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Malcolm Turnbull discusses the Gippsland by-e -

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TONY JONES, PRESENTER: With hoots of joy from the Coalition still ringing in his ears after the
Gippsland vote the Shadow Treasurer and aspiring Liberal leader Malcolm Turnbull joined us in the
studio earlier this evening.

Malcolm Turnbull thanks for joining us.


TONY JONES: Now do you agree if Gippsland is any guide at all you are going to have to personally
adopt a populist fix of cutting the fuel excise to take the policy all the way to the next election
no matter who is leading the coalition at that time?

MALCOLM TURNBULL: Well we are committed to cutting the fuel excise by 5 cents. So that commitment's
been given.

And we will take that to the next election. There is no question about that.

TONY JONES: No matter who is leading the party?

MALCOLM TURNBULL: Well, Brendan Nelson is our leader, I expect him to lead the party at the next
election, but as a party we have gone out there and said we will cut 5 cents off the fuel excise.
And I don't think as party we can walk away from that. That is our commitment.

TONY JONES: If this is what the public wants, if this is what populist politics demands of both
governments and oppositions, then why leave it at 5 cents a litre, which virtually does nothing to
the house hold budget?

Why not do what one of your own backbenchers said and double it to 10 cents a litre?

MALCOLM TURNBULL: Tony, it's purely a financial exercise. It's a question of looking at the
budgetary consequences.

If you cut 5 cents off the excise it costs you about $1.8 billion a year, then it has a GST
consequence. 10 cents is twice that, 20 cents is twice that again.

So it's a question of how much you can afford. There is no...

TONY JONES: So how much can you afford as a government? That's the big question, because if I
understand this correctly, a 5 cents a litre cut means on average, for an average working family,
if you want to put it that way, $2.50 in relief at the bowser per week.

MALCOLM TURNBULL: That assumes they're buying around 50 litres of fuel every week.

TONY JONES: We're talking about average.

MALCOLM TURNBULL: OK, but Tony, that's just a calculation. The point of the 5 cent cut that Brendan
Nelson announced in his budget reply was that it really showed up the hypocrisy of Kevin Rudd.

I mean the political message was very important, was in fact even more important than the 5 cents,
because Kevin Rudd had gotten elected last year saying, or leading people to believe, that he would
bring down the price of petrol.

And he has done nothing to do that. You know it is this emptiness at the centre of the Rudd
Government that is what is causing people's support to fall away from.

That's what, in my view, caused the swing in Gippsland. Because people are seeing him for the
phoney that he is. He goes out there, drapes himself around petrol forecourts, empathising with
embattled motorists paying high prices for petrol.

Then when he gets in office what does he do? Nothing, except come up with a scheme which all the
expert departments in Canberra say is going to put pressure on prices, in other words push them up
not down.

TONY JONES: OK, but it's very revealing what you just said, which is the 5 cents a litre cut
doesn't mean that much except in political terms.


TONY JONES: You said it's more important in political terms than it is what it does to benefit
actual people. Isn't that the point I was making earlier. It doesn't benefit actual people very
much at all, but it is politically very clever.

In other words it's a sham. It's a game.

MALCOLM TURNBULL: No, no, it's not. 5 cents cut off the excise is a saving. Now you say, if you
only buy 50 litres of fuel a week then it's only $2.50 a saving, well that's a calculation.

TONY JONES: Let me ask you this though. I'd like to know what your calculation is as the Shadow
Treasurer for how much it would save average working families.

MALCOLM TURNBULL: Well depends how much petrol they use. You're asserting they use on average 50
litres of petrol a week.

TONY JONES: That assertion has been widely made. Do you want to dispute it?

MALCOLM TURNBULL: No, I'm not disputing it at all. This is basic arithmetic. If we keep doing these
calculations we'll get them wrong and prove we're no good at arithmetic. But the point is a 5 cent
cut in the excise costs the federal Government, the fuel excise is about $1.8 billion revenue a

The fuel excise entitle is about $14 billion a year. No why is it at 38 cents? Well, it's there for
historical reasons? Like so many of these taxes, there's no particular logic as to why it's 38
cents rather than 28 or 42.5. It's there.

It's part of the budget framework and the argument against cutting the excise is you say well,
that's a couple of billion dollars of Commonwealth revenue that we now either have to say we don't
need or we're going to raise from somewhere else.

So always as, you know, everyone would like every tax to be lower, but on the other hand we've got
things that governments have to do; schools and hospitals and defence forces and so forth. ABC's
that have to be paid for.

TONY JONES: You can say this then? The excise cut will never be any higher, you could guarantee,
and that the Coalition would never raise the excise cut beyond 5 cents a litre?

MALCOLM TURNBULL: I'm in the saying not at all. I'm not going to guarantee that any more than the
Labor Party will. Both the Government and the Opposition, i. might say we started doing it first...

TONY JONES: But you might want to do it to the point where it had some actual impact on household
budgets as opposed to $2.50 for the average family, if that's to be believed.

MALCOLM TURNBULL: Tony, $2.50 may not be important to you, it may be important to somebody else.
The point about the excise is simply that it is a head of revenue, it is the cutting the excise is
the only way the Federal Government can cut the price of petrol.

Now this was where John Howard was honest last year and Kevin Rudd was dishonest. Kevin Rudd led
people to believe he could cut the price of petrol without cutting the excise. Howard was against
cutting the excise you'll recall. He said this is the only thing I can do to cut petrol prices.

TONY JONES: And so were you, against cutting the excise. It's widely reported the email you sent to
Brendan Nelson suggested to him it was bad policy.

MALCOLM TURNBULL: The email never said that and it's never been leaked...

TONY JONES: What did it say? Did it say it was good policy?

MALCOLM TURNBULL: Tony, there is no... My views on cutting the excise were simply what you would
expect from a Shadow Treasurer who was looking to maintain government revenues. It is a question of

The fact that people have different views...

TONY JONES: You did. Your views were clearly different to his. Your views were that it was not a
good idea for Government revenue to do this, presumably.

MALCOLM TURNBULL: Well Tony, it is, Look that's ancient history.

TONY JONES: It's not ancient history. It's a history from a month ago.

MALCOLM TURNBULL: Tony, with great respect you're missing the point. Whether you cut the excise by
5 cents or 3 cents or 7 cents, is simply an exercise in achieving the level of Government revenues
you wants to achieve.

You could choose, a government could choose to have less in the way of income tax cuts and more in
cuts on indirect taxes, on excises, on petrol and other things. You could, I mean it's a mix and
you've, governments have got to, and indeed oppositions, have got to look at the consequences of
all of the tax measures they undertake, or in our case propose, and then see how it adds up on the
bottom line.

You have to determine how big a surplus you want to have, if you're going to have a surplus, what
you want to spend your money on and so forth. It's a question of judgment. And so the 5 cents cut
in excise is not a moral question, it's not a good bad policy question. It's a question of

TONY JONES: It sounds like what it really is what you said before which is a question of politics.

MALCOLM TURNBULL: Well it's powerful politics. Very powerful politics.

TONY JONES: Pinioning the Government, without actually having much effect?

MALCOLM TURNBULL: It exposed a sham. You talked about sham earlier. It exposed the sham of Kevin
Rudd. Because it was Kevin Rudd that had said I will bring down petrol prices, that was the message
he sent.

And then he did nothing about it. Now people naturally are furious with him. They feel betrayed.

Now John Howard on the other hand, said "I can't bring down petrol prices, price of oil is set by
global markets, the only thing I can do is cut the excise" and he made the case for budgetary
reasons that it wasn't appropriate to cut it.

Now that was what John said. At least what Mr Howard said was honest. What Mr Rudd said was
dishonest and that is why he's being punished.

Because he's paying the political price for his spin; for the gap between the rhetoric and the

TONY JONES: Alright, but the reason I'm asking you what would happen in an election where this will
go to in election is because of what most people will say is a statement of the obvious

That is that most political commentators, most politicians I've spoken to do not believe Brendan
Nelson will be there leading your party at the time of the next election.

So everyone wants to know what you will do, because you're the person most people expect will be
leading the Liberal party at the time of the next election.

MALCOLM TURNBULL: Look Tony I'm not...

TONY JONES: That's why people are interested in that question.

MALCOLM TURNBULL: The fact of the matter is this, that our party has made a very strong commitment
to a 5 cent cut in the excise.

Now we've made that commitment, people can argue about whether it was right or wrong, but it's been
made and as a matter of integrity, political integrity being straight with the Australian people,
we have to take that to the next election.

TONY JONES: And so were you leading the party you would take that to the next election?

MALCOLM TURNBULL: I expect Brendan Nelson to lead the party to the next election. He is the leader
of the Party.

TONY JONES: Given what I've just said the overwhelming majority of politicians I've spoken to as
well as commentators simply don't believe he will lead the party to the next election.

MALCOLM TURNBULL: Well look Tony I'm not going to engage in a discussion of that. It's fine for you
to do that...

TONY JONES: Well Tony Abbot for example, he said that Brendan Nelson's survives depends on the next
few rounds of opinion polls.

MALCOLM TURNBULL: Look I am not going to be a commentator on the leadership of the Liberal party,
other than to note we have a leader, his name is Brendan Nelson and he has my support.

And I do my job supporting him by being as effective a Shadow Treasurer as I can be.

TONY JONES: But you haven't given up your ambitions, have you?

MALCOLM TURNBULL: Well Tony, the reality is my ambition is to do as good a job as Shadow Treasurer
as I can, and ensure that this increasingly obviously phoney government of Kevin Rudd and Wayne
Swan is exposed for what it is and is back on the opposition benches in 2010.

TONY JONES: Let me put it this way, when you speak about your current leadership ambitions, and you
put it to one side like that, are you telling the whole truth? Or are you being to coin a very
famous phrase, economical with the truth?

MALCOLM TURNBULL: (Laughs) That was a phrase that somebody else made famous at my instigation.


TONY JONES: But I'm asking you the same thing that you asked at time in that cross examination. Are
you being wholly truthful with us about your ambitions or are you being economical with the truth?

TONY JONES: Well you're not Malcolm Turnbull and I'm not Robert Armstrong, and what I'm saying to
you is we have a leader and he has my support. Now the fact the matter is he is he has my support.
And the fact of the matter is...

TONY JONES: Can you guarantee he will be the leader come the next election?

MALCOLM TURNBULL: Well I can't guarantee anything. I can't guarantee that you'll still be doing
Lateline next week, I can't guarantee that 'Q&A' won't be a raving success and taken off the air.

I mean life is full of uncertainties. We all live with those. But the point of the matter is that
we are a team, we have a leader, our opponent is the Labor Party and we are exposing the phoniness
of the Labor Party. And the people of Gippsland have recognised that. And that's why they voted in
such large numbers for the Coalition.

TONY JONES: Alright, let's move on to the ramifications of climate change. Do you still believe
Australia should have zero carbon emissions from electricity generation by 2050?

MALCOLM TURNBULL: Well there's no way in the world we could meet the 50 per cent cut in emissions,
50 cut by 2050 to a level equal to 50 per cent of emissions circa 1990 or 2000 unless we did that.

The global, my own view is that this global objective, which is becoming increasingly, if you like,
popular and being adhered to increasingly as an objective of 50 per cent cut by 2050 can only come
about is stationery energy, power stations and big industrial installations become zero emissions.

In fact that, if you just a slightly more complicated exercise in arithmetic than working out 5
cents a litre over 50 litres.

TONY JONES: No, I understand. But I'd like to ask you how many of Australia's giant coal fired
power generators would survive in an era where zero emissions by 2050 became necessary, as you
point out that it is?

MALCOLM TURNBULL: Well all of them could survive. In 50 years a lot of the plant will become
obsolete in the normal course of events. But you know we have a great opportunity in Australia, and
indeed it's more than an opportunity it is an obligation, a duty to the world to make clean coal
work. Coal is the most abundant and cheapest source of energy in the world.

TONY JONES: With the best will in the world, even clean coal technology at its most ambitious come'
aim to have zero emissions?

MALCOLM TURNBULL: Well very nearly zero emissions. If you strip out that's not true. If you strip
out the carbon dioxide out of the flu gases of a coal fired power station or gas fired power
station and you compress that and pump it under the ground, then it's...

You took it out from under the ground, it was embedded in the coal, you burnt the coal, take off
the carbon dioxide, put it down under the ground. You can get zero emissions or very close to it
for all practical purposes.

TONY JONES: You can't at this stage because we don't know whether that can be done yet.

MALCOLM TURNBULL: Tony, let me just say something about clean coal. Clean coal, the technology for
clean coal is well understood. What has not happened and I'm not understating the difficulty of it,
It's extremely difficult, but the science is there, the challenge is to get a large demonstration
plant that shows that what works in the laboratory or on the small test site can work on a larger

Now once that happens, and it has to happen, it really is vital to the whole climate challenge,
then I think Australia will be the clean coal capital of the world.

TONY JONES: What about nuclear power because that is the sure way of creating power with zero
carbon emissions?

MALCOLM TURNBULL: Well nuclear power is going to play a bigger part in the world's electricity

TONY JONES: What about in Australia? That's the point I'm making.

MALCOLM TURNBULL: Well there are two reasons why I'm sceptical about nuclear power playing a
significant if indeed any part in Australia's energy future.

The first is if clean coal works any where it will work in Australia. We have both cheap coal,
we've got relatively clean coal to begin with and we've got lots of geology appropriate to storing

So if clean coal doesn't work, it won't work anywhere. Now if clean coal works economically in
Australia, then you don't have any need economically, financially, if you like, for nuclear energy.

The second thing, and this is more of a political point, is that nobody would undertake a nuclear
power station without overwhelming bipartisan support, because these projects take too long.

So nuclear power stations will have to, if they were ever to be built in Australia would have to be
politically uncontroversial. Again, we talked earlier about...

I think there is a lack of certainty about that happening.

TONY JONES: We certainly...

MALCOLM TURNBULL: It's a way off.

TONY JONES: There is no bipartisan support that's for sure. Last year in government you said
transport fuels should still be included in an emissions trading scheme. Do you now think that
simply depends on the price of petrol at the time?

MALCOLM TURNBULL: Well No. I think the reality is the reason for putting a carbon price on fossil
fuels, and petrol is obviously one of them, is to send a price signal.

The motorist has had a very big price signal sent to him and her, over the last year, 18 months or
so, since we embarked on our emissions trading scheme policy.

TONY JONES: What if the price of petrol goes down again?

MALCOLM TURNBULL: Well, it may well do, Tony.

But the point I'm making...

TONY JONES: If it does there's no price signal, and you'd have to have it in the emissions trading
scheme, wouldn't you? Have to have it built in with some sort of sliding scale? It'd have to be in
there wouldn't it?

MALCOLM TURNBULL: Look there is a powerful argument which we put last year and was certainly part
of our policy last year for liquid fuels to be included in the ETS.

Now we haven't walked away from that. I have canvassed two alternatives, because we, unlike the
Government, we are prepared to have a policy discussion publicly, we've canvassed two alternatives.

One is to do what the Europeans, and what the New Zealanders have done which is to leave liquid
fuels out of the initial stage of the emissions trading scheme.

The other is to include liquid fuel so the scheme is comprehensive but offset the carbon price with
a commensurate and equal reduction in the excise. So if you had, for example, a $20 a tonne carbon
price that equates to about 5 cents a litre on petrol, so that you would take 5 cents off the

Now, the virtues of that are these: firstly, the motorist has had the price signal about fuel being
expensive right between the eyes. He's got that message. Number two, it's in the scheme, it's

No. 3, it's revenue neutral. The government is no worse off. It just gets its money via a carbon
tax rather than the excise. That basically is the answer for that alternative. So that offset is a
very powerful elegant alternative.

TONY JONES: It may in fact be that that is what is proposed by the Government. All you may in fact
be doing is getting a little bit ahead of them because they're waiting for the Garnaut report
before they make their judgement on this.

MALCOLM TURNBULL: Well I don't know what they're going to propose naturally. But it certainly...

TONY JONES: If they do propose it you'll take credit, won't you?

BRENDAN NELSON: There is so little credit available to the opposition we take whatever scraps are
available, Tony.

TONY JONES: Malcolm Turnbull, that's where we'll have to leave you tonight. We thank you very much
for coming in to talk to us.

MALCOLM TURNBULL: Good to be with you.

TONY JONES: Good to be with you as well.