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Penny Wong joins Insiders -

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Penny Wong joins Insiders

Broadcast: 13/07/2008

Reporter: Barrie Cassidy

Climate change minister Penny Wong discusses the Governments upcoming reply to the Garnaut report
and possible start dates for an emissions trading scheme.

BARRIE CASSIDY, PRESENTER: And now to our studio guest this morning, the Minister for Climate
Change, Penny Wong.

Before she joins us, let's hear first from the leader of the Opposition Brendan Nelson. He's
travelled far and wide on this issue all week but yesterday he finished up in Tasmania and
essentially reduced his argument to this:

BRENDAN NELSON: It's very important that if for example China and India and the United States are
not committed to meaningful action, than implementing the emissions trading scheme which has got to
be done so carefully and thought through, and no earlier than 2011 at the least, we've got to make
sure that the price that's imposed on Australian families, on Australian jobs and Australian
industries is one that we can actually afford.

What is the point, I ask Mr Rudd, what is the point of doing enormous damage to Australia's
economy, Australian jobs and industries by not thinking this through, rushing it in by 2010 and
still not explaining to Australians what it's going to mean for petrol, electricity and jobs in our
key industries?

That's what's most important.

BARRIE CASSIDY: Penny Wong, good morning and welcome.


BARRIE CASSIDY: It might have been a bit of a confusing week on Brendan Nelson's part but he seems
to be back where he started and the key point now is that you're rushing it.

PENNY WONG: Well, I'm not quite sure what Dr Nelson's position is. It seems to have changed a
number of times in the last week.

But we have always said that we will take a responsible approach to implementing this approach, the
tackling of climate change through an emissions trading scheme, the need to reduce carbon
pollution. We've always said that we will take a measured and responsible approach to this.

BARRIE CASSIDY: Are you committed though to a 2010 start up?

PENNY WONG: Well Barrie, what we've said is that's what we're planning for. That's certainly our
intention and we're very aware of what Professor Garnaut has told us and other economists have said
- that the longer you delay, the higher the costs are likely to be. Professor Garnaut has reminded
us of that.

And obviously Australia has had 11 years or 12 years of delay on this issue. We know that the
Howard government was told by Treasury in around 2003 that this was the way forward so we're very
conscious in terms of ensuring the lowest cost transition to our economy, that we do need to start
this as soon as is reasonably possible.

BARRIE CASSIDY: But that is not a commitment, that's a plan or an ambition. It sounds as if you
might be giving yourself a little bit of wriggle room given that 2010 could be an election year.

PENNY WONG: Well Barrie, we've said that is our intention and that is the plan, that's what we said
before the election. I mean commentary on that issue is up to you but...

BARRIE CASSIDY: So it's more likely than not to start in 2010?

PENNY WONG: Well that's clearly what the Government has said. We have said that is our intention,
that's what we're working towards.

As I said, we're very conscious that we have to take the lowest cost approach to this and the
longer we delay, the higher the costs are likely to be. We are very conscious we need to ensure
that we approach this methodically and carefully. That's why we're putting out a green paper;
that's why we've had the consultations to date. So that's how we'll approach it.

BARRIE CASSIDY: What if the global conference though in Copenhagen next year disappoints and then
Australia and one or two others will be isolated, will be out in front of the rest?

PENNY WONG: Well a couple of points about that: The first is that we're not isolated at the moment.
In fact we're behind a number of other economies. Around 27 states in the European Union have had
carbon trading for year. New Zealand as you know is implementing one. Japan is intending to
implement at least a voluntary scheme in the northern autumn. We also know that quite a number of
states in the United States have state based trading schemes. So the developed world is already
moving down this path.

BARRIE CASSIDY: Sure, but you wouldn't want to be out in front of the United States and China and
India and the rest of them though, would you?

PENNY WONG: Look we've always said we'll be conscious of what the rest of the world is doing. But
let's remind ourselves what Professor Garnaut said. We have a very strong self interest in tackling
climate change. We're a hot and dry country. We have a strong self interest in adapting now,
adjusting to the new world order. We've got a strong self interest in an effective global regime
and part of that is doing the right thing at home.

BARRIE CASSIDY: But isn't it true though that even if Europe and Australia went down this path and
the rest did not follow, we couldn't even save the Barrier Reef.

PENNY WONG: Well Barrie, what is the alternative? That Australia sits back and says we're not going
to participate, we're not going to play, just like the previous government did?

What is very clear is that this country has a very clear economic interest in a strong global
agreement. We have a clear economic interest in making sure that we adjust as a nation to a world
where there is a carbon constraint.

We're very clear as a Government. We have the international approach where we have to push very
strongly the international agreement, and we also have to implement effective domestic policy. It's
a whole of economy approach to reducing carbon pollution. That's what this is all about.

BARRIE CASSIDY: The other point of difference with the Opposition is on petrol. Will we know on
Wednesday as to whether petrol is in or out?

PENNY WONG: Well Barrie what I've said is that the green paper will make clear the direction the
Government is taking on key issues, key design elements of the emissions trading scheme and
obviously coverage is one of those, so I would anticipate you'll get a clear idea of the direction
Government is seeking to take on these issues.

Obviously it's a green paper out there for consultation because we recognise we do have to consult
very closely with stakeholders on these issues.

BARRIE CASSIDY: So it sounds as if we will know whether petrol is in or out. And will we know also
what type of compensation will go with that?

PENNY WONG: Well Barrie, I'm not going to on this show tell you everything that's in the green
paper but as I've said, you'll know very clearly the direction the Government is going to take on a
range of important issues.

Can I say - let's understand what we're doing. We have to have a whole of economy approach to
reducing carbon pollution. That's the way

we tackle climate change.

So, what is the heart of that? The heart of that is emissions trading. What is that? Well, the
government puts a limit on how much carbon pollution is permitted. We issue permits up to that
limit for companies and it is the issue of those permits which creates a price, therefore an
incentive to reduce pollution.

Now we've never done that before. We for years have put carbon pollution into the atmosphere
without any regard for the costs.

BARRIE CASSIDY: Have you any idea how many companies will be affected by this?

PENNY WONG: Look, we'd anticipate approximately a thousand Australian companies would be required
to obtain permits under this scheme. Obviously we'll focus primarily on the large polluters.

So it's unlike some people have been talking about the GST. Well that obviously involved
two-million I think Australian companies. Here we're talking about around about 1,000 Australian

BARRIE CASSIDY: Well a thousand companies, but as far as the public is concerned it is like the GST
because everybody will be impacted in some way or another.

PENNY WONG: We've been up front about the fact that this is a whole of economy approach. What we
are doing is trying to shift from a high polluting economy to a cleaner and greener economy of the

That's a very substantial transition. That's going to require not only emissions trading - it's
going to require assistance and support to households to make that transition and assistance and
support to industry and business to make that transition.

And all of those things together combine to mean we have a comprehensive, whole of economy approach
to reducing carbon pollution, to tackling climate change.

BARRIE CASSIDY: Will electricity suppliers know where they stand on Wednesday in terms of

PENNY WONG: Look, right back in February when I gave a speech, I think it was in Melbourne, I said
there are three groups that the Government is very conscious of, that we have to ensure we address
in terms of developing these policies.

The first were households and we said there would be measures to assist Australian families,
Australian households to adjust to the impact of a carbon price.

The second were the emissions intensive trade exposed, so they are companies who are highly
emissions intensive and operate on the world markets.

And third is the group that you mention, what we described as the strongly affected industries
where introducing a price on carbon pollution does have an impact on their businesses. So we are
very conscious of the impact on them.

Obviously Professor Garnaut has had a range of views about that which have been a part of the
public debate of late. We'll certainly be outlining the ways in which we would propose to address
all three groups in the green paper.

BARRIE CASSIDY: Given the significant impact that this is going to have on the economy and on
people's lives, do you ever ask yourself what if the science is wrong? What if it is grossly
exaggerated? Do you ever have any moments of doubt?

PENNY WONG: Well Barrie, I think we're very careful to consider what the science is putting to us
and the overwhelming majority of science in this area suggests climate change is happening and
there's more than a 90 per cent likelihood that human activity has contributed to this.

I'll give you just one example in the other side of my portfolio, in water. In the Murray-Darling
basin where we've had, as you know, extraordinarily low inflows for many years, we're currently
tracking at below the worst case climate change scenarios for 2050. In other words, in recent years
what we've seen in terms of the River Murray inflows is worse than, the CSIRO Australian scientists
are telling us, is the worst case climate change scenarios for 2050.

Now one would have to, you know, infer from that some understanding of what climate change means to
Australia and some understanding of what the scientists have been telling us for many years.

BARRIE CASSIDY: But it's still, as you said it may be 90 per cent but it's still based on the
balance of probabilities. There's nothing certain about this. Are you convinced about the
fundamentals, that the planet is warming, and what figures can you present over the last 10 years

that point to that?

PENNY WONG: Oh well Barrie, I'd refer you to the IPCC report, the report that actually got so much
of the world interested and alive to this issue, where so many world scientists, peer reviewed,
said climate change is happening and human activity is causing it.

And leaving that to one side, are you prepared to take that risk Barrie? Are you prepared to say,
oh look, the very small majority of people who might still be climate change sceptics might be
right and on that basis I'll trust my kids and my grand-kids to the possibility that they're right?

I think most Australians do think climate change is happening and they want governments to show the
leadership that is required to do something about it and that is something the Rudd Labor
Government is prepared to do.

BARRIE CASSIDY: And what Kevin Rudd seems to be developing is a two pronged approach to what
governments around the world can do. He seems to be arguing that poorer countries should not be
expected to do what rich countries should do; binding targets for rich countries but what he says
of poor countries is "measurable and verifiable action". What does that mean?

PENNY WONG: Well these are the words that were agreed by the international community in Bali. What
we're negotiating under at the moment is an international framework convention which does recognise
that there is a difference between the obligations of wealthy, developed nations and the
obligations of developing nations.

We cannot reasonably say to developing countries you have to stay poor because of climate change.
So what we have to do is ensure that

there is, or find a low emissions development path for developing countries.

Now that necessitates different types of commitments as between wealthier, developed nations who
should have economy-wide reduction targets and developing nations.

BARRIE CASSIDY: So that means developing countries, if they showed that they were more energy
efficient for example and they put more weight on renewables, rather than set targets?

PENNY WONG: Well, it depends what targets you set and what sort of action is taken, but this is
precisely what we're currently negotiating. So right at the moment, leading up to Copenhagen what
we'll need to negotiate is what we will do and in return what developing countries will also do to
reduce their emissions path.

BARRIE CASSIDY: Okay, you mentioned water as part of your portfolio. With the Murray River, I
gather it's still your aim to increase over time the amount of water that you can buy and pump into
the system. The four per cent cap now, what's going to be needed by, say, the end of next year?

PENNY WONG: Well look, COAG has said as an ambition increasing the four per cent to six per cent by
the end of next year and we welcome that commitment by the Premiers to that ambition.

BARRIE CASSIDY: But do you really think you will move John Brumby?

PENNY WONG: Well, can I say this - John Brumby has got a long history in reform. We recognise when
it comes to the four per cent issue that we still have to talk to stakeholders, to communities
about what that means.

We as a Government do take this view: We think that a modern water market that enables water to go
to where it has most value is a sensible path to reform. We think also we do have to reform in the
Murray Darling basin. Quite clearly we have to do more with less, take less water out of the river.
We also have to purchase water for environmental purposes. So we'll continue to work with the
States and stakeholders on that front.

BARRIE CASSIDY: And if all else fails, and Lenore Taylor has written about this, would you consider
buying entire properties and the water rights that come with that, and then return that water for
the river?

PENNY WONG: Well look, we have $3.1-billion allocated in this Budget under water for the future,
for water purchase, in order to return water to the river. We're currently evaluating the first
tranche of that, the first $50-million which we spent earlier this year. We've also through the
COAG process committed additional money from that to purchasing water in Queensland. So we'll look
at a range of possibilities...

BARRIE CASSIDY: So that's an option.

PENNY WONG: We'll look at a range of possibilities. We have said that the Government's approach is
to purchase water from willing sellers. Within that we will progress the water purchase because it
is important to increase the amount of water that we return to the river because the river is in
real trouble.

BARRIE CASSIDY: But if you were to go down that path it would be not compulsory I gather. You
wouldn't compulsorily acquire property?

PENNY WONG: I've made clear that our approach is to buy from willing sellers, Barrie, which is why
we need the modern water market to which I referred.

BARRIE CASSIDY: Thanks for your time this morning.

PENNY WONG: Good to speak with you.