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Meet The Press -

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MEET THE PRESS

INTERVIEWS WITH SHADOW FINANCE MINISTER LINDSAY TANNER AND WORLD WIDE FUND FOR NATURE CONSERVATION
DIRECTOR DR RAY NIAS.

5th November 2006

DISCUSSIONS ABOUT INTEREST RATES, FEDERAL GOVERNMENT SPENDING, GLOBAL WARMING, STERN REPORT,
NUCLEAR ENERGY.

MEET THE PRESS PRESENTER PAUL BONGIORNO: Hello and welcome to Meet The Press. It's a sure bet,
according to the pundits, the Reserve Bank will raise interest rates at its Melbourne Cup Day
meeting. John Howard may have broken his election promise, but here's how he taunts the Opposition
leader.

PRIME MINISTER JOHN HOWARD (Monday): And he cannot escape the heavy burden, Mr Speaker, that
Keating and Beazley equal 17%, Howard and Costello equal 7.75%. Mr Speaker, that is the measure of
the difference between the economic stewardship of this Government and the economic stewardship of
the Australian Labor Party.

PAUL BONGIORNO: Today, Shadow Finance Minister Lindsay Tanner takes up the fight. And later, more
on the inconvenient truth of global warming. But first, what the nation's papers are reporting
Sunday November 5 - In Adelaide, the 'Sunday Mail' leads with "PM calls Murray Summit." Data
showing Australia's most important river system will run dry within a year has forced the Prime
Minister to call a summit with key premiers on Tuesday. The 'Sunday Herald-Sun' reports "Free water
tank in every home." The Bracks Government will virtually give away rainwater tanks in a bid to
grab the green vote in the Victorian State election and combat the devastating drought. The 'Sunday
Telegraph' has "Iraq bracing for Saddam verdict." A violent backlash from Saddam Hussein's
remaining supporters is expected if the ousted leader is sentenced to death tomorrow in his trial
for crimes against humanity. In Brisbane, the 'Sunday Mail' has "Ashes security blitz." An
unprecedented security cordon will be thrown around the Gabba and other venues for this summer's
Ashes cricket series, a crack down requested after revelations al-Qa'ida had planned a gas attack
during the last series in England. Labor's Federal Director Tim Gartrell has no doubt the
Coalition's interest rate campaign last time played to devastating affect for his party. Labor
tried to hit it off with Mark Latham signing a low interest rate guarantee, only to be lampooned
for an empty stunt. Welcome back to the program, Lindsay Tanner.

SHADOW FINANCE MINISTER LINDSAY TANNER: G'day, Paul.

PAUL BONGIORNO: Before we go to interest rates and guarantees, I suppose you'd have to welcome this
water summit by the Prime Minister on Melbourne Cup Day?

LINDSAY TANNER: Paul, I'm always in favour of people sitting down and constructively talking
through our big national problems, and they don't come much bigger than our problems with water.
The Howard Government's done a lot of bashing of the States, it's done a lot of posturing, but
there hasn't been a huge amount action from the Government yet in water. So if they're approaching
this in a constructive frame of mind with a genuine desire to reach collective solutions with the
States, good on them. But time will tell whether that's what's going to happen.

PAUL BONGIORNO: Is there much risk, in your view, that there will be another interest rate raise
next week after Melbourne Cup Day?

LINDSAY TANNER: Paul, countless Australian families, hard-working families, are living in fear of
further interest rate increases, and it looks fairly likely that there will be an interest rate
increase this coming week. John Howard, as you mentioned, campaigned on the slogan 'keeping
interest rates at record lows', and ever since, interest rates have just kept going up. Now, he
said in the Parliament this week that the economy is magnificent, so I think he's lost touch with
reality on this point. And he's described any interest rate increase that might occur this week as
a stitch in time that'll save nine. Now, it's a great pity for ordinary, hard-working Australians
that he wasn't thinking like that over the past few years while spending huge sums of money on his
own political survival instead of investing in the things that do put downward pressure on interest
rates like the skills and infrastructure our economy needs.

PAUL BONGIORNO: Well, he can still hit Labor over the head, as you saw in our opening clip, with
his 7% versus your 17%.

LINDSAY TANNER: It's true to say that for a period of about 10 months out of 13 years interest
rates were at 17% under Labor - 17%, but 17 years ago. Something that happened 17 years ago is not
a get out of jail free card for John Howard, and at that time, world interest rates, world
inflation, was substantially higher. So, yes, interest rates shouldn't have reached 17% then, but
understand this, Paul - the economic reforms, the tough reforms that were taken by the Hawke and
Keating government have laid the foundations for the 15 years of continuous growth we've seen
since. So, I'm proud of our economic record, and I don't think most Australians are going to be
that concerned about that what happened 17 years ago when they're judging John Howard's record now.

PAUL BONGIORNO: Well, you've supplied with us a list of savings Labor would be prepared to
undertake to put downward pressure on rates. That lists includes - cut Government advertising by
$207 million, close down Invest Australia, close down our $90 million contribution to the European
Bank for, reconstruction, withdrawal from Iraq, $125 million, dismantle WorkChoices, $450 million,
introduce a means test for family tax benefit B and, among other things, abandon the sale of
Medibank Private for a total savings of just over a $1 billion. A billion dollars, I guess, is a
small beer in the scheme of things, but can't Peter Costello say to you, as he's said in the past,
that the budget's in surplus? In fact, this very week the ABS said it was a $10.8 billion surplus.
As well as that there's no net Government debt. So they're doing what you say they should do,
they've taken pressure off interest rates.

LINDSAY TANNER: John Howard's budget's got more fat than the 'Biggest Loser', and it's putting
pressure on interest rates. It's one of the factors that's causing interest rates to go up. It is
being rained with money. John Howard is being drowned in money because of the boom from China. The
increase in company tax receipts, for example, is just enormous. It is not that hard for any
government in these circumstances to keep the budget in surplus. It's been widely acknowledged by
expert economists like Chris Richardson from Access Economics, that the Government is not keeping
expenditure at an appropriate level. It's putting too much pressure on interest rates, and it's not
investing enough in the key drivers for our economic future like skills and infrastructure. What
we've proposing is just the start. It's only a billion dollars. That's a lot of money, but in the
context of the budget it's just a start. What we're suggesting is that the Government should have a
mini-budget. When was the last razor gang? When was the last serious attempt to rein in government
spending? John Howard is spending it all on himself.

PAUL BONGIORNO: Lindsay, if I can just intervene there. Chris Richardson and Ross Garnaut and other
economists say that the budget surplus should be around $20 billion and the money shouldn't go
towards tax cuts. Are you saying Labor won't be using money for tax cuts because it should be
spending it on infrastructure instead?

LINDSAY TANNER: We'll make those judgments as we get closer to the election as we see what's in the
budget. But what we're proposing...

PAUL BONGIORNO: But hang on, don't you accept that tax cuts, in fact, are part of the pressure on
interest rates? This is one of the problems, as seen by those economists. I mean, you'd have to
agree with that, wouldn't you?

LINDSAY TANNER: It's the total picture that counts, Paul. It's where the total picture is, what the
money is being dedicated to. Tax cuts are fine provided that the total picture is OK. The trouble
is that John Howard has also been spending enormously. As well as cutting taxes he's been spending
huge amounts of money. In effect, the money that's been rained on him by the minerals boom, he's
spending the lot either through tax cuts or through increased spending, and most of that is
wasteful. Most of that is profligate. It's not being used to invest for our future and for the
future of our kids.

PAUL BONGIORNO: Just finally in this break, do you believe that Richardson is right? That we need
to have a surplus twice as big as we've got now? And would you be aiming for that?

LINDSAY TANNER: Look, I think that's probably excessive figure, but what we're suggesting is that
you've got to make a start. You've got to make a start in cutting back on wasteful Government
expenditure. At a business lunch for City Group tomorrow, I'll be outlining the list of things
where we believe that start needs to be made. The public service now is effectively larger when you
take into account the huge expenditure on consultancies and the massive expansion of the upper
level, the fat cats. It's effectively bigger now than it was when John Howard took office. Under
him the Liberal Party has become the party of big Government.

PAUL BONGIORNO: Time for a break. When we return with the panel, facing up to the costs of climate
change.

PAUL BONGIORNO: You're on Meet The Press with Lindsay Tanner. Welcome to the panel, Eleanor Hall of
ABC Radio 'The World Today'. Good morning, Eleanor.

ELEANOR HALL, ABC RADIO: Hello, Paul.

PAUL BONGIORNO: And Glenn Milne, columnist with News Limited. Good morning, Glenn.

GLENN MILNE, NEWS LIMITED: Good morning, Paul.

PAUL BONGIORNO: Former World Bank chief economist Sir Nicholas Stern has grabbed international
attention with his alarming warning that we have 10 to 15 years to cut greenhouse gases or face
catastrophic economic consequences.

SIR NICHOLAS STERN (Monday): It's about creating carbon markets, creating a price incentive to cut
back on the carbon. It's about promoting R&D, it's about encouraging energy efficiency and, above
all, it's international; it's getting countries to move together.

PAUL BONGIORNO: Labor agrees, and is pledged to signing the Kyoto protocol and to carbon trading.
The Liberals' Greg Hunt says that spells its own disaster.

PARLIAMENTARY SECRETARY GREG HUNT (Thursday): It's probably going to take, on the Beazley plan, a
double or tripling petrol and energy prices to make the sort of changes in emissions that he wants.

ELEANOR HALL: Lindsay Tanner, Greg Hunt is right, isn't he, at least to the extent that there will
be a cost. Has Labor done an analysis on what it will cost, what it will do to petrol prices, to
bring in your policies of putting a carbon price in place?

LINDSAY TANNER: Eleanor, clearly there's a cost to dealing with global warming. We're starting to
pay that cost now. Governments are already spending money on things that are dedicated to trying to
deal with the challenge of global warming, and obviously that's going to continue. The real
question is whether we start now or whether we put it off because the later we start dealing with
it the more expensive it will ultimately be. One way or another we have to pay a price. The
question of how big that price will be in the long term, nobody knows the answer to that. What
we're trying to do, through establishing things like an emissions trading scheme, ratifying the
Kyoto protocol, is put in place a market framework that gives incentives for new technologies to be
developed, and news technologies often solve problems much more cheaply than anybody can expect. We
had doom and gloom predicted with the catalytic converter for cars. It ended up adding very little
to the additional cost of a car, and I think the same could well be the case with global warming.
But we've got to start acting now. John Howard's been in denial. It's about time we got serious
about this issue.

ELEANOR HALL: And are you prepared to call a spade a spade? Are you prepared to say what we're
really talking about here is a carbon tax, because in the UK they're talking about taxing the big
polluting activities like airline travel.

LINDSAY TANNER: I don't think it's a carbon tax. Emissions trading means that you've actually got a
market mechanism designed to ensure that the incentives are there for people to develop the new
technologies, to invest in the research, that will eventually solve these problems that will enable
us to maintain our economy but substantially reduce our carbon emissions. We can't predict exactly
how that'll unfold. But the trouble is with John Howard we've had 10 years of doing virtually
nothing, 10 years of standing apart from the rest of the world, 10 years of denial. Even weeks ago
his minister for industry was denying that there's a connection between human activity and climate
change. Most of the world doesn't agree with him. We certainly don't.

GLENN MILNE: Mr Tanner, you mentioned there maintaining the economy. Nicholas Stern says that the
cost of combating climate change will be at minimum 1% of GDP. Do you accept that if we're going to
get on top of this problem that we have to see economic growth slow?

LINDSAY TANNER: Glenn, I accept that there's a cost. There is no question there is a cost. We are
already paying a small part of that cost through activities of State and Federal governments.

GLENN MILNE: No, I understand the issue of a cost, but I'm talking about economic growth generally.
Do we have to accept that to combat climate change economic growth will have to be cut?

LINDSAY TANNER: We don't have to because what the change is going to produce is a range of other
economic activities, new technologies and a range of economic activities that involve things like
environmental rehabilitation, things like solar power, where Australia has been leading until
relatively recently. So there are opportunities there as well as costs. We can't predict exactly
what will happen with the economy over 20 years, nobody can, but there's no reason to assume that
things will get worse on the economic front. Yes, there's an additional cost, but there's also an
additional cost to fighting terrorism, for example. We're spending large sums of money trying to
protect ourselves against the threat of terrorism, to reduce that risk, and it's equally logical,
equally rational, for us as a society to spend money to invest to protect ourselves against the
even more serious threats in the longer term that climate change imposes.

GLENN MILNE: You mentioned opportunities there. The Bracks Government of Victoria, which of course
is in the middle of an election, has put on the table an offer of virtually free water tanks,
rainwater tanks, to anybody who will sign up. Do you see opportunities for you there if you get
into government in the sense of offering tax concessions, for example, for people to take up solar
energy?

LINDSAY TANNER: I certainly do, Glenn, and in Kim Beazley's climate change blueprint, a very
detailed analysis of this issue and a set of proposals that was put out six or eight months ago,
that's the kind of proposal that was floated in that blueprint. I applaud the Bracks Government for
its proposal with respect to water tanks. My wife and I were actually contemplating putting one at
our home very recently - we haven't got around to doing anything about it yet but we do intend to -
it looks like we might be able to do it a bit easier than we thought.

ELEANOR HALL: Lindsay Tanner, I guess tax incentives are the easy option. What about nuclear? The
Stern report also says that nuclear energy should be considered as part of the mix in addressing
the climate change problem. Will Labor consider nuclear now?

LINDSAY TANNER: We don't believe there's a case for nuclear power in Australia, either now or into
the future. Even with the impact of clean coal technology on price, and clearly that clean coal
technology will increase the price of coal, but I suspect quite a bit less than what we currently
think, as has been the case with previous new technologies, so we are still blessed with a very
wide variety of alternative energy sources in Australia.

PAUL BONGIORNO: Lindsay, how are we going to get clean coal technology unless there's a tax on
carbon emissions?

LINDSAY TANNER: There doesn't have to be a tax on carbon emissions, Paul, but emissions trading,
which effectively forces people to go for the cleaner option, it puts a rocket under companies to
make sure that they are actually pursuing these things rather than sitting back and just going with
the flow, doing what's always been the case or in some cases, like Exxon Mobil, deliberately trying
to derail the global efforts against climate change. What it will do is create incentives that
people will rise to. History tells us that when we are given incentives to seek better solutions to
improve things that we actually do it. We don't know what the longer term cost of that will be, but
we do know one thing, and that is the longer term costs of not doing anything or pretending to do
something - that's John Howard's position - will be way, way greater than the cost of actually
tackling the problem.

ELEANOR HALL: Do you accept the urgency of this? Do you accept the 10- to 15-year time frame?

LINDSAY TANNER: Yes, I do. I think that the evidence is overwhelming that if we don't start dealing
with these problems now then our children will face a nightmare situation. The longer we leave it,
the harder it will become and the higher those costs will be. The sooner we start the more we'll be
able to spread those costs over a longer period of time, over a larger number of people and
seriously tackle the issue without doing significant damage to our economy.

GLENN MILNE: Mr Tanner, it looks very much like John Howard will have a cabinet reshuffle over the
Christmas period and he'll probably elevate Malcolm Turnbull, who's currently in charge of the
water, into the cabinet in some sort of super-charged climate change portfolio. Isn't it about time
Peter Garrett, on your side of politics, was elevated on to the front bench to tackle these issues?

LINDSAY TANNER: Peter Garrett's already playing a significant role, Glenn, in he's got formal
responsibilities for the arts and indigenous reconciliation. And I've got no doubt he will play a
bigger role into the future. But I think it's not a great comparison with Malcolm Turnbull,
frankly. Malcolm's got a lot of publicity - he's very good at getting publicity - but what's he
actually done with respect to the water problem? We've got yet another summit being called in the
next few days by the Government. Where are the achievements? He's good at publicity, not so much at
getting the runs on the board. So, yeah, you'll see more of Peter Garrett in the future, I've got
no doubt about that.

PAUL BONGIORNO: Thanks very much for joining us today, Lindsay Tanner.

LINDSAY TANNER: Thanks very much.

PAUL BONGIORNO: After the break we talk with Dr Ray Nias of the World Wide Fund for Nature. And
Nicholson and his mates from Rubbery Figures on the Australian's web site see the climate debate
this way.

JOHN HOWARD ANIMATED FIGURE: It's the weather. It'll be cool and mild until the end of the century
with a few showers. Oh, look at that, some crazy scientist down at the weather bureau has a
hangover or something. That's better, it's not too hot at all. Oh, now I see the problem, that's
the long range forecast. The good news is that it will be cool and mild until the next election.

PETER COSTELLO FIGURE: Oh, that's fixed it.

JOHN HOWARD FIGURE: Oh, Jeanette, I think the sausages are burning again.

PAUL BONGIORNO: You're on Meet The Press. The Stern review certainly prompted a flurry of activity.
The Prime Minister went to the CSIRO and announced how he was spending $60 million of the $100
million he had previously announced to combat carbon dioxide emissions especially in coal-fired
power stations, and he rejected signing up to Kyoto carbon trading and targets this way.

JOHN HOWARD (Wednesday): This country is probably more dependent for its wealth on fossil fuel use
than any developed country in the world, and we have to be incredibly careful that we don't behave
in a way that cripples the natural advantages we've been given, because future generations will not
thank us for squandering a natural advantage providence given us.

PAUL BONGIORNO: Welcome to the program Dr Ray Nias, director of conservation of the World Wide Fund
for Nature. John Howard has a point, hasn't he? We can hardly close down our coalmines as they have
in Great Britain.

WORLD WIDE FUDN FOR NATURE CONSERVATION DIECTOR DR RAY NIAS: Well, I think that Australia has an
enormous amount of renewable resources at our disposal - winds, solar, geothermal. We've got lots
of options, and I certainly don't think future generations will thank us for ruining the planet,
which is what Stern in his report is very clearly showing - that the cost of doing nothing far
exceeds the cost of trying fix the problem.

GLENN MILNE: Dr Nias, we saw there Lindsay Tanner admit that a carbon trading system is actually
going to mean a cost which eventually will be passed on to consumers. What do you see that impact
being at the end of the line for consumers?

RAY NIAS: The modelling that we've seen, the ABARE modelling, for example, and the Allan's
Consulting modelling done in the last few months, shows that even under quite stringent carbon
pricing regimes, Australian GDP still grows, and grows strong, at 2050.

GLENN MILNE: At what rate?

RAY NIAS: Between about a percentage or so different from GDP growth otherwise.

GLENN MILNE: So it would be around about 2%?

RAY NIAS: About 2%. I think it's somewhere between 1.7% and 2.3%. But that sort of rate is barely
detectable when you look at it on the graphs. And it's within the natural sort of range of
variability in the economy. So it seems that Australians, even under carbon pricing and even under
mitigation of climate change impacts, will be a lot better off in the future. And of course there's
these other industries and efficiency which also add to economic growth.

GLENN MILNE: I see. We've seen a flurry of activity from the Government in the last week. We saw
John Howard looking at new green, clean technology, we've seen Peter Costello unveil solar power
plants in Victoria. But do you think for the Howard Government it's all too little, too late?

RAY NIAS: Look, there is a sense - there's no sense of strategy or a plan coming out of the
Government at the moment. You know, cutting ribbons is not a plan. We need to see long-term
commitments - tax, trade, regulate. I mean, these are the things we need to see, and it we need to
see it soon, and the Government has to have more than just a series of statements. We need to
see...

GLENN MILNE: Or summits?

RAY NIAS: Or summits. We need a plan, not another document - we've got plenty of documents. We need
clear commitments that we're going to take steps. We have 10 to 15 years to do it.

ELEANOR HALL: If we're talking about difficult choices, the Prime Minister says that renewables
can't be relied on for the base load of energy, but he's saying that nuclear is a serious option.
Would your organisation consider backing nuclear energy?

RAY NIAS: We see no case for nuclear energy in Australia. As I said before, Australia has an
abundance of renewable resources. Gas can also...

ELEANOR HALL: So you disagree with the Prime Minister there that it can't be relied on for the base
load of energy?

RAY NIAS: You can use it to provide base load electricity, of course you can. But even the
optimistic and generous modelling - the ABARE modelling, for example - suggests that nuclear power
won't play a role in Australia for at least 15 years, if that. So by the time 15 years has come,
things may well have changed, but we need to do something between - you know, now, in the next 10
or 15 years. We have gas, we have renewables. Nuclear just seems to be a very dangerous and
expensive way of doing very little about climate.

ELEANOR HALL: And yet your chief executive, Greg Bourne, has said that nuclear energy should be
regarded as a clean energy. Wouldn't you then, given that, consider changing your position on
nuclear?

RAY NIAS: As I said, in Australia we see absolutely no need for nuclear energy in Australia. Gas
can provide base load. Countries like Japan may have different options. They have much less options
than we do. The UK, every country is different. They have to make their own decisions. In
Australia, as I say, it's 15 years off at the best, even with very generous modelling, and why do
we need to wait 10 or 15 years? Let's get on with the job now.

ELEANOR HALL: Despite our huge uranium resources?

RAY NIAS: As I say, it will take 10 to 15 years to build a nuclear plant anyway even if the
Government decides to do that. The point is, we've got the resources to start tackling climate
change now.

GLENN MILNE: So coal's better than nuclear?

RAY NIAS: Clean coal would be better than nuclear, for sure, and clean coal technology is something
that the Government is investing in and that's good. We think a lot more needs to be done on that
and, ultimately, clean coal will provide a very, very important part of Australia's energy mix if
it proves to be technologically feasible.

GLENN MILNE: What do you say to John Howard's argument that we're a net energy exporter and
basically if we adopt your strategy we'll shut the country down?

RAY NIAS: My understanding is that Australia is actually, by value, a net energy importer. So, you
know, where are the economics on this? Where are the statistics and the modelling that really give
us a clear understanding of what the situation is? We're hearing these sort of facts, so-called
facts, just thrown around the place, but reports like Stern and economic modelling by ABARE and the
economic modelling by Allan's and so on all point to quite a different picture.

PAUL BONGIORNO: There's been some nay-saying of Stern. Professor McKibbon, for example, thinks that
some of his modelling's wrong. Just briefly, do you think that his overall message is accurate?

RAY NIAS: I think the Stern report confirms previous reports. I mean, it's not one report, it is a
summation of thousands of reports, and economic modelling is far from perfect, we all know that. So
yes, there will be points to criticise. But what Stern does is quite clearly put the case that has
been made by hundreds of previously reports.

PAUL BONGIORNO: Thank you very much for joining us today, Dr Ray Nias. Thanks to our panel, Eleanor
Hall and Glenn Milne.