E&OE….
Topics: Emissions Reduction Fund, Post-2020 Target Consultations
PETER VAN ONSELEN:
I’m joined now by Greg Hunt live from the nation’s capital. Thanks very much for being here.
GREG HUNT:
G’day, good to see you.
PETER VAN ONSELEN:
Answer this one for me – this seems to be the biggest criticism that gets levelled at the scheme and it was being criticised before the price was set and the number of permits and so forth were sold as it was.
That is this idea that it used to be under the carbon tax that the polluters were paying for it, now it is the taxpayer that pays for it by buying under the structure of the Direct Action scheme. What is the answer to that?
GREG HUNT:
Well of course it’s wrong on a number of fronts. Firstly what we see is that it was never the polluters that pay, it was always the pensioner that paid. The way the carbon tax worked is that it was a licence to pollute and that licence was paid through higher electricity and gas taxes so it was a massively regressive tax.
It was a mythology that it was in some way a heavy burden on companies. The whole idea as was said by many ALP members was for that price to flow through to goods but what they never talked about was those goods were electricity and gas. So in other words mums and dads and pensioners – it was the pensioners’ pay – a pensioner pays system. Now the second thing is that is that it also…
PETER VAN ONSELEN:
Can I just jump in on that Minister, and ask – they would say that there was compensation to go with that.
GREG HUNT:
Well we have kept the compensation as a cost of living measure, so you have tax cuts without a tax. What you also have is the fact that the ALP was handing out $30 billion of taxpayers’ money and the ALP and the Greens and some of their supporters never talked about that. Five and a half billion dollars in gifts to brown coal generators with no strings attached. Days before the carbon tax they gave $250 million to the very firms they demonise – the Hazelwood Power Station, to the Yallourn Power Station, to the Loy Yang Power Station, all approaching $250 million for each of those as part of a $5.5 billion package just to brown coal generators to keep generating.
It is a bizarre Orwellian re-writing of history. So they gave enormous sums from taxpayers’ money, they imposed a tax on pensioners and of course that was the real hit on the lowest income taxpayers’, and then of course they failed to reduce emissions in any significant way, so that was why it was never a polluter pays system but a pensioner pays system.
PETER VAN ONSELEN:
Okay so looking at your scheme now, the Direct Action scheme with the amount of money that’s gone into it, it’s a large chunk of the $2.55 billion that you’ve got between now and 2020. Is that a good thing that it was as large an amount as it was because there was therefore enough interest to take that amount or is that a concern for you because the Prime Minister has made it clear that not one cent more will go into that fund?
GREG HUNT:
No I think it’s absolutely unequivocally a tremendous outcome. The critics – the ALP, the Greens, their friends said there’d be no demand and it will be for whatever there was at an incredibly high price. In reality, we achieved 47 million tonnes of emissions reduction in just the first auction.
The largest reduction in Australian emissions in Australian history, not by a little amount but by an order of magnitude at four times larger than the entire best case reduction in emissions throughout the carbon tax experiment at about 1.1 per cent of the price in terms of the cost per tonne of actual emissions reduced. Stunning outcome, really set us on our way to 2020 and set us up for the post-2020…
PETER VAN ONSELEN:
Well can I ask you about that?
GREG HUNT:
…we will not just meet our targets now but will make a real contribution post-2020.
PETER VAN ONSELEN:
Can I talk about that post-2020 period because your critics which include an editorial in The Australian newspaper are suggesting that the problem with Direct Action is more beyond that 2020 period, it’s that it’s not a sustainable policy of itself beyond the 2020 period. Malcolm Turnbull said similar things shortly after being deposed as Liberal leader because obviously he had a philosophical objection at the time to walking away from an ETS.
What is the answer to that from your perspective because I know that – and we’ll talk about this in a moment, but you will be about to be starting the roundtable process of coming up with what are plans for the post-2020 period are. How do you answer those criticisms from the Editorial in The Oz, indeed from your colleague, albeit a number of years ago Malcolm Turnbull?
GREG HUNT:
Sure, we do start tomorrow discussions on a post-2020 target. We are meeting – holding a round table in Sydney, Julie Bishop and myself with environment groups, with universities, with indigenous groups, with interested parties and business representatives. There are really three things.
First is the Emissions Reduction Fund is a long term policy and we’ve always said that we would consider – and this was directly the wording in the white paper – future funding in subsequent budgets. But we’ve got what we need right now to achieve our 2020 targets and I am very happy with that.
But secondly the central element for the post-2020 period is of course the safeguards mechanism. And the safeguards mechanism provides a budget for individual firms, about 53 per cent of national emissions are covered …
PETER VAN ONSELEN:
Can I just quickly ask you on that point – sorry to jump in but that safeguard, I mean one of the criticisms I’ve heard is that it’s just set too high, so to be able to achieve the kind of emissions reduction targets that you need without the Direct Action slush fund to go with it, when that runs out if you don’t top that up and you just rely on the 1 July scheme that’s about to start that you just can’t get there, what’s the response to that?
GREG HUNT:
Well the safeguards mechanism is designed to have its real impact in the post-2020 period – and it’s flexible, it is designed and legislated so as it can be adjusted and it can be tightened in such a way so as to allow for progressive emissions reductions…
PETER VAN ONSELEN:
But it’s like an ETS isn’t it?
GREG HUNT:
We have a long term policy. No, I don’t accept that characterisation. What it is is a two-part system. An emissions reduction fund which has a long term future. As we’ve seen 10-year contracts are part of the first auction, but we have much more in prospect there.
Secondly, we have the safeguards mechanism which allows us to work with individual firms on a budget which can be adjusted and progressively tightened throughout the 2020s through to 2030 and 2040 and 2050.
And then the third part is of course there are other measures and that includes reforestation. It includes work which we’re doing with regards to ozone protection. Of course there’s a huge secondary benefit that when you move to new and better synthetic greenhouse gases – which reduce ozone, you also have an extraordinary benefit in terms of reduced greenhouse emissions.
There are energy efficiency measures in relation to vehicle emission standards and also that the vehicle fuel quality standards. So these are a range of elements that allow us to not just achieve our 2020 targets well within our budget but to go much beyond that, to have a very positive role in the post-2020 discussions.
Ok stay with us Minister. We’re talking to Greg Hunt, the Environment Minister. We need to take a break, but when we come back we’ll bring the panel in for this discussion around climate change, the Direct Action and where to post the 2020 target. Back in a moment.
Intermission
PETER VAN ONSELEN:
Welcome back you’re watching PVO News Hour, I’ve been speaking to Greg Hunt, the Minister for the Environment. It’s time to bring in the panel, Kristina Keneally and Miranda Devine.
KRISTINA KENEALLY:
Look Minister it’s been really interesting hearing what you’re talking about post-2020. There’s been a bit of analysis though since the auction that would suggest that the auction itself – the 47 million tonnes that were auctioned off recently – what percentage of those are going to be completed or captured by 2020?
GREG HUNT:
Look the overwhelming bulk on the advice of the Clean Energy Regulator will be pre-2020. Of course some does come post-2020 and that’s a good thing. We were told that this was just a short term policy that it would only ever go to 2020.
I always said that was wrong, the facts are in, the contracts are in, the decision of the Clean Energy Regulator is in, and so we’re reducing emissions not just in the next three years or in the next five but over seven and ten years.
PETER VAN ONSELEN:
But Minister you don’t count those do you? You don’t count things that are beyond the 2020 in the 5 per cent target, that’s just a bit of cream on top ahead of these roundtables you’re about to go and start as of tomorrow?
GREG HUNT:
Look this helps Australia more generally it helps the world in terms of emissions. It helps us achieve our 2020 targets and it helps prepare us for the post-2020 period. Of course you need to understand before last Thursday, the savage criticism and I remember reading it in one major newspaper, only a week ago was this was a policy to 2020 and we always said no it’s not, this is a policy that I think will form the basis for what Australia does over the next 30 and 40 years now to 2050.
That you have an approach which has an Emissions Reduction Fund as part of it so as we are having a very successful reverse auction, stunningly more successful in reducing emissions than anything else is Australian history and secondly, that we have a long term safeguards mechanism which will allow us to progressively ensure reductions from a variety of firms over the coming decades.
KRISTINA KENEALLY:
Minister you have said that the results of the auction would indicate that we’re going to breeze past our target for 2020…
GREG HUNT:
Correct.
KRISTINA KENEALLY:
…and that the price was better than you expected but isn’t it the case…
GREG HUNT:
Correct.
KRISTINA KENEALLY:
That at the rate that this particular auction – let’s say the Government got this – did the rest of the auctions for the rest of the year got this same price as you got in this one, which admittedly, is a very good price, wouldn’t we still fall short in 2020? Wouldn’t we still be late in meeting the target and wouldn’t we still fall short?
GREG HUNT:
No not at all. Let’s say you were to roll out the total funds at this price that would produce about 180 million tonnes of emissions reduction. That’s well above what our realistic requirement is to buy.
It’s important to understand the task started at 1.335 billion tonnes, it then dropped to 755 million tonnes, it then dropped to 421 million tonnes it’s now dropped to 236 and all of the advice I have in talking to the private sector, in talking to the department and others is that it’s dropped significantly again. So we are well, well over what we are likely to need to achieve our 2020 targets. We’ll achieve them and there’ll be a variety of mechanisms to do that.
KRISTINA KENEALLY:
But isn’t that target dropping because of loss of manufacturing not because of government action? Isn’t that target dropping because of loss of manufacturing not because of the Direct Action policy?
GREG HUNT:
Well I’ve always said that I’m trying to say that – well I am saying that we’ll achieve our targets and we’ll achieve it through a variety of factors. The case for the carbon tax was fabricated.
PETER VAN ONSELEN:
It sounds like (inaudible) sort of major factor in it. Is that fair? I mean it sounds like luck , or bad luck I suppose, for the manufacturing workers – is one of the reasons that we’re going to get there and that would have been the case under either side of politics.
GREG HUNT:
The case for the carbon tax was always a fabricated case. I remember saying before the election that the alleged target was false, phony, incorrect and untrue and I remember being pilloried by the ALP and by many of their, sort of, associated supporters and critics of the Liberals…
MIRANDA DEVINE:
Minister Hunt, how…
GREG HUNT:
…how is it that we managed to get the target figures right from Opposition and yet, the ALP with all the resources of government got it incredibly wrong?
MIRANDA DEVINE:
Minister Hunt, Miranda Devine. Congratulations on neutralising climate change as a political issue, you’ve done that very well but can I ask you for all the hundreds of millions of dollars of taxpayer money that you are going to be lavishing on Direct Action, how many degrees of difference is that going to make to the temperature of the…
GREG HUNT:
Ah, the Andrew Bolt question.
MIRANDA DEVINE:
…globe? Well, no it’s not, it’s the climate sceptic question, really Mr Hunt and look, you’ve done a great job. You’ve made sure that Tony Abbott, who is a climate sceptic, has managed to skate through this issue which was such an enormous issue at the last election. However, I still ask you what good is this hundreds of millions of dollars going to do for the climate?
GREG HUNT:
Sure. Probably three things there. Firstly, I respectfully – having had probably more conversations with the Prime Minister than any other person about climate change, don’t accept your characterisation of him. He’s been deeply committed to action, has reaffirmed support for the science on multiple occasions and has supported this policy all the way through.
Secondly, what we’ll see is that this is part of a global approach to keeping changes in temperature below two degrees. We are committed to that and thirdly, irrespective of where you stand on the issue of climate change – and I respect people’s right to have differing views, you can still support this policy both as an economic efficiency measure with regards to energy efficiency, farm productivity and also as a local environmental measure.
What we see is that reducing waste methane from landfills such as the example where we had the Cranbourne methane spill some years ago, is improving local environment, improving reforestation and avoided deforestation in farmlands whether it’s in Tasmania or New Zealand – or New South Wales – apologies – Tasmania and New South Wales, extremely important things.
You’ve got savanna burning projects in Northern Australia and soil carbon projects. You don’t have to accept the science of climate change or the debate around it to like those things…
PETER VAN ONSELEN:
Minister…
GREG HUNT:
…and think they are good worthwhile environmental initiatives.
PETER VAN ONSELEN:
…can I jump in, sorry, because we are almost out of time but I did just want to ask one quick last question, it’s a bit of a throw forward to what’s happening tomorrow. How are you going to get your team in behind perhaps putting more money into extending the five per cent target?
As Miranda Devine has talked about on the very day that your reverse auction happened, Cory Bernardi came on this program and he said it won’t make a lick of difference to global targets.
He’s one of your own Senators, there are others within the party ranks that feel the same way. How are you going to get them over the line for the announcement that you’ll have to make later this year – as quickly as you can, sorry, because I’ve talked too long, about what the new target will be for post-2020?
GREG HUNT:
Well look, firstly I think Cory’s being very constructive. He has focused on the environmental benefits at a local and community level coming from the Emissions Reduction Fund. Secondly, I think that we can, will, bring our team with us.
They have been very supportive of where we’ve gone with the Emissions Reduction Fund and remember this, it’s a choice for the country between two different approaches, one is a low-touch market mechanism which is ours, the other is a massive new electricity and gas tax which Mr Shorten is proposing to bring back and I can guarantee you our side will back the former and we will oppose, absolutely, a massive new electricity and gas tax and after the auction, for Bill Shorten to try to bring back an increase in electricity prices for pensioners and families, that is going to be one heck of an ask and…
PETER VAN ONSELEN:
Well…
GREG HUNT:
…we’re already hearing that he and many in the Labor Party are having second thoughts about their carbon tax.
PETER VAN ONSELEN:
Well, we’ll watch with interest, we’re out of time. Minister Hunt, we appreciate your time, you’ve been generous with it. Thanks for joining us on the program.
GREG HUNT:
Thanks very much guys.
(ENDS)