E&OE….
Topics: Labor’s plan to bring back the carbon tax, modelling, Victorian Labor Government’s cuts to the solar feed-in tariff
DAVID SPEERS:
Greg Hunt, thank you for your time.
GREG HUNT:
Pleasure.
DAVID SPEERS:
Now, Bill Shorten has restated his position at the National Reform Summit that he wants an emissions trading scheme. He's called on business and community leaders to work with Labor to come up with a policy that will last. What is wrong with that approach?
GREG HUNT:
Well two things. Firstly, what he actually wants is higher electricity prices, what we want is lower electricity prices. If you want national productivity, national reform, if you want economic efficiency, then lowering your costs of production are fundamental.
The second thing is the public have already rejected an electricity tax in the form of a carbon tax. We've got rid of a tax which didn't work and we have replaced it with an Emissions Reduction Fund which has produced four times the savings in just the first auction at one per cent of the price.
So economically preferable, environmentally preferable, and the public have already voted. So we would invite him to join us in what the public has already supported, is already working, and is environmentally dramatically better.
DAVID SPEERS:
But while you say it would be a massive electricity tax, isn't it quite likely, quite probable, that it would be significantly lower than the sort of carbon tax they had when Labor was last in Government?
GREG HUNT:
Well on the targets which they indicated at the ALP Conference, we know from Treasury modelling this is a $633 billion impact.
A 78 per cent increase in wholesale electricity prices on their modelling, for their policy, on their time in Government. And all up about a $5000 per household hit by 2030 per annum. So a massively inefficient policy.
DAVID SPEERS:
Let me just pull you up on that. How do you come up with that figure of a $633 billion impact?
GREG HUNT:
Well we don't come up with it, they did themselves. This was the analysis done in the Treasury and Industry modelling prepared in Labor's time in Government, on Labor's policy, for what is now Labor's targets. So it couldn't be clearer.
DAVID SPEERS:
But your own modelling on this is far more up to date. You've just released the other day modelling on what a 30 per cent, a 35 per cent, even a 45 per cent target to reduce emissions would cost, and it's not that figure.
GREG HUNT:
Well actually the Prime Minister and Cabinet Taskforce makes it clear in its chapter on modelling that the appropriate modelling to assess an economy wide emissions trading scheme or carbon tax is that which had previously been prepared by Treasury and Industry. So it expressly, clearly, absolutely references that.
And so the point is, it's a $633 billion cumulative impact in nominal GDP terms, but in human terms it's 78 per cent increase in wholesale electricity prices. So Bill Shorten talks about reform and he then pledges higher electricity taxes.
DAVID SPEERS:
Okay, but clear this up for me. Your modelling shows that a 35 per cent target would cost between 0.3 and 0.5 per cent of GDP, a 45 per cent target would cost between 0.5 and 0.7 per cent of GDP by 2030 – that's right isn't it?
GREG HUNT:
Well, with respect, that is not referring to an economy wide emissions trading scheme or carbon tax. And so that is why the …
DAVID SPEERS:
What is it referring to?
GREG HUNT:
…that is a notional impact of a generalised target, but without taking into account the economy wide carbon tax.
That is why PM&C, or the Prime Minister and Cabinet Taskforce report expressly refers to the previous work of Treasury and Industry, and directs people to that work which is currently available, prepared by the previous Government, for the previous Government, on the previous Government's policy.
DAVID SPEERS:
Okay, but I just want to get this right. Your modelling is based on achieving that target, not with an economy wide carbon price, but with your preferred approach – the Emissions Reduction Fund.
GREG HUNT:
So it deals with the generalised impact of a notional target within Australia for an economy wide trading scheme.
The appropriate modelling as set out by Prime Minister and Cabinet is that which is prepared by the previous Government. So, Labor's modelling, on Labor's policy, for Labor's targets.
DAVID SPEERS:
Okay, but your modelling is based on achieving these targets how?
GREG HUNT:
Well what we do is it runs through a variety of activities. This was the McKibbin modelling, and what we see is absolutely clear. The right modelling for a carbon tax is Labor's own modelling.
And what Bill Shorten has just advocated today – the only thing that matters – is a return to increased electricity prices. The very opposite of what he says he wants.
DAVID SPEERS:
Okay, I'm just asking about your modelling. Your modelling does indicate that even a 45 per cent target would only cost between 0.5 and 0.7 per cent of GDP. That's right isn't it?
GREG HUNT:
If you apply Labor's policy then you end up with the 2.6 per cent which is expressly outlined in the Prime Minister and Cabinet report.
So the Prime Minister and Cabinet report looks at a variety of inputs. And it concludes and references that the right place to examine Labor's policy is the modelling that was prepared for Labor's policy by the supreme agencies of government when Labor was in power – in terms of Treasury and Industry who were the ones then dealing with this policy modelling on these target set.
DAVID SPEERS:
Okay I just want to be clear about what your modelling shows in relation to your preferred way of achieving the target. It would only cost, if you had a 45 per cent target, 0.5 to 0.7 per cent of GDP.
GREG HUNT:
Well ‘only’ is still a very significant issue. So whatever modelling you use, we are completely confident as we've always said that our approach is a cheaper approach.
What we've set is however what we think is the right approach and the right level for Australia. Minus 26 – 28 per cent is up from Labor's minus five per cent. So it's a dramatic improvement, but at a cost per tonne of emissions reduction of about one per cent.
So in other words we have an approach which is working, which is reducing emissions, an approach which comes without a massive electricity tax and which in fact saw electricity prices drop by the largest amount on record, and an approach which is producing emissions reductions or abatement at $13.95 per tonne rather than the $1300 per tonne which occurred under Labor.
The case is clear, closed and absolute. Labor's carbon tax didn't work for the environment and it didn't work for families, because in the end it was just an electricity tax at its heart.
DAVID SPEERS:
Okay, can I just ask you finally on another matter – the Victorian Labor Government has just announced a cut in the solar feed-in tariff for households from just over six cents to around five cents per kilowatt hour. Do you think that's going to have much of an impact on rooftop solar in Victoria?
GREG HUNT:
Well it is very interesting that they have reduced the tariff by the equivalent of about 20 per cent. There has been a relative silence from some of those who are apparently advocates of solar who were critical of the Federal Government for maintaining the entire small scale solar infrastructure untouched but have been almost completely silent about a 20 per cent slashing from the Victorian Government.
They'll have to put out their own statement as to the impact. But what I know is this – we have maintained support for small scale solar untouched for Australian households.
The Victorian Government said that they would try to increase renewables, and their first act is to decrease by 20 per cent support.
And I would hope that the Solar Council might have something clear and strong to say if it weren't to be perceived as a partisan organisation.
DAVID SPEERS:
Environment Minister Greg Hunt. Thanks for your time this afternoon.
GREG HUNT:
Thanks David.
(ENDS)