Sky News Australian Agenda Nick Greiner 1 July 2012

Interview with Nick Greiner, former New South Wales Premier Australian Agenda program, 1 July 2012 Peter van Onselen: We've been talking to serving politicians getting spun to all day, but we're now going to speak to a former politician in the shape of former NSW Premier Nick Greiner. Let's see if we can get more candid responses. Nice to have you on the program. Nick Greiner: Ill do my best, Peter. Thank you. Peter van Onselen: Let me just ask you about the big issue of the day - it will no doubt be the key issue, I suspect, in the lead-up to the election - and that is carbon pricing, or carbon taxing, depending on what you want to call it. What's your view on the issue broadly? Nick Greiner: Well, my personal view is that yes, of course, there will be some pricing of carbon at some point in time, it's happening around the world, but in a very different timing and at a very different level. I was in Europe at the EU a month ago. The EU Energy Commission has said their ETS, their emission trading system, was what he called a non-functioning instrument. In other words, it wasn't working. He said that if Germany, which is the largest European economy, went to zero emissions now, it would take China only 18 months to offset that with the increase in their emissions. So the reality is I think, objectively, not being part of the political scene, the timing is crazy, the price is crazy, and so to do it at this point with a fragile world and a fragile Australian economy I think is a really
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stupid, objectively stupid, policy and I think its political ramifications will flow from that and they'll essentially be around electricity. You can see Greg Hunt in your show switching to electricity pricing, which is where there is a four square direct impact on everyone. So I think timing and price are pretty bad. Paul Kelly: Well, given that our price is $23 a tonne, far ahead of comparable prices in the rest of the world Nick Greiner: Yes, theyre around 6 or eight Euros - $9, $10. Paul Kelly: Sure. Well, what do you think will be the impact on the Australian economy? How damaging will this be? Nick Greiner: Oh, look, I think both sides are clearly overstating it. I mean, they're egging it, as one of your panellists said. It will have a negative impact on certain industries, especially those industries where there's a direct energy usage, but the reality is the environmental impact I think will be sweet nothing for a very long time, so we're just kidding ourselves about that, and the economic impact will be negative, but it won't be as negative as the political rhetoric suggests. I think that's probably right. Matthew Franklin: And Mr Greiner, this idea of the environmental impact, I think that's really interesting, because only a few short years ago people were really keen on the idea of doing something about climate change for environmental impact, but I get the impression that that debate has shifted pretty significantly, with people realising if the world doesn't move, what difference does it make? Nick Greiner: Exactly. Europe has had their ETS, which is roughly the policy that Rudd had - they've had that for 10 years. Its made very marginal
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impact. I think there's a feel-good factor. Those who've got the religion like the fact that it exists, but the environmental impact on the world has been sweet nothing. Paul Kelly: Well, if we look at China and America, the big players, what's your assessment about where the debate is about the degree of progress we see in China and America? Nick Greiner: Oh, Paul, there is some rhetoric in China, but the sheer size and the practical situation is that they are doing some things at the margin, but net/net they're continuing to be a contributor, a very large positive contributor, to global emissions. And in the United States even a centre left Government, the Obama Government, has basically given this away. This won't be an issue, I suspect, in the presidential election. It's non-happening. So China and America are 45% of the world's emissions, and if they don't do anything, the notion that we're going to go way out there with the world's highest price really beggars belief in some ways. Paul Kelly: So do you think we've been conned? Nick Greiner: Oh, look, I think people have got religion, to use that line again. People felt very emotional about it - clearly the Greens do, clearly other people perhaps do about their children's children and are we prejudicing the nature of the planet in 30, 40, 50 years? So I don't know that it's a con. There is clearly an issue about carbon. It's a question of Peter van Onselen: But is it a con about whether you can do something about it, I guess? Nick Greiner: Yes, well, how quickly, what is the right timing and how you do it - I think its a very, very long-term insurance policy and you don't pay premiums if they're ridiculous. If you want to insure something, you
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see can I get it insured and what is the price? I suspect the Australian people, and the polls show that, will have reached a sensible conclusion that the premium they're being asked to pay now in their quarterly or half-yearly electricity bills is way higher than they want to pay for some possible long, long-term benefit in environment. Paul Kelly: Now, you're talking to Australian business all the time. What's your assessment of the view of the business community towards this carbon proposal, towards this carbon scheme? Nick Greiner: Oh, Paul, it clearly varies, I think the evidence is it varies. But I think everyone agrees that given the fragile nature of the economy and it is fragile in every sector. I mean, even in the resources sector, terms of trade have come off, you can see investment decisions being questioned by the big players, so people can see that the world and Australia is not in a strong, solid position, despite some of the rhetoric. So I think everyone thinks the timing is really dubious. They would like certainty, of course they would, but I don't think I've seen anyone who thinks that Labor's existing or Labor/Green policy is good economic policy for Australia on July 1 2012. I don't think anyone thinks that's the case. Peter van Onselen: Mr Greiner, can I ask you to put a different hat on, the GST hat, youve had a role in all of this now. States like Western Australia Nick Greiner: I still am, sadly.

Peter van Onselen: Well, they are livid about the loss of GST in terms of the carve-up. What's the solution to this? Nick Greiner: Well, I guess John Brumby and I and Bruce in October, Peter. But it is substantive change to the GST poisoned chalice. I can't pre-empt what the committee that Carter are going to bring down a report - given that we're not allowed to make itself, it's a zero sum game, it's a

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The reality about WA is, yes, because of the strength of their own revenues, essentially mining related, their share of GST is coming down. Our view - and we said this in our interim report - is that the notion of giving them a floor, which can only mean transferring money from all the other states, which are weaker, to Western Australia, which is stronger, really doesn't have any economic logic to it. WA used to get a very good deal about 10 years ago, and through history has had a very good deal. At the moment it might say, understandably, it's getting a bad deal, its GST is heading down below 50 cents in the dollar, but I think it's pretty clear from our interim report we're not going to recommend a floor for WA. Peter van Onselen: But they would argue that they're getting penalised in terms of GST take courtesy of being prepared to invest in other sectors of their economy, whereas a state like Tasmania, for example, by not making those investments, is reaping the benefit through the GST cover. Nick Greiner: Sure, yes. Look, I think there's some truth in that, but youve got to remember this is a federation, and the essential premise of the federation is that you do redistribute a bit. It's not a hell of lot, its about $4 billion, but you do redistribute to get equality of capacity, so that Tasmania can by and large have the same quality of service as at the moment WA. So if you don't buy the equalisation, then you are really challenging the whole federal concept, and our terms of reference tell us, and I think it's realistic - they say, you know, the federation is there to stay and so horizontal fiscal equalisation, which is the jargon, is here to stay. We're not asked to throw that principle out; we're asked to see can it be done better. And that really puts us in a situation where we're probably going to have to improve around the edges because a radical change would be very difficult to implement. Paul Kelly: As a long-standing member of the Liberal Party, what's your view of Tony Abbott's decision that there won't be a conscience vote extended to Liberals on the question of same-sex marriage? Nick Greiner:

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Well, that's a quick switch from GST distribution. Oh, I'm appalled by it. I mean, the Liberal Party I've been a member of for 40 years is essentially the party of individual freedom, it's the party that believes in conscience votes. Normally the Labor Party doesn't, or is much more reluctant. I think this is actually a solidly conservative cause, which is why people like David Cameron, conservative Prime Minister, support it. I have to say I have a family member, a daughter, who's in a gay marriage, or a gay relationship, so I could be said to have a bias. But no, look, I think the notion of not giving people a conscience vote on what is quintessentially a conscience vote issue is just bizarre. Peter van Onselen: His argument is that they went to the last election with a commitment, so therefore he wants to honour that. Nick Greiner: Okay, I hear that. I think it's drawing a long bow. It wasn't an issue at the last election. But if that's your point of view, okay, then you could have a policy for the next election that says we're going to allow a conscience vote if the other parties have a conscience vote. I mean, if this is not a conscience vote issue, then there has never been a conscience vote issue. So, look, I think that's searching for a politically pragmatic excuse. Paul Kelly: Where do you think the Liberal rank and file is on this question of the conscience vote? Do you think that Tony Abbott's position as leader is inconsistent with the sentiment of the rank and file? Nick Greiner: I'm not sure of that, Paul. It may not be. I think the Liberal Party rank and file is probably more conservative than the centre of the Australian community overall. To put it another way, I think this is an issue where overall community sentiment is clearly running ahead, clearly running ahead of the politicians. You've got Julia Gillard I wont describe her background and her DNA, but youve got Julia Gillard taking a conservative position on this, Tony Abbott, who probably naturally has a conservative position on it as well.

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I think the community, regardless of its politics, is clearly running ahead of them. This has happened around the world now in most firstworld countries, and the polling here indicates that most Australians think that if people want to make a commitment, then the state should bless - bad choice of words, perhaps the state should bless that desire. It doesn't mean that churches have to change their behaviour at all. It simply means that people wanting to enter a committed relationship, whatever their gender, should be able to do so. Peter van Onselen: Mr Greiner, we're almost out of time, but I described you as the infrastructure tsar of New South Wales. Nick Greiner: Yes. Peter van Onselen: It has been put elsewhere. Are you enjoying the role? done in NSW in terms of infrastructure delivery? Nick Greiner: I'm finding it interesting; I'm not sure enjoyable is always the word. Look, at the end of the day, this is about funding. It's not going to be that hard to in September come out with a strategy and a priority as to what projects really make sense economically for the people of New South Wales. The problem is State budgets are in very poor condition, state balance sheets are in poor condition. That's not going to change, despite the efforts of various treasurers - Mr Baird and Mr Nicholls, and others. So it is a funding issue, and the Commonwealth doesn't have enough money. I noticed Mr Abbott's commitments. That's useful, but it's only marginal for these projects. So you either have to have user pays of some sort or you have to sell assets, and both of those seem to be politically a bit difficult. So the community has to choose. If they want more infrastructure and better infrastructure, you've got to fund it somehow, and that is where the tension essentially lies. Peter van Onselen: What has to be

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All right. Nick Greiner, we are out of time, but we do appreciate you joining us on this episode of Australian Agenda. Great to have you on board. Nick Greiner: Its a pleasure, Peter.

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