KEITH CONLON: Well, it might be complicated but there’s been a big movement in the way in which a carbon tax and a carbon floor price and so on is going to happen in Australia. Greg Combet, the Minister involved on the Labor side federally, will be talking to Matthew [Pantelis] and to Kevin Foley after the news as they sit in for Leon [Byner]. We are talking to Senator Simon Birmingham from South Australia. He’s the shadow spokesman on such matters. Good morning, Simon.
SIMON BIRMINGHAM: Good morning, Keith. Good morning, John.
KEITH CONLON: Well, we know what Tony Abbott is going to say ‘this is going to be… create uncertainty’ but you will have to face the reality that many companies are greeting this scheme because they would rather take a lower price based on where Europe is than the Labor price that was going to go into place.
SIMON BIRMINGHAM: Well, Keith… and that may be the case today, in terms of the fact that Europe’s price is significantly less than Australian companies will be paying this year, next year or the year after it’s around the $8 to $10 Australian mark in Europe at present versus starting at $23 a tonne in Australia so we know that, today, Australian companies are being penalised by a rate of two to three times what they’re facing in Europe but yesterday we saw Christine Milne, the Greens’ leader, come out and proclaim, with a very cheery smile on her face, that the European price could be as high as $50 a tonne by 2015 so, if that’s the case, Australian industry will have nothing to cheer and, in fact, will find that they’re paying a price nearly twice what was expected in 2015 as a result of these changes.
KEITH CONLON: But do you actuallyaccept the Greens’ pricing on this?Are you saying that that is what’s going to happen? You don’t normally agree with them about anything much at all!
SIMON BIRMINGHAM: Well, Keith, what I accept is that there is great uncertainty as a result of this and, in the end, if the Government has got this wrong on the downside and the price is significantly lower than forecast, there are very serious budgetary ramifications and we will have a big black hole in the federal budget but, if they’ve got it wrong on the upside and the Greens are right and the price does skyrocket in Europe, then Australian industry and business will find they’re paying significantly more than expected and will be even more uncompetitive than the carbon tax is already making them.
KEITH CONLON: And in the meantime you have to facesomeone like TRUenergy one of the big electricity and gas retailers saying scrapping the floor price is good for us, good for consumers.
SIMON BIRMINGHAM: Well, as I say, that may the case based on where the European price is today but the European price has shown enormous volatility and that volatility means that it could well go back up some, as I say, and Christine Milne, very much, expecting that it will go back up and if it does that will be bad, bad news for households, in terms of their power bills, and Australian businesses, in terms of their competitiveness so there really are just more risks and uncertainty out of this deal.
KEITH CONLON: But you will actually be facing the reality, won’t you, that big Australian business the ones who do get hit by any sort of carbon tax or floor price… they like this.
SIMON BIRMINGHAM: They may like… or some of them, of course, may like it. I’ve seen very strong criticism from the Minerals Council, so they’re not welcoming it; I’ve heard very strong criticism from the Australian Chamber of Commerce and Industry, so they’re not welcoming it… so I wouldn’t say universally that business is supporting it. There are some very strong concerns about their… about this. There are at least concerns that it doesn’t really change what, in the end, is a clear problem for Australia and that is that we are really coupling ourselves with Europe in this process. The European economy is very different from Australia’s. We are far more reliant upon agricultural and mineral resource exports than European countries are and the countries that we are competing with are far more those of our region, of South and North America and of Africa, than they are necessarily with Europe, in terms of the areas we compete in.
JOHN KENNEALLY: Just on that linking with Europe, Simon, would that make it more difficult to repeal carbon tax legislation, should Tony Abbott become Prime Minister?
SIMON BIRMINGHAM: Far from it, John. In fact, what we will see is that anybody who chooses to buy European permits and that’s a business decision for Australians whilst the carbon tax is in place will simply be able to sell them back into the European scheme if the carbon tax is abolished, so it doesn’t make it any harder at all. In fact, if business choose to go down that path, it probably provides a little greater certainty.
KEITH CONLON: Do you accept that it makes it more difficult for Tony Abbott to run the line, as he has in general, that basically we’re going alone? We’re not going alone we’re going into a European scheme where there’s 250 million people.
SIMON BIRMINGHAM: And, Keith, there’s always been a carbon price in Europe. It’s right now somewhere between one-third and one-half of the price in Australia, so we are being slugged at the highest rate with a tax that is far more comprehensive, in terms of its scope and application, than the European tax, so let’s understand Australia’s carbon tax is still well out in front of the rest of the pack, as the Productivity Commission found, but let’s also appreciate the point that I made before, which is that Australia’s economy is very, very different to Europe’s economy. Our reliance upon agricultural and mineral resource exports is far, far greater than Europe’s. It’s not Europe who we compete with on a global stage; it is the countries of North America, South America and our region and Africa, in terms of the future mining export developments of the world.
KEITH CONLON: But lowering the price, and giving companies the chance to buy permits from Europe, has surely got to mean that that helps them in exactly the scenario you’re talking about.
SIMON BIRMINGHAM: Well, there is no guarantee of getting a lower price out of this. There are just as many forecasters suggesting there could be a higher price.
KEITH CONLON: It’s going to be fascinating to watch and we appreciate you coming on. Thanks, Simon.
SIMON BIRMINGHAM: A pleasure, guys. Any time.
KEITH CONLON: Senator Simon Birmingham speaking for the Federal Opposition.