest income four million households in the country, we’ve geared the assistance so that they will be better off. And that means pensioners, who are receiving an increase of $340 a year in the pension if they’re singles, or of course, more than that if they’re couples $510 a year, we’ve already paid $250 of the single pension increase in advance in cash, $380 for a pensioner couple, in cash, in advance. But there’s one thing that’s been overlooked, Richard, in this reform that’s taking place from yesterday, we’re using the money that we’re receiving from the highest greenhouse gas emitters in the economy, less than 500 companies, we’re using a lot of that to make a big income tax reform, too, that took effect yesterday. And that is the trebling of the tax free threshold, from $6,000 to $18,200. That means that one million people will no longer have to pay tax and file a tax return. One million people will receive tax relief in that way, and everyone earning up to $80,000 a year will receive a tax cut. Plus, families get extra increases in Family Tax Benefit. So, it’s a really big set of changes that I think, when they settle in and people start to see what it means, I think, you know, the message will get through a bit a better.
KING: 2HD, four to eight. I’m speaking with climate change Minister, Greg Combet. The price of $23 per tonne, I think that the world recognises that as being pretty high and, in fact, it’s almost triple what it is in a number of European countries, Greg?
COMBET: Well at the moment in Europe, as everyone would know, I think, there’s a major debt crisis. But just a year ago when we announced the policy the European price was pretty much about what ours is, and when you look at its average over the last four years, it also averages around 22-23 Australian dollars a tonne. In fact, the carbon prices internationally have been as high as $56 a tonne several years ago. So, they go up and down and we will link with those international markets. You can’t just look at it at one particular day. We’ve structured ours so that there’s certainty for three years and that businesses know how it will work, they’ll know what their costs are. That’s allowed us to do very careful economic modelling of the very modest price impacts that will flow through the economy, less than one cent in the dollar. Less than half a cent in the dollar in relation to food and grocery items, and to structure the tax cuts, pension increases, Family Tax Benefits, payments for many self funded retirees etc., so that people are receiving assistance and millions will be better off.
KING: I’m speaking with Federal climate change Minister, Greg Combet, also local Member for Charlton. Look, just on the subject of what some might see as a double standard on the part of the Federal Government in relation to aluminium smelters, the Federal Government was very quick to whip out forty million dollars plus to keep the Alcoa Point Henry plant near Geelong going for, probably, a limited time, Greg, and yet there was nothing forthcoming for the Norsk Hydro plant at Kurri Kurri.
COMBET: I’m very glad you’ve asked me that, Richard, because I’m concerned about that and hopefully the Kurri Kurri workers and their families, some of them will be listening. Because this is the reality, every aluminium smelter in Australia is under great pressure because of the low international aluminium prices and the high value of the Australian dollar, which makes the smelters less competitive. But there’s a third factor that’s absolutely critical to every single smelter, and that’s their electricity contract and the price for electricity in that contract. I mean, Kurri Kurri smelter’s in my backyard, my region that I represent, and I worry about that smelter. And I met that company, and so did Joel Fitzgibbon, on a number of occasions over the last twelve months or so, and we knew it was in trouble. It was losing about $80 million a year, and what the company said to us is that there was only one thing that’s important. They didn’t even ask the Federal Government for assistance, they said there’s only one thing that’s important and that’s a new electricity price, a new electricity contract with the NSW Government that had to be at a sufficiently low price to make the smelter viable. And neither the O’Farrell Government, nor the Kenneally Government, nor the Rees Government, nor the Government before that, none of the NSW Governments in recent times were prepared to give them an electricity contract at an appropriate price. And that’s what buggered the viability of that smelter, along with the international issues. That’s why it went down. Norsk Hydro never asked the Federal Government for assistance because it would never be viable without that electricity contract. In Victoria, it’s been a bit of a different story. Alcoa asked both the Victorian Government and the Federal Government for assistance, but in particular from the Victorians. Of course they’ve negotiated something, we don’t know all the details of it, but they’ve negotiated something on their electricity supply arrangements that gives them a chance to become viable and the Federal Government’s kicked in some money, too. But I can assure you I would have helped Kurri Kurri if it had been possible but the company did not even ask us for assistance.
KING: We better leave it there, but thanks for your time this morning Greg. I dare say you’ll be doing a lot of talk about the carbon tax today. Thanks for your time.
COMBET: I will do, thanks for having me on Richard. Bye Bye.
KING: Greg Combet, he’s the local Member for Charlton and also our climate change Minister.