Capital Hill: ETS and GST

15 July 2015


SUBJECT/S: Renewable energy, Climate change, Emissions trading, GST

MELISSA CLARKE: Now, Jim Chalmers is the Shadow Parliamentary Secretary to the Opposition Leader. He focusses on trade and investment and prior to entering Parliament worked for then-Treasurer Wayne Swan, where he witnessed the development of Labor’s various climate change policies close up, and he pays particular attention to tax policies, as we heard the Treasurer Joe Hockey talking about.  He joined me from his home state of Queensland a short time ago. Jim Chalmers, thanks for joining Capital Hill.


CLARKE: There’s a fair bit of detail in the News Ltd papers today about an internal working document that Labor has on emissions trading policies in the future. Who’s leaking?

CHALMERS: Look, I think when it comes to climate change, Melissa, Australians understand that it’s real and something needs to be done about it. We’ve had a really serious policy process in place to come up with the right policy for the economy and the right policy for the environment. The story in the News Ltd press today was a bit misleading and a bit wrong, but it is true to say that we have a discussion paper process and a lot of consultation and thinking going on on this issue, because we do want to have the right policy to take to the election.  And as we’ve been saying for some time, that will be focussed on renewable energy and also on an emissions trading scheme.

CLARKE: I do want to get to some of those details, but nonetheless Labor made quite a deal when there were leaks from Cabinet about policies that went on in the Government and this is a significant internal leak. Who’s responsible?

CHALMERS: Melissa, I don’t think you can compare a discussion paper which found its way into the Tele with some of the leaks out of the National Security Committee of the Commonwealth Government. I don’t think that’s really a fair comparison. I’m not too fussed about what finds its way into the Tele when it comes to our process of coming up with a climate change policy. I think that process that Mark Butler and Bill Shorten and others are involved in is a really good one because we do need a serious climate change policy based on renewable energy, based on emissions trading. And in the course of that discussion, if things find their way into the media, so be it.

CLARKE: If there is to be separate emissions trading systems for electricity producers, and perhaps a separate one for individuals or businesses, how will that work and how will you explain that to the public?

CHALMERS: As I said Melissa, these were questions raised in a discussion document to feed a policy development process. I don’t really think I can go through all of the ins and outs of the various options that people are discussing. We have been very clear for some time now – it will come as no surprise to anyone who follows our commitments and our comments in the area of climate change and renewable energy – we are trying to come up with the best possible emissions trading scheme. Mark Butler said that again this morning. That will be released well before an election, so that people can understand the ins and outs of that and how it will impact the environment, the economy and households.

CLARKE: Do you agree that this is a tricky one for Labor, that the public in the past has had to try and get its head around a CPRS, then an ETS or a carbon tax – depending on how you wanted to characterise it – now we’re going through direct action, and we’ll get a new Labor policy at some point – how do you cut through to the public with what your message is, given that background?

CHALMERS: It certainly has a long and colourful history as you alluded to, and the policy itself has a long history in terms of the Australian political debate. I’m confident that our policy will cut through when it is released because Australians understand, much better than Tony Abbott does, that climate change is real, that if we want to have  a first-rate, first-world economy, it needs to be a low-pollution economy, and by creating that low-pollution economy, we give ourselves the best chance of looking after our environment. I think most Australians agree with that sentiment and for that reason, the policy that we’ll release well in advance of an election will coincide with the aspirations and the views of the majority of the Australian people.

CLARKE: Now, you have an economics background, you’ve worked closely with then-Treasurer Wayne Swan before entering Parliament yourself. You’ve seen plenty of tax debates come back and forth. At the moment, we have the Treasurer Joe Hockey encouraging the states to make their own moves towards agreeing to an increase in the GST. Do you concede, as many economists say, that there should be either a broadening or an increase in the GST and that would be a more sustainable budgetary future, across all levels of government?

CHALMERS: I don’t agree with that, Melissa, for a very simple reason: if you increase the GST or you broaden its base, it disproportionately hurts those on middle and low incomes in our community. That’s why I don’t support increasing the GST or broadening it. But there are some important points about the Treasurer’s speech today that people need to understand. The first thing is that Tony Abbott promised 33 times before the last election that he wouldn’t touch the GST. Now the Treasurer – his Treasurer – is out there floating a change. The other important thing - and you mentioned the States in your question – the other important thing is the Government has cut $80 billion out of schools and hospital funding for the States, and they’ve got a paper out there from the Prime Minister’s own Department saying that we should consider vacating the field at a federal level from funding schools and hospitals entirely. And what they’re trying to do is create a big excuse – to put a lot of pressure on the States – to agree to a higher GST by giving them no alternative, by dramatically de-funding their schools and hospitals.

CLARKE: Isn’t there a strong theory behind though having a taxation more geared towards consumption, rather than on more productive elements when we’re talking about income or capital tax. Isn’t that something that there is consensus that that makes for a more sustainable budget for governments?

CHALMERS:  I’ve heard those arguments before, Melissa, as you would expect. I think the best way to improve the Budget bottom-line when it comes to revenue is to first look at some of those concessions at the high end in the superannuation system, and Chris Bowen and Andrew Leigh and Bill Shorten have a well-considered policy out there on that issue. The other thing is when it comes to multinational tax avoidance – and again we have a policy that’s been carefully consulted on, that’s been carefully considered and announced well in advance of an election. So the Australian people have a choice between, on our side, fixing some of those high-end tax concessions in the superannuation system and making multinational companies pay their fair share – that’s the Labor view of tax reform – or if they want a higher and broader GST, that’s the Joe Hockey and Tony Abbott view of tax reform. That’s the choice, and that will be the choice at the election as well.

CLARKE: Alright, we’ll have to leave it there. Jim Chalmers, thanks very much for talking with us today.

CHALMERS: Thanks Melissa.