Climate policy and savage cuts in MYEFO - Sky AM Agenda

E&OE TRANSCRIPT

TV INTERVIEW

SKY AM AGENDA

MONDAY, 14 DECEMBER 2015

SUBJECT/S: Paris climate conference; savage cuts ahead in MYEFO; John Bannon.

DAVID LIPSON: Joining me now, Shadow Assistant Treasurer Andrew Leigh. Thank you very much for your time. 

ANDREW LEIGH, SHADOW ASSISTANT TRASURER: Pleasure, David.

LIPSON: Was the deal in Paris a good one?

LEIGH: I think it is. I think it sets that target of 1.5 degrees which we know is absolutely vital to keeping the Great Barrier Reef.

LIPSON: Well 2 degrees, but an ambition, I suppose, of one and a half.

LEIGH: Yes that's right. Certainly though it leaves Australia out from the pack with the rest. We know Australia's targets are now well in excess of what other countries have. We're failing to demonstrate the level of ambition that Britain, the United States, and now Canada - with their change of government - are showing. We're going to have the highest emissions per head amongst developed countries, and that really is going to challenge Australia's ability to make the change in a way that is economically responsible. We know that if we put off the task of dealing with dangerous climate change, it will hurt the economy more and it will hurt the environment more. 

LIPSON: Julie Bishop says the deal allows more flexibility for us to do more: does Labor care which way we achieve our targets? Does it matter as long as it's being done at a low cost? 

LEIGH: Well we agree with what Malcolm Turnbull once said of Direct Action: that it's fiscal recklessness on a grand scale. We also agree with what the Climate Institute has said, which is that you've got to tackle climate change using a market-based mechanism. That's the simplest way of achieving the goal and frankly I don't think there is any serious economist around the place who believes that Australia can make the necessary emissions reductions without a market-based scheme in place. That's why Labor is committed to a cap on carbon pollution, using the market to get it done. The Government's approach won't see any company forced to reduced emissions. That means that we're kicking the can down the road and it will become much more expensive for Australia to make the changes it needs to make.

LIPSON: But if the baselines are set under Direct Action and other tweaks made, potentially it could be linked up to global markets and other schemes and run fairly effectively. I suppose the point to make is, there have been a number of factors that have led to this, but with Direct Action in place, the Government is going to meet its 2020 targets.

LEIGH: Well let's be clear, David. The Government meets its targets by using credits from overshooting from previous periods. Other countries around the globe have said: well simply because we did better than anticipated in previous years, we're not going to carry forward those credits. Australia has not taken that approach; our approach isn't one which is sustainable in the long term. Malcolm Turnbull, when he wasn't Prime Minister, said that this was a core issue of leadership but since he has become Prime Minister he has failed to take the necessary leadership that is required to see us save the barrier reef, see us save Australian agriculture. The Goyder Line - the viable area of agriculture in South Australia -  is now steadily shifting down south. We can see more extreme weather events; with extreme weather events come extreme prices. That's why dangerous climate change is so expensive to Australia. 

LIPSON: Speaking of South Australia, the South Australian government is leading this push to look at nuclear as an option. It would be much easier and cheaper for Australia to meet targets if we had nuclear. What's your view on that? Should we go down that path?

LEIGH: Labor's position is that we have a range of good renewable sources. Australia gets more solar than just about every other country in the world; we've got great opportunities with wind power. One little chink of light from the government here is ending the war on wind, and those opportunities with renewables are what Labor believes should be the priority. 

LIPSON: OK, but not ruling out nuclear as an option to get us there?

LEIGH: The Labor party's formal position is not to support nuclear power. We certainly recognise that the nuclear industry, through medical research has an important role to play, but we haven't supported nuclear power.

LIPSON: OK, I want to look at the budget update. The position for the Government has worsened but largely due to factors out of its control. They've actually made the budget position stronger in terms of the deficit, with the savings that they made since May. Further savings are going to more than cover the new expenditure that they've put in place. Is that a suitable and reasonable approach for the Government to be taking tomorrow?

LEIGH: When Scott Morrison says he's making savings, I imagine that many Australians on fixed incomes think that he is talking about them. We know that for the quantum of savings that the treasurer is talking about, they can only be found if you're making them through cuts to the most vulnerable. We've got the best-targeted social safety net in the world and so when you rip money out of the Australian income support system, you hurt the poor more than you would anywhere else in the world. Labor's proposal is that we do it a different way. We've put proposals on the table on multinational taxation, high-end superannuation and cigarette excise which would raise around $70 billion over the course of the next decade. We believe that's fairer and more equitable. What Australia really needs is, as Malcolm Turnbull said when he was campaigning for leadership, a bit of economic leadership. But yet we've got a Government which said it was going to have the budget back in surplus in the first year and every year thereafter, and is unwilling to look at both revenue and spending when it comes to balancing the books.

LIPSON: As you say though, your policies add up to $70 billion in a decade, we're talking about a deficit of $35 billion, half of that, in just one year. So your policies don't go nearly far enough.

LEIGH: Well certainly there will be more to come and there is more that I haven't spoken about. Labor has committed to getting rid of the slush fund for polluters; Labor doesn't believe that we need to reintroduce a $1000 Baby Bonus as the Government is committed to. So we've made sensible decisions on revenue and on spending. But importantly David, when the economy is fragile, you've got to be concerned about the impact your policies will have on growth and the impact they'll have on inequality. I worry that Treasurer Morrison is just grabbing for the latest new idea, that he doesn't have a coherent economic vision for where he wants to see the country go. From a philosophy like that, come bad ideas. 

LIPSON: But Scott Morrison has also said that he doesn't want to chase revenue that's been lost as a result of falling commodity prices. Is that a good approach to take; is it worth the deficit growing in order to maintain growth in the economy? 

LEIGH: You need to work out which of these things are structural and which are cyclical; to the extent that revenue is gone and not coming back then you need to calibrate the rest of the budget in order to meet it. If Mr Morrison's projections have final prices going back up then you might take a different approach. I'd be keen to see the basis on which he'd make such projections.

LIPSON: OK, I just want to briefly talk about the late South Australian Premier, John Bannon. Your thoughts on the Premier?

LEIGH: An extraordinary Labor man. He was the longest-serving South Australian Labor Premier, he came off the back of Don Dunstan's extraordinary social reforms in South Australia to put in place important economic reforms. He was also responsible for the developments of the Adelaide downtown and building up a more sustainable manufacturing industry. And then as a runner myself, I am a great admirer of his times. I've run under three hours a couple of times, but John Bannon ran the Adelaide marathon 11 times in less than three hours. That's an amazing achievement, with many of those times set as Premier.

LIPSON: Andrew Leigh, thank you for your time.

LEIGH: Thanks David.

ENDS

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