E&OE….
Topics: Carbon Farming Initiative, Renewable Energy Target.
PETER VAN ONSELEN:
To discuss this issue, the big issue of the week, we are joined live out of Melbourne by Greg Hunt, the Environment Minister, thanks very much for being there.
GREG HUNT:
Pleasure Peter, and good morning Paul.
PETER VAN ONSELEN:
Can I ask you off the top, obviously it’s congrats all round for getting the deal through the Senate and getting the deal done with the Palmer United Party. But is it that way internally because there are some suggestions or some people suggest that the Coalition wouldn’t have minded saving the $2 billion in the current budget climate had it not passed Direct Action?
GREG HUNT:
Look, I have heard this suggestion and I have heard you make that point. I respectfully disagree. This has been our policy since the 2nd of February 2010. We have taken it to two elections and we had a very clear approach – repeal the carbon tax and reduce electricity prices.
People said that we wouldn’t be able to repeal it and we wouldn’t be able to reduce electricity prices, and respectfully they were wrong, both things have occurred. And then to implement the Emissions Reduction Fund which is a very conventional approach of using the market to purchase the lowest cost abatement. We’ve done that. We’ve done it with a party room which has taken this to two successive elections.
And what it does do is it gives Australia a chance to reduce emissions without a carbon tax and it frames the next election as a choice between higher electricity prices, a returned carbon tax, no matter what Mr Shorten calls it on the Labor side, and lower electricity prices, reduced emissions without a carbon tax on our side.
PAUL KELLY:
Mr Hunt, what was your approach with Clive Palmer? And how did you find him to deal with?
GREG HUNT:
Look, we have a genuinely very good relationship. To his credit, he is looking for outcomes. And so we worked obviously directly, one-on-one. Secondly, we worked between offices. Thirdly, there were other parties who were involved such as the Australia Institute.
It may seem like an unusual negotiating partner, but Richard Dennis there has always been a critic of the carbon tax and has always thought that what we were proposing was actually a very conventional mechanism of using the market to buy back emissions reductions. So, the most important relationship, of course, was directly with Clive Palmer.
We provided a way through. We were able to negotiate in good faith. To his credit, he and his Senators were utterly true to their word and we worked together on repealing the carbon tax. I think they were delighted at the fact, as have been our Senators who have been tremendous and the House of Representatives members, that electricity prices did then fall. I think that was a very good sign.
So there was a sense of trust that we cannot just deliver on our word but we can implement what we say we are going to do.
PAUL KELLY:
Given there is no certainty whatsoever that the funds allocated, the $2.55 billion will deliver the five per cent reduction target, will the government be prepared to put in more funds?
GREG HUNT:
Well, we are absolutely committed to meeting the target. But we will achieve it within our budget. I say that because having just been with my department on Friday morning, we were utterly focused on the next step of implementation.
We are the opposite of the Labor Party. The way in which they approach their budgets was to predict blue sky and then to apologise for failure afterwards. We’re very conservative. In essence, the whole Peter Costello philosophy of under-promising and over-delivery is built into the DNA.
When we set this policy up we set a level of price which we thought was conservative. We set a level of abatement which we thought was conservative, and we had a target to meet which was conservative.
On all three fronts we are tracking ahead of what we had assumed and predicted at the outset. The target is half of what we had assumed we would have to achieve four-and-a-half, five years ago. The abatement of the pipeline – I can announce this is greater than…
PETER VAN ONSELEN:
Is that because of the carbon tax?
GREG HUNT:
No, it is not to do with the carbon tax. The abatement pipeline is greater than we’d expected and the price is lower than we’d expected.
PAUL KELLY:
Look, you have been lucky inasmuch as the situation has changed so it is therefore easier to achieve the five per cent target. But that has got nothing to do with your policy. Now if we come back to your policy, isn’t the truth that there is no internal mechanism in your policy that means we will end up with minus five per cent given the funds that are being spent?
GREG HUNT:
Well, there are two halves to the policy and this is often ignored by some of the critics on the Labor or the Greens side for political reasons.
The first is that there is the crediting and purchasing or the Emissions Reduction Fund side. The second is that there is a safeguards mechanism which is in place, it’s in the legislation, it’s been passed through the Senate which ensures that we are able to prevent against rouge emitters and sudden rises in our emissions as a country. It is a very balanced long term…
PAUL KELLY:
But you are not going to penalise them. You’ve already said that this is all carrot, no stick, that you’re not actually going to penalise companies. So on what basis can you be so confident about meeting the target?
GREG HUNT:
Well, they are actually a mixture of the two elements in what we are proposed. We aren’t budgeting any revenue, that of course is the real test of a government’s intent. I don’t seek to raise any revenue, I don’t intend to raise any revenue, we are not budgeting on any revenue.
But the fact that we have a safeguards mechanism, according to the business community and others, acts as an important guideline for the future. It gives us flexibility.
And so are we going to achieve our targets? Absolutely. Are we tracking ahead of where we expected to be? Yes. Some may say we are lucky – we were lucky to pass the Green Army and then to implement it with no problems, we were lucky to pass the carbon tax repeal and then to implement it and to achieve what we said, and we were lucky to pass this. I would rather be lucky than to be perpetually unlucky, as the Labor Party is.
Or it may be that you set conservative goals, you plan to exceed them and you say what you do and then you deliver exactly what it is that you have pledged. That’s the DNA and it is the difference, I think, between the Tony Abbott approach and the ALP approach.
PETER VAN ONSELEN:
Okay, let me come at this another way then. The issue for me is if the guarantee is there that you will reach the five per cent target, but equally the guarantee is there particularly strongly coming from the Prime Minister that you won’t spend one cent more than this 2.5 billion that is going on.
Let me come at it another way – if you are well ahead of target, and I accept your words on that, where will you find the savings? If you’re well ahead of target and you don’t need the 2.5 billion to achieve the five per cent target, will you spend less and just get to five per cent? Or will you spend up entirely on the 2.5 and perhaps get to 6, 7 or 8 per cent?
GREG HUNT:
Look, I will be cautious in this because we are going to now head into a commercial auction process. But of course if there’s additional abatement, that is the sort of thing which can banked for the post 2020 period and I think that that is important.
We are now heading into the period where we meet our international obligations between now and 2020. At the end of next year there’s a Paris conference and it’s likely that in some form or other the world will have an agreement for the post-2020 period and is also likely that any additional savings can be carried over to that.
PETER VAN ONSELEN:
Okay, obviously you’ll come under, as all ministers do in all governments, you will come under perhaps some pressure from the finance team that if they can see that you are going to hit that five per cent target relatively comfortably, as it sounds like you may, you may not therefore need the full 2.5. You could see them in a difficult budget environment looking to claw back 100, 200, 500 million, whatever it might require. Is that a protected 2.5 billion irrespective of how well you are doing on the five per cent target?
GREG HUNT:
Look, our expectation and my expectation is very clear that the full amount of the funds are guaranteed and will be available, and the reason why is it’s not just to achieve our target but to give us the capacity to take into the Paris 2015 negotiations the ability to roll over any additional savings or any additional abatement or emissions reduction – which is what’s happened from the Kyoto One period.
For all of the talk, the Howard government set us up to be a country that over-achieved during the first Kyoto crediting period. We are one of the few countries in the world to have significantly beaten our emissions targets.
Now the Labor Party said “you’ll never do it, it will all be a disaster”. We achieved our targets and we exceeded our targets the first time around. We’re in excellent shape already.
I can announce this today – that the first auctions under the Emissions Reduction Fund, after having spoken with the Clean Energy Regulator on Friday, will be held in the first quarter of next year.
I can also say that the pipeline of emissions reduction or abatement projects is greater than we had expected. We are developing methodologies which will released shortly. There are 26 out there, another more than 20 under development for things such as aggravated household energy efficiency, for cleaning up power stations, for cleaning up waste coal mine gas, for cleaning up emissions from waste water and sewerage farms. Really practical things that will allow firms to participate and landscape activity to occur. And these groups are already seeking to participate.
So my message to business, to farmers and to households is very clear – the Emissions Reduction Fund is open for business. We are looking for abatement. The abatement is already beginning to be very evident. I think that that’s a very positive way of reducing emissions as opposed to an electricity tax.
I would use today to say to Mr Shorten – rule out going to the next election with an electricity tax, no matter what you call it, and give Australians the certainty that they’ve voted and you accept the result.
PAUL KELLY:
Okay, given that you’re so optimistic and so confident and given that the government is under pressure for a more ambitious target than the five per cent by 2020, are you committed so that you won’t change that five per cent or might you be more ambitious in terms of 2020?
GREG HUNT:
So really the world is looking at two different stages here. There’s now until 2020, and that debate has largely settled. And the international community…
PAUL KELLY:
So you won’t change?
GREG HUNT:
I don’t expect that there will be any change. I don’t expect. We are utterly committed to the five per cent.
PAUL KELLY:
What about post-2020? How ambitious will you be in terms of post-2020?
GREG HUNT:
So there’s a process between now and the end of 2015 which is the Paris conference which will set the post-2020 outcomes. Julie Bishop will be the chief negotiator in that as Foreign Minister.
Our conditions are very clear and the Prime Minister has been absolutely clear on this. That we want a good global agreement but we want to make sure that we work in lock step with comparable action, verifiable action, committed action from our trading partners and our competitors.
So I won’t pre-empt a figure. We are very supportive of a good global agreement, it is the right thing for the planet, it is the right thing for Australia. But we want to see genuine comparable action from other countries, but we will be part of that process in a constructive way.
PETER VAN ONSELEN:
Minister, can I just double check as well. The five per cent target will remain on 2000 levels, won’t it? Because obviously we saw an adjustment to this 20 per cent target for the Renewable Energy Target becoming a real 20 per cent rather than the way that it was originally constructed. There is no change there, is there? You are confident about 2020 five per cent reduction on 2000 levels?
GREG HUNT:
Yes, I am. And there’s I think a very important point for the viewers and that is – whether you use 1990 or 2000 it is an almost identical outcome because our emissions were flat over the course of that decade. And indeed 25 years on, Australia’s emissions, despite the economy having grown enormously, are only fractionally, fractionally higher than they were a quarter of a century ago.
We have had population growth, we have had productivity increase and we have increased participation rates. Despite all of that, what you see is a massive drop in our emissions per unit of GDP, which is the real indicator for the world.
So on our emissions per unit of GDP we are very, very successful. We are in the most efficient half of the OECD, and indeed the G20. So it is a very, very good measure.
PETER VAN ONSELEN:
What is your biggest concern about the use of international permits? That is one of the big differences between the two sides of politics. It is something that Nick Xenophon, in his negotiations with you was trying to have included in Direct Action but failed. Is it a compliance issue, is that the big concern? Because obviously climate change is a global phenomenon.
GREG HUNT:
Sure. Look, our focus has been on domestic action, on actually cleaning up our emissions within Australia so as to have practical outcomes which will improve farm productivity, which will improve our soil health, our landscape health.
So we have already put in place soil carbon methodologies, which again we were told we could never do but we’ve done. To improve our industrial emissions, to improve our energy efficiency.
PAUL KELLY:
Minister, just on this point that Peter has raised, isn’t the reality here that Tony Abbott has an ideological opposition to international permit trading?
GREG HUNT:
Look, I don’t accept it as a proposition. What I would say is that we always want to make sure that
PAUL KELLY:
How would you characterise it then?
GREG HUNT:
Well, two things. Firstly, we want to make sure that anything internationally is robust and safe, and that hasn’t been established fully to our confidence at this stage.
PAUL KELLY:
You don’t sound too confident on that.
GREG HUNT:
Secondly, since the 2nd of February 2010 we have said we wanted to take practical action in Australia. Our position hasn’t changed on that front and our focus has always been ensuring that we see these benefits in Australia.
PAUL KELLY:
Just going to the critical question of what happens globally. The position of Labor and the Greens is that there is a movement towards emission trading schemes in much of the world. Now to test this I want to ask you your assessment of where the United States is going and where China is going in respect of an ETS in those two countries. What is your response on that?
GREG HUNT:
Well, clearly the United States has moved in precisely the opposite direction. Under the current administration what you see is that they have ruled out an emissions trading scheme or a carbon tax.
The White House has done it on many occasions and they have taken a far more direct route to emissions reduction. In Canada you’ve had a carbon tax, or an ETS rejected. In Japan they have gone in precisely the same direction as Australia. And in China the vast bulk of their work is directly cleaning up power stations.
There are some pilot schemes, and overwhelmingly, whether you look at Beijing or Shenzhen or Shanghai, some of the other models, it is 99 per cent or 100 per cent of permits that are given away for free. It is a radically different system to what was in place in Australia under the Labor carbon tax, which was essentially taxing electricity consumption.
PETER VAN ONSELEN:
Minister, this brings us then to the Climate Change Authority which is looking into the concept of an ETS. If the world is moving in the direction that you are taking Australia in a policy sense, that is Direct Action, why even bother to get the Climate Change Authority to do that? Is it just a simple case of you just had to throw that bone to the Palmer United Party?
GREG HUNT:
Look, this was part of the negotiation, that is a completely honest answer. They, in good faith, said that they would allow us and work with us to implement the Emissions Reduction Fund. The request from Mr Palmer, because he dropped his call for a legislated dormant emissions trading scheme, was instead to have a review of what other countries are doing. I was very happy to do that. We were very happy to do that.
PETER VAN ONSELEN:
But you are not really going any further than that. You are throwing the bone to the PUP but nothing is going to come of it ultimately.
GREG HUNT:
Look, I wouldn’t characterise it that way. We were very happy to have a review, but we will not be implementing on our watch a carbon tax or an ETS.
PETER VAN ONSELEN:
That is almost, you could say, one step worse than the Henry Review and then not implementing any of the processes. Presumably they were at least open to possibly doing so but ultimately squibbed it and only went with the mining tax element of all those recommendations. You’re having an inquiry into an ETS ruling out at the outset any response to whatever that uncovers.
GREG HUNT:
Well, I just could not be clearer. We will not be having, on our watch, a carbon tax or an ETS. And at the next election there really will be a choice. For all of the attempts to avoid the word “carbon tax”, what is it that Bill Shorten is proposing? He is proposing something which, on their own estimates, has a $38 carbon tax effect within a few short years. Fifty per cent higher than the tax that they introduced, and that is on a floating basis – their modelling at the last budget before they lost office.
That means not just the reclaiming of the electricity price reductions but another increase on top of that. We don’t support that. We’re not going to do that. And I will suggest to Bill Shorten now is the time to rule out whether you call it a carbon tax or an ETS as a policy for the next election and just to accept that on this occasion the Australian people have voted, they have spoken and the senate has supported it and let’s give certainty to Australians about electricity prices.
PAUL KELLY:
Minister, before you go we have to ask you about negotiations in relation to the RET – the Renewable Energy Target. How confident are you that you can get a satisfactory outcome that will, first of all, you can get a deal, that you can get a deal from Labor on this?
GREG HUNT:
Well, I would put it in terms of being quietly hopeful, I don’t want to overstate the position. But whereas we have had opposition from the ALP on everything to do with the carbon tax repeal and the implementation of the Emissions Reduction Fund, we are having what I would describe as good quality negotiations with Mark Butler, with Gary Gray, with Chris Bowen.
I won’t speak for their positions, I don’t think that would be fair or appropriate. But so far it’s been good quality discussion.
So I remain hopeful that we can get a balanced agreement which allows for good growth in the renewable sector but without pressures on electricity prices and in a way which I think achieves the long term bipartisan goal of 20 per cent renewable energy.
PETER VAN ONSELEN:
Environment Minister, Greg Hunt, really appreciate your time on Australian Agenda, thanks very much.
GREG HUNT:
Thanks very much Peter.
(ENDS)