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Ali Moore interviews Kevin Rudd -

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ALI MOORE, PRESENTER: Late today I spoke with the Prime Minister, Kevin Rudd, in our Sydney studio.

Prime Minister, the Government has committed to helping households overcome the cost of an
emissions trading scheme.

Is that a guarantee, low income households won't be worse off?

KEVIN RUDD, PRIME MINISTER: What we've said very plainly is when it comes to pensioners and carers,
and those on forms of social security support in that category we would provide beyond the normal
adjustments to those pension payments.

Additional support to meet any costs a rising from the introduction of this carbon pollution
reduction scheme.

ALI MOORE: Is that a no worse off?

KEVIN RUDD: Similarly, similarly for, for low income households as well. And beyond that we've also
indicate add preparedness to support households in general to obtain assistance for energy
efficiency measures within those households to bring down their energy cost over time.

We think these are practical steps going forward. I tell you what I can guarantee is that if you
don't act on greenhouse gases now, if you don't act on climate change, the cost for every household
will in time go through the roof.

ALI MOORE: But can you guarantee for low income households that they won't be worse off?

KEVIN RUDD: As I said, it is explicitly stated in the green paper, and you've read it I assume
today, that we've committed in this green paper to meeting through additional payments, through the
tax and payments system, any additional costs which come to households as a consequence of
introduction of this scheme.

Of course you're always going to have other things that affect standards of living and costs for
families, but our commitment visa vis low income households, pensioners, and carers is clear cut
and stated in the green paper.

ALI MOORE: What's the cut-off, what's the income threshold for a low income household in this
context?

KEVIN RUDD: Well what we've spoken about is where family tax benefit A starts to reach its base
rate, which is around the $53,000 to $55,000 a year per household.

And of course below that we have people who are on pensioners, on pensions, carers, and...

ALI MOORE: So that's $53,000 and below?

KEVIN RUDD: Yeah, for households. And then beyond that we also have a further commitment for middle
income households to provide some assistance to assist them as well.

And more generically for households we will be examining, when we get to the white paper stage,
other ways of assisting households adjust with investment in new ways of improving energy
efficiency at home.

Because that is not just good for the environment, and for the overall economy, it's good for the
cost of the household as well.

ALI MOORE: When it comes to some assistance for middle income earners, can you give any guide as to
what proportion the one per cent or

point nice of one per cent increase in inflation the green paper is forecasting based on a $20 a
tonne carbon price.

What percentage of that middle income earners will have to bear?

KEVIN RUDD: We'll work that trough during the course of white paper consultation process. What we
need to make sure is those who are least able and least flexible when it comes to responding to a
highest cost for carbon.

Let's go back to the underlying facts here. My job as Prime Minister is to face the scientific and
economic facts and to get the balance right for Australia for the long term. That does mean a hire
cost for carbon.

The question is there, therefore, how do you provide assistance to those households least able to
adapt and adjust in the here and now; and business least able to adjust in the here and now, to
transition through that.

ALI MOORE: So when do we get details of the compensation scheme, when do we know when it starts,
and indeed whether it's up-front so you get the compensation before you pay the higher electricity
bill?

KEVIN RUDD: In the green paper as you would understand we've outlined our principles. And
principles, designed principle force the overall carbon pollution reduction scheme.

It's about emissions trading, support for households, and support for businesses. When the white
paper comes through, including exposure draft legislation, it is through that that you will have
the full detail in terms of where we will go on the support arrangements, both for households an
for business.

ALI MOORE: The other area of compensation of course is petrol. Your climate adviser Professor
Garnaut was very clear that compensating people would lead to a funny signal. Does it really send
the right message?

KEVIN RUDD: Well when you're looking at our Carbon Pollution Reduction Scheme we're covering 75 per
cent of the economy.

That includes the transport sector, it includes therefore petrol. But we're very mindful of the
fact that households right now are under financial pressure.

Therefore, our response to that is to provide this adjustment support and we've indicated we would
do so for the three year period, cent for cent for any consequential increase in the price of
petrol. We would take off associated petrol taxes, and then we would review at the three year
point.

I think that is a responsible course of action now in order to transition this system to a lower
carbon economy, which is what we need for the economy longer term, what households need for the
economy longer term, as well as looking after our kids.

ALI MOORE: So what are the benchmarks for that review?

KEVIN RUDD: In terms of?

ALI MOORE: Petrol. Whether or not you continue to cut cent for cent?

KEVIN RUDD: Well let's look at that point for example at what the overall impact on the households
budget are; where will the global oil

price stand at that stage, etc.

These are the sorts of criteria which we be deployed at that time. But we think it's fair and
reasonable thing to help households who are under real financial pressure now to adjust through.

You remember the overall integrity of this scheme is achieved by having such breadth of coverage
across the economy, 75 per cent of the economy. We think this is the right way to go for Australia
for the long term.

ALI MOORE: As Brendan Nelson argues you're asking Australians to take you on trust aren't you.

They're getting a carbon trading scheme, whether or not they will continue to be compensated for
the higher cost of petrol for three years, don't know. The actual format of a compensation for
households at this stage, don't know. When it will start, don't know.

There's a lot there, isn't it, that you're asking them people to trust you.

KEVIN RUDD: Well in the first six months of this Government's life, and it's now seven months,
we've done more than our predecessors in 12 long years.

That sat there as climate change sceptics, and then on the eve of the election they said they would
introduction an emissions trading scheme.

And now that we're across the election hump, and we're now the Government, they say they're now
opposed to one.

Well I really don't know where Dr Nelson stands other than he seems to be engaged in irresponsible
short-term politics.

For us, it's laying out, as we said more or less after we came to office, through the Climate
Change Minister Penny Wong, building block number one is putting out the green paper to outline the
design features of an emissions trading scheme as part of a carbon pollution reduction scheme, and
our support payments for households and business.

Building block two will be when we produce the finality of that with legislation at the end of this
period. It is a sequential way through and it's one part of our overall strategy to bring down
carbon emissions as well as a new strategy for energy efficiency which we will be putting out in
due course.

A new strategy for on the supply side dealing with clean coal technology. A further supply side
strategy with renewable energies. All part of doing our bit for the planet, but getting a decent
outcome for Australia.

ALI MOORE: The green paper also includes limited compensation for the big polluters, the
electricity generators, so they don't become riskier investment prospect. How limited will that
compensation be?

KEVIN RUDD: Will get to that as we consult with each of the electricity generators, there's a
number of them around the country.

And a number of them, depending on the age of the generator and the plant, the nature of its
technology, each of their particular circumstances are different.

There is no blank cheque being offered to electricity generators, but we are mindful of the fact,
mindful of the fact that their environment, their investment environment changes the consequence of
the introduction of a carbon pollution reduction scheme.

So we believe that adjustment supports are necessary, but the quantum will be determined after
we've had a very hard-nosed, individual negotiation with each of those generators. And we intend to
be very tough.

ALI MOORE: The other side of the argument of course is the one the Greens make, and they say that
while the whole point of a trading system is to send price signals, they argue you've rushed to
compensate, you've rushed to neutralise.

KEVIN RUDD: Well, you know something, we're going to get attacked from the left, and that's what
the Greens are doing. We're going to get attacked from the right and that's what Dr Nelson is
doing.

My job's to get the balance right for the future. And if getting the balance right means having a
clear sense of our target, our objective, which is to bring Australian carbon emissions down.

And to do so in partnership with the global community through our negotiating posture, and the Bali
road map, the Kyoto road map, to the post Kyoto road map as it mow is; to do all that and provide
adjustment support on the way through. That's the responsible and balanced course of action.

The Greens on the left out there, they may not like what we're going to do and they will say it's
not as pure as the driven snow. Well I'll cop that on the chin. And you will have the climate
change sceptics on the right corner saying that we shouldn't be doing anything.

My job is to face the facts, the economic facts, the science facts, and prosecute a balanced course
of action.

ALI MOORE: This is, as we've been saying repeatedly, a green paper and you're opening it up for
consultation with the business.

How do they consult with you when they have no numbers, no economic parameters, no emission target
parameters, and yet the time of consultation actually closes before they will get those economic
parameters from the modelling that Treasury is due to provide in October?

KEVIN RUDD: Well between now and the end of the year, as you've said, there will be further
modelling produced.

Remember, though, when we said this green paper would come out, its purpose has always been to
provide the design of the system.

How fast the system is then driven in terms of trajectories between now and 2050 with the carbon
target we have long term of 60 per cent reduction by 2050 against 2000 levels, that is to be
determined once we've got modelling.

ALI MOORE: But the modelling comes after the closure period of consultation. that's my question.
How does business give you the consultation when they don't know the modelling?

KEVIN RUDD: Well the first thing they've got is design features and that's critical.

Secondly, what we've indicated also, in the case of the large of that category of firms, some 1,000
across the economy, but as you know that's 1,000 over literally millions of firms out there who are
affected by these changes, they have provided to them through this green paper the design of a
system.

For those which are energy intensive or emissions intensive and trade exposed, we've already
indicated the thresholds of support we are likely to provide in terms of the possible free issue of
permits, now that's there.

But, you know, we've got to take it one step at a time. And can I say there'll be detailed
individual discussions. It's 1,000 businesses out there. We can have reasonable discussions with a
large number of them in the time we've set for ourselves.

But we have to get on with it. We can't keep pushing this off. The last mob did that for 12 years.

ALI MOORE: You say that...

KEVIN RUDD: 12 wasted years.

ALI MOORE: But given the modelling has been in fact delayed, hence we're getting it in October, and
the intention as you say is to start in 2010. Is it possible that will slip?

KEVIN RUDD: What we've said right along is our ambition remains unchanged. We believe it's
technically achievable in terms of the consultation process, the drafting process, and the
legislative process,

That will be very interesting to see where the Liberals stand on in the Senate. Are they going to
play blocking strategy or will they be constructive partners in the nation's long-term
environmental and economic future?

We believe this is deliverable, and as I've said consistently in previous interviews, including on
this program, we're very mindful of the implementation arrangements for these 1,000 businesses
who'll be affected.

They're large businesses, and they will be treated respectfully. But our ambition as I've said
before is 2010.

ALI MOORE: Prime Minister thankyou very much for joining us.

KEVIN RUDD: Thanks for having me on the program.