GST, Energy policy including NEG and Tony Abbott re the Paris Accord, Senator Leyonhjelm’s comments to Senator Hanson-Young.

July 07, 2018






SUBJECT: GST, Energy policy including NEG and Tony Abbott re the Paris Accord, Senator Leyonhjelm’s comments to Senator Hanson-Young.

JOHANNA NICHOLSON, PRESENTER: Earlier this week, the Turnbull Government announced a major redistribution of the carve-up of the GST revenue. Western Australia and Victoria are the biggest winners, but the Northern Territory and Queensland will see their return fall.

ANDREW GEOGHEGAN, PRESENTER: But Western Australian Treasurer, Ben Wyatt, is unhappy with the result, pointing out the state consistently receives less than half of its population share of the GST. To get more on this and other political news, we're talking with Liberal MP Craig Kelly and Labor MP Pat Conroy. Welcome to both of you.  We've just had that story on the by-elections. We're three weeks out. Craig, how are you feeling, given the government is always obviously the underdog in a by-election. How are you rating your chances now?


CRAIG KELLY: Oh, look it is very tough. A government actually hasn't won a by-election off an opposition in something like 100 years. The fact we're even in with a chance is actually quite amazing.

NICHOLSON: Pat, how's Labor feeling?

PAT CONROY: I think Justine Keay in Braddon and Susan Lamb in Longman are doing great work, along with Josh and Pat in the West. It will be tough going but I would hope we hold all four seats.

GEOGHEGAN: You said "hope", "tough". You obviously are concerned particularly in Longman?

CONROY: I've spoken to people campaigning there and they're optimistic that people are responding to our policies but it's a mug's game to predict the results. But I'm hoping, and expecting, that we will hold all four seats. We have great candidates in Justine and Susan who deserve to be supported.


NICHOLSON: Alright Craig, lets get on to the GST.  In this new carve-up, the government has pledged $7 billion extra into the system. Where is that money coming from?

KELLY: Look, I think when we talk about the GST one thing we've got to get away from, this argument about who is getting something from one state and one state taking off another state. The first thing we've got to do is make sure we are growing the pie, and that's in growing the pot. If we keep the economy growing, if the economy keeps firing, if we keep the job creation growing, we keep investment in the industry, that will make the overall pot of the GST revenue bigger and everyone will be able to get more. But also too, What we've seen in Western Australia, where their numbers went down to 30 cents and 40 cents in the dollar because they had a lot of revenue coming in from the mining tax, I think the changes that we made need to be changed. Because the current system really is not quite fair to that State.

NICHOLSON: Where is that $7 billion coming from?

KELLY: There are plenty of other areas where we can get that money from. This is what you have to get away from, saying it is coming from one area to another area. This is the problem we have had with the GST and why the debate has been so fraught for so many years.

GEOGHEGAN: I think Pat is going to take issue with that.

CONROY: I am unsurprisingly. What we saw from Craig was just a really poor defence for what is an ad hoc arrangement. I'd make a couple of points. First,  Craig and the Liberal Party haven't said where they'll find this $7 billion to fund this top-up. They have got to be very clear about how they're doing it. They're funding $7 billion when they're cutting $17 billion from schools for example. And secondly, they're a year late. We guaranteed last year, that every state would receive 70% of their GST as a floor. So that is one good thing that the Government is coming to...

GEOGHEGAN: You don't have a problem with the carve-up as it stands now then; what they're proposing?

CONROY: No, we haven't seen the all the details and quite frankly, how they will pay for it. Are there any nasties in the detail? Are they going to cut funds further from schools or hospitals to provide this $7 billion? We announced last year that we would guarantee a 70% floor of GST revenue for states like WA who are feeling hard done by this process. It is good to see the government is coming late to the party. But they need to substantiate how they're going to fund it. What's the long term system going forward, because what they are advocating is just an ad hoc top up over the next few years that will be at the whim of the treasurer of the day so who knows what Scott Morrison will is going to do next year if the situation changes.

GEOGHEGAN: Alright, let's move to energy and the NEG and Craig specifically, let me ask you about Tony Abbott, his comments during the week, the
Paris accord. He signed up to this four years ago. He's saying that's a mistake?

KELLY: One of the conditions at sign-up and actually the wording is in the Paris agreement, it says "a Paris agreement applicable to all." That was the precondition what we signed up upon. Now, the Paris agreement is no longer applicable to all. The USA, the world's largest economy, is no longer in the Paris agreement. China, the largest emitter of CO2 is actually doing nothing until 2030. So it's very hard to argue that condition precedent that it's applicable to all still applies.


GEOGHEGAN: But hang on, is your argument then, like Tony Abbot’s, saying if they are not doing it then why should we? Isn't there a moral responsibility as well as economics and environmental of course, that you should stick to the accord?


KELLY: What does the Paris agreement actually achieve? We can do the maths. We can do the sums and it's 0.05, one-20th of one degree by the year 2100. That's what the Paris Agreement achieves. All those cuts that every single nation if they stick with through to 2030 we save 1-20th of one degree.

GEOGHEGAN: So they shouldn't have signed up to it to begin with? Tony Abbott has made a mistake?

KELLY: No, what's been signed up to is a Paris agreement applicable to all which it is no longer - applicable to all. And we also need to, if that's the case, the problem that we now have, lets take agriculture, we have to make large cuts in our agriculture sector if agriculture is going to do it's fair share. Now the problem we've got, if we reduce our herd sizes, all that means  If we reduce herd sizes, all that means is herd sizes will pick up in USA and places like South America to supply China. There is no point having cuts in Australia if those cuts are just going to be transferred from Australia and that production goes to other countries.

GEOGHEGAN: Well it is not just about that of course but it's also about perhaps building a new coal-fired Power Station but we will get that in a moment. Pat?

CONROY: I have to respond. Craig is absolutely factually incorrect. For example, the US is still party to the Paris accord. They can't pull out until the day after the next US Presidential election in 2020 so who knows who will be President then. Secondly, China has committed to having their emissions peak by 2030. Their emissions have flatlined right now  so most people think they will actually achieve their target well below that. The truth is only two countries didn't make commitments under the Paris accord. Syria and Nicaragua. And as the highest emitter of emissions in the developed world on a per capita basis, we need to make that commitment. So what we are seeing from Craig and Tony Abbott is crab-walking away from a commitment. They made it, willingly and knowingly what it would result in. Even so, their targets are inadequate so we shouldn't be talking about walking away from the Paris treaty, we should be ramping up our commitment to meet what the rest of the world is doing in reducing emissions and it's not 0.000.

KELLY: How much temperature does it change?

CONROY: The Paris Accord is to restrict global warming to 1.5 degrees above pre-industrial levels. That's a really important commitment if we are actually to achieve a sustainable planet and give our grandkids something they can actually enjoy.

NICHOLSON: Okay, Craig, I want to ask your opinion on the Nationals push for government owned and funded coal fired power stations. Obviously Tony Abbott has shown his support for that. Is that disunity between the National Party; Tony Abbott has got his point of view and then Josh Frydenberg is still having to talk to the states. How counterintuitive is that for this disunity?


KELLY: Firstly, it's important that we shouldn't see debate and discussion on this issue as disunity. It is open debate and discussions and throwing ideas on the table. That's the way to get the best policy for the nation. Now one of the great issues we've got when it comes to a coal fired power station, we have places like Liddell,  that even if we could keep it open for a few years, it will eventually close. We've lost the production for Hazelwood power station. We have lost production from the Northern Power Station in South Australia. What will that be replaced with? Now, we've got hundreds of these coal-fired power stations being built all around the world. The simple reason we are not getting it built here in Australia is the political risk. The market is not worth it.

GEOGHEGAN: So you are advocating funding new coal-fired power stations?


KELLY: Not at all. I think what we need to do is we need to have set as part of the NEG to ensure we get the cheapest, dispatchable baseload power into the market.

When you look at that, at the moment, that's coal. It will be for a number of years going forward. The reason that investment is not going to occur in a normal market is because of the political risk. There's a fear of investors in the coal-fired power stations that a Labor-Greens Government will pull the rug out from underneath them.

GEOGHEGAN: Should the government be subsidising existing power stations or power stations such as Liddell that are closing down?

KELLY: It is not a matter of subsidising. The subsidies that we have at the moment go to renewables. $3.6 billion this year and the cost of those subsidies go on top of your electricity bill. Having a structure where you make sure you direct the investment into a coal-fired power station is not subsidising it. It is a completely different kettle of fish.

CONROY: Craig's policy there is a recipe for higher power prices. We have to replace coal-fired power stations that are about to close down because they're very old. But the cheapest new form of power is renewable energy backed
up by gas and pumped hydro. That's what industry is saying is the cheapest. Kerry Schott, the Government’s own head of the Energy Security Board, the Energy Council, Origin, AGL and Energy Australia have all said that new coal cannot compete against renewable energy backed up by gas that makes it reliable. That's why the National Party is talking about spending $5 billion because the commercial sector says it's not economical. That $5 billion will either be tacked onto people's power bills or come out of taxpayers' funds, which means higher taxes, which is bad news from a policy point of view and it halts the transition to renewable energy.

KELLY: If Pat is right, let's drop the subsidies today. Let’s go back to Parliament

CONROY: And they end in 2020. The target peaks then. Subsidies have done a great job.

They end in 2030. That's billions of dollars going onto the price of electricity for consumers.

Your government's own review found that the Renewable Energy Target actually reduces power prices


KELLY: Oh Pat, prices are through the roof. Don't tell consumers electricity prices are going down. They won't believe you.

NICHOLSON: We're not going to find agreement so let's move on to another topic this week. Of course we had Senator Sarah Hanson-Young and Senator David Leyonhjelm back and forth with various comments this week. Would these comments from Senator David Leyonhjelm be tolerated in the normal workplace, Craig, and shouldn't it be the other way round where we have leaders leading the society, not the society leading the leaders?

KELLY: Look, I agree. The comments were over-the-top They were not what should be acceptable as parliamentary standard.

GEOGHEGAN: Should he apologise?

KELLY: I think he should. Pat and myself, we can argue here and we'll argue as aggressively and as hard and as passionately on issues that we believe in but when we go to the personal, we overstep the mark and that's what we have to make sure, as politicians that we set a standard in the community.

CONROY: I absolutely agree with Craig. Senator Leyonhjelm should apologise. Unfortunately he has got exactly what he wanted which is two weeks of the media and people like us talking about it.


GEOGHEGAN: Was that a deliberate ploy on his part?

CONROY: Absolutely. This guy is one of the most cynical politicians out there. He runs in a micro party that no-one knows about. He knows the only way he gets elected again, given he was an accidental senator in the first place, is getting attention.

NICHOLSON: What's the answer then? Do we ignore these comments and not report on them?

CONROY: It's a really hard balance and I'm not criticising the media, you have got an obligation to report on the political affairs of the country. But I just think we need to reflect on how do we handle this in future? Whether we say initially, he has done the wrong thing, leave it to the parliamentary process when we come back in August to either make him apologise or condemn him and sanction him in Parliament which is what I think the Senate should do. I just think we should reflect that over the last two weeks we've been rewarding his bad behaviour by talking about it and unfortunately there is a very small group of people out there that support his outdated and misogynistic attitudes and that may increase his vote.

GEOGHEGAN: Is Senator Sarah Hanson-Young right in proceeding down the legal path?

CONROY: It's entirely her call. I'm not going to tell her what she should or shouldn't do there. She is exercising her rights and that is entirely up to her. She shouldn't have to stand for what was said and she is using avenues to seek a change. I think he should just apologise and he should reflect on his behaviour. You are absolutely right in your earlier comments. We have an obligation to set an example for the rest of the country and people are jack of Parliament looking like schoolyard kids hurling abuse. I've had school classes coming through where the behaviour of Year 6 is better than Parliament.

NICHOLSON: Is this common behaviour, Craig Kelly? Is there a cultural problem here?

KELLY: I don't think so. We'll play it hard amongst each other, but there's a certain line that you cross when you start going into the personal. I think that's the line that the good senator has crossed, that he needs to have a look at where he actually went.

NICHOLSON: But this isn't certainly the first time that this personal debate has come up?

KELLY: Unfortunately, in the heat of debate, some people go to the personal and I think that's a sign of the weakness of your point. When you have to go down and attack someone personally, that's the first sign you're losing the debate.

CONROY: Or bring their family into it, which has occurred during question time a bit, and I condemn it on both sides when people bring family into it because that should be separate.

GEOGHEGAN: Thanks very much, gentlemen.