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ABC Triple J Hack program, Interview with Tom Tilley

Tuesday, 15 July 2014

Topics: The Deadly Awards, Vibe Australia, Carbon tax


TOM TILLEY: [introduction]

ALAN TUDGE: G’Day Tom, great to be with you.

TOM TILLEY: Alan, why was Vibe Australia’s funding cut?

ALAN TUDGE: Tough decisions have to be made sometimes in government, particularly when the budget is in significant deficit and the forecasts are for deficits as far as the eye can see. In relation to Indigenous expenditure, we’re spending $4.8 billion over the next four years [inaudible] we’ve tried to reorient the funding towards the frontline services, particularly to school attendance, to education and to getting adults into work. When you look at some of the facts and figures, particularly in the remote areas, only about 25 per cent of kids are attending at a rate which means they can learn as well as other kids. Fewer than one in five young adults are in training or work so there are real issues there. We want to invest in those areas.

TOM TILLEY: Are you saying Indigenous Australians don’t need the Deadlys?

ALAN TUDGE: No I’m not saying that. I’m just saying that some difficult decisions had to be made. There was an independent evaluation done and following that independent evaluation some decisions were made. There was still a further million dollars of funding for the Vibe business between now and the end of the year. It also has a lot of corporate funding and I’m hoping through that corporate funding and other sources it could still continue to hold the Deadly awards.

TOM TILLEY: A lot of people are but with that much funding gone it’s going to be extremely difficult. They’ve said last night that it certainly won’t be going ahead at this point. Alan, have you ever been to the Deadlys or watched it on TV? Do you know what we’re missing out on?

ALAN TUDGE: I haven’t been to them, but I have seen them on TV. I know it is watched by many and many people do attend it. It consequently does attract significant corporate support as well, and it has been generously funded by government in the past. But there was an evaluation done by KPMG of the organisation, and as I said there was still a million dollars on the table to continue the work at least until the end of this year.

TOM TILLEY: Given those budget cuts you mentioned and the redistribution to frontline services which totalled half a billion dollars in the budget, and combine it with the end of the Deadlys because of this funding cut, how do you think your Prime Minister is going on his pledge to be the Prime Minister for Aboriginal Affairs?

ALAN TUDGE: I think that if closing the gap was all about dollars we would have closed the gap years ago. We’ve had an 80 per cent increase in funding for indigenous issues over the past ten years. We now spend about $44,000 per aboriginal person on trying to close the gap. Money is not the only thing that is important but it’s not the only thing. Indeed, over time we’ve had hundreds of programs developed to the extent that now there’s almost one program for every five individuals in some remote communities. And yet, we’re still not making progress.

Our approach is to amalgamate many of these programs and focus on two or three core areas. They are getting kids to school, getting the adults into work, and ensuring there is community safety. Because if kids are in school and adults are working or doing something constructive, then other things tend to take care of themselves.

TOM TILLEY: Someone has texted, Eliza from Sydney, saying ‘the best way to get Indigenous kids into school and work is to give them inspirational role models. The Deadly awards provided the perfect platform for this.’

ALAN TUDGE: There’s a lot of different research as to what works and what doesn’t in relation to getting kids to school.

TOM TILLEY: Are role models one of the things that help?

ALAN TUDGE: Yes, role models can help and there are some former Origin greats who go around, and there are AFL players who assist in that area. At the end of the day, it also takes some parental responsibility. We’ve funded truancy officers which are local people, on the ground in some of the remote communities, to literally go around and support the parents to get their kids to school. Already that’s having an impact, about a nine percentage point impact on school attendance. We want to look at other ways because at the end of the day Tom, if kids aren’t at school they’re not going to be learning, and if they’re not learning at school it’s going to be so difficult for them to get work afterwards.

TOM TILLEY: Alan I do want to leave that topic there. It’s a pretty heavy one, but stay with us because it’s time to talk about what should be a champagne moment for your government – the repeal of the carbon tax. We’re going to find out how many bottles of champagne our audience can afford through the savings it may bring.

[Tom plays carbon tax repeal story]

TOM TILLEY: Talking here about the hip pocket savings from the axing of the carbon tax. We’ve heard from Woolworths that they won’t be dropping their prices so will it only be coming from our energy bills?

ALAN TUDGE: The treasury estimate that each household will be about $550 better off as a result of scrapping the carbon tax which should occur over the next 48 hours. A significant component of that will be from lower electricity prices. In some states, those prices are regulated and the regulators have already said those prices will come down by about 9 per cent. 9 per cent in NSW, eleven per cent in the ACT, eight and a half per cent in Queensland.

TOM TILLEY: Will there be savings from any other part of our weekly budgets?

ALAN TUDGE: Electricity, as you know, flows through to all aspects of the economy. Every business uses electricity to some extent, particularly manufacturing businesses where electricity is a very large import cost. When you reduce electricity prices, it flows through into the economy. Overall, as I said, the independent treasury, they estimate that the average household will be about $550 better off each year.

TOM TILLEY: It’s interesting to think about those flow on costs because if there were significant flow on costs for businesses like Woolworths, wouldn’t they be talking about passing them on?

ALAN TUDGE: There’s (inaudible) of businesses that will have to pass on lower costs. We’re boosting the powers of the ACCC and we’re ensuring there are pretty significant penalties for businesses that don’t pass on cost savings from a lower carbon tax bill.

TOM TILLEY: Just to get this clear, you’re talking about energy providers there. You’re not talking about other companies that may or may not pass on the savings in their energy bills.

ALAN TUDGE: There are all sorts of companies that are hit directly by the carbon tax. Energy companies are obviously one of them, but there are other companies as well. Refrigerant has a very high carbon tax component on it causing those refrigerant gasses to go up multiple fold in some instances.

TOM TILLEY: Will they be penalised for not passing on their savings?

ALAN TUDGE: Absolutely. That is in the legislation. The ACCC has powers to ensure that carbon tax costs, when they are removed, are passed on to consumers.

TOM TILLEY: Also joining us in the studio right now is Richard Denniss. He’s an economist and the Executive Director of the Australia Institute. Richard, thank you for joining us.

RICHARD DENNISS: Good afternoon.

TOM TILLEY: Richard, I know you disagree with some of the points the government has been making about the axing of the carbon tax and how it will flow on into our pockets. Do you agree with Alan that we’ll see flow on effects to all kinds of businesses from them having cheaper electricity bills?

RICHARD DENNISS: I don’t disagree that there will be flow on effects, I just think the government is going to spend two years backing away from the incredible scare campaign that it’s run for the last three. If anyone out there thinks their ice blocks are about to get a lot cheaper because it’s going to be cheaper to run the fridge, I think they’re going to be sadly disappointed. Yes, it’s true that treasury modelling showed that prices would go up by around $550, but that modelling was done before the carbon price came in. The fact is that modelling was quite conservative. We’ve heard Coles and Woolworths and Qantas and a whole bunch of people say we didn’t put our prices up, therefore we’re not going to take them off. Either they’re lying, in which case the government is going to have to take them head on, or they’re telling the truth in which case the government has got to come clean with the public and say we scared the bejesus out of you for a couple of years. But the fact is, the exchange rate moving around in the last couple of years has had a much bigger impact on our cost of living than the carbon price ever did.

TOM TILLEY: Alan Tudge, what do you say to that, there was Whyalla wipeout and unfortunately Craig Emerson brought that to us in a bit of a painful rendition of the old Skyhooks song. But has there been scaremongering? Did you guys go too far?

ALAN TUDGE: We’re actually referring to a union leader who said that Whyalla was going to be wiped off the map as a result of the carbon pricing. In relation to the aluminium industry, it’s been very significantly hit because it’s the biggest user of electricity in the country. Under the treasury forecast, the aluminium industry was going to decline by, from memory, fifty per cent simply because of the carbon tax. That’s not just because of where the tax is today, but under the forecast, Labor had forecast for the carbon tax to rise from what is $25 today up to $38 in 2020 and all the way up to $350 by 2050. They are the official treasury forecasts.

TOM TILLEY: We now know the carbon price was going to be moved to a floating price next July which means the carbon price was actually going to come down and these savings were going to get even smaller.

RICHARD DENNISS: Let’s be really clear. The carbon price was about to fall from $25 or so to $5 or so. If the best the government can do is pull out some forecasts that treasury made a few years ago I think they’re in real trouble.

ALAN TUDGE: These were last August, these forecasts.

RICHARD DENNISS: The aluminium industry has suffered far more from movements in the exchange rate than it has from electricity prices. Because lying to shareholders is different to lying to the public, when the aluminium industry shut down their factories they made quite clear the reason they did that was the exchange rate. The government gave 94.5 per cent of the permits they needed away for free. Let’s be really clear. The big polluters got 94.5 per cent of their permits for free. To suggest the carbon price is a major impact on their competitiveness is the sort of story the governments going to struggle to tell for the next couple of years.

TOM TILLEY: Time will tell and unfortunately we’re running out of that right now. Alan Tudge, I know you would like to jump in. We are out of time. I want to thank you both so much for joining us.

ALAN TUDGE: Thanks so much Tom.