SKY NEWS AM AGENDA
MONDAY, 12 DECEMBER 2016
SUBJECT/S: Climate policy; Infrastructure spending.
KIERAN GILBERT: With me on the program now to discuss other issues today is the Shadow Assistant Treasurer, Andrew Leigh. Let's turn our attention first of all to the issue of climate and climate policy. The Financial Review reports today a billion dollar price tag for the need to increase and enhance energy infrastructure. Most notably those interconnectors between states like Tasmania, South Australia to other eastern seaboard states. Does Labor support that initiative even though the cost is quite large and could be made redundant in terms of advances made elsewhere in terms of energy technology.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Kieran it depends on the particular proposal coming forward but certainly there is a history of the Commonwealth contributing towards interconnectors. The big picture here Kieran is that the Government has now decided that the Government is going to reject the cheapest way of dealing with climate change, an internal energy market recommended by the Australian Energy Market Commission, and a policy that the Government's Chief Scientist said would save the taxpayer $15 billion. So Malcolm Turnbull wants Australians to spend more on electricity and do less to reduce emissions.
GILBERT: Why is it so important? This emissions intensity scheme which Labor advocates within the power sector?
LEIGH: Because as Mark Butler and Pat Conroy have pointed out, the Government's direct action plan is running out of puff. It was never a particularly effective way of dealing with climate change; costing a couple of hundred million dollars a year and getting very little in terms of gains. We've got electricity emissions higher now than when they were in 2013. The Government is only going to meet the 2020 target by using past credits and stands little chance of making its own woeful 2030 target unless it uses the cheapest and most effective way of dealing with climate change which is an internal electricity emissions market. It saves taxpayers money and brings down emissions.
GILBERT: If you look at the Government's direct action approach of course you are critical of it - Labor has been for many years. But if you toughen up this safeguards mechanism as part of their emissions reduction fund and toughen the penalties, doesn't that then provide a way to reduce emissions?
LEIGH: Kieran in the end it's just bits of sticky tape and chewing gum kind of holding together a pretty hopeless mechanism. What you want to do is listen to the experts, the Energy Market Commission, the Chief Scientist, every serious economist who looks at this says you need an emissions trading scheme. The proposal that Labor took to the last election was this notion of an internal scheme. So it's revenue neutral, it's ensuring that we get clean emission technology coming. We've got to do that if we're not going to be left behind by the rest of the world. If we're left behind, that's a world in which other countries could start imposing carbon tariffs on us.
GILBERT: Isn't this all about gas though? To secure gas as a transitional base load energy source? To use more of that essentially as the coal fired power plants are phased out?
LEIGH: The magic of the market is that you're not picking a technology. You don't have to say ‘here's my favourite technology and we're not going with anything else’. What an internal energy emissions trading market does is it simply favours the technologies that have the lowest emissions. I mean everyone agrees that we'll be coming down that steady curve from brown coal to black coal to gas to renewables. And an internal market does that cheaply which is why the Chief Scientist recommended it. It's extraordinary last Friday that the Premiers were called to Canberra to hear a report from the Chief Scientist that the Government has already ruled out. I mean, what an inept Prime Minister we have that he is willing to rule out a recommendation by the Chief Scientist that it reduces electricity bills and reduces emissions.
GILBERT: The Australian today reports that there are states stuck in the slow lane are seeking billions for infrastructure spending. Do you accept the argument that there is good debt versus bad debt so if the Government were to enhance spending with record low interest rates globally that this would be a good time to be spending and enhancing infrastructure in these states and elsewhere?
LEIGH: Interest rates are certainly low - the Bank of England says they are as low as they've been in 5000 years. But that doesn't take away the responsibility to make sure your projects stack up - that they pass a benefit-cost test. I worry that under this Government we've had too much partisan pork-barrelling. The Auditor General for example said on the mobile blackspots program that a quarter of those towers didn't add to the signals. We've seen too many instances of the Government effectively run by Barnaby Joyce is investing in infrastructure projects that don't have a good pay-off for the community. We do need infrastructure investments, we've had a one fifth fall in public infrastructure since 2013 and that's one of the reasons -
GILBERT: Is good debt versus bad debt a viable argument? Do we need a more nuanced argument and discussion about debt in this country?
LEIGH: Sure. As a household I'm happy to take on debt for a mortgage, but not to go on a holiday. But it all turns on the quality of the investment. I mean there is good investment you can do, for example in human capital. So it's important not to have this recurrent versus capital split of the budget which some people have been arguing.
GILBERT: Andrew Leigh, thanks for your time I appreciate it.
LEIGH: Thank you, Kieran.
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