EMMA ALBERICI, PRESENTER: One of Tony Abbott's first acts in Government was to appoint Maurice Newman as the head of his Business Advisory Council. Mr Newman is the former Chairman of both the Stock Exchange and the ABC. He's our guest this evening and he joined me earlier in the studio for this exclusive interview.

Maurice Newman welcome to 'Lateline'.

MAURICE NEWMAN, CHAIRMAN, PM'S BUSINESS ADVISORY COUNCIL: Thanks Emma.

EMMA ALBERICI: Now, Clive Palmer thinks the $1.5 billion worth of money the Government has set aside to reduce greenhouse gas emissions is money better spent on the aged pension. What's your view?

MAURICE NEWMAN: Well, I don't quite know what he means by that. When he says it should be spent on the old age pension, does he mean we should increase the pension, that it should replace other money? I don't quite know what Mr Palmer is talking about frankly.

EMMA ALBERICI: It's no secret that you don't agree that man-made CO2 is causing global warming. Given there is now consensus among 97 per cent or so of climate scientists across the world that the view - around the view that human activity is responsible for climate change, what would it take to convince you?

MAURICE NEWMAN: We know first of all that the survey which came out with the 97 per cent number was flawed in the first place. So we don't pay any attention to that. What we do look at...

EMMA ALBERICI: There have been roughly three that have come up with that.

MAURICE NEWMAN: They all come up with flawed methodologies. So we don't pay any attention to that. We know that there are a whole host of scientists out there who have a different point of view, who are highly respected, reputable scientists. So the 97 per cent doesn't mean anything in any event because science is not a consensus issue. Science is whatever the science is and the fact remains there is no empirical evidence to show that man-made CO2, man-made emissions are adding to the temperature on earth. We haven't had any measurable increase in temperature on earth for the last 17.5 years. If you look back over history, there's no evidence that CO2 has driven the climate either. So I know that this is a view which is peddled consistently, but I think that the edifice which is the climate change establishment is now starting to look rather shaky because mother nature is not complying.

EMMA ALBERICI: I just want to take you up on that because it would appear that there is strong consensus, at least among - certainly when it comes to the IPCC, that is a group that has brought together under the auspices of the United Nations, the science around the world, it doesn't actually do science itself, it just collates all the science and puts it forward. Now 195 countries contribute to that. Nineteen academies of science across the world, including I have to say the Australian Bureau of Meteorology, the CSIRO, NASA, the American Academy of Sciences, the British equivalent, the Canadian equivalent, some really reputable bodies around the world are now agreeing that it's human activity that's causing climate change. So I'm wondering, who is it that's influencing you so that is so convincing you otherwise?

MAURICE NEWMAN: I just look at the evidence. There is no evidence. If people can show there is a correlation between increasing CO2 and global temperature, well then of course that's something which we would pay attention to. But when you look at the last 17.5 years where we've had a multitude of climate models, and this was the basis on which this whole so-called science rests, it's on models, computer models. And those models have been shown to be 98 per cent inaccurate.

EMMA ALBERICI: By?

MAURICE NEWMAN: By Roy Spencer, who's carried out a thorough review of all of the models and the empirical data which against both land-based and satellite-based measuring. And they were found to be wrong.

EMMA ALBERICI: He's one scientist, climate scientist.

MAURICE NEWMAN: It's not a question of being a scientist.

EMMA ALBERICI: But he is a climate scientist.

MAURICE NEWMAN: Yes he is a climate scientist.

EMMA ALBERICI: He is. He was at NASA. His colleagues at NASA disagree with him.

MAURICE NEWMAN: There's a study that came out from NASA in the last few weeks which says that the impact of CO2 on the upper atmosphere brings about a cloud and the result of that is a bit like our own body temperature moderating as a consequence of perspiring. So you get an albedo effect which reflects sunlight. If you want a correlation between global climate, don't look to CO2, look to the sun's activity, there will you find a very close correlation.

EMMA ALBERICI: What do you mean?

MAURICE NEWMAN: Well, if you look at the - if you go back in history, and you look at when the sun has been active and when the sun has been inactive, will you find the climate on earth responds accordingly. So we had the Maunder minimum we go back to medieval warm period, you will find they correspond very closely to what happens with the sun. There's very little correlation with CO2, in fact, if anything, which came out of Al Gore's Inconvenient Truth, there's a six to 800-year lag between CO2 and climate.

EMMA ALBERICI: I think the one thing we can agree on is that neither of us are scientists.

MAURICE NEWMAN: Correct.

EMMA ALBERICI: But I'm just going on people with great reputations around the world, including our own Chief Scientist, Greg Hunt, the Environment Minister, Tony Abbott, the Prime Minister. I mean, around the world, there seems to be consensus that it is a man-made phenomena.

MAURICE NEWMAN: But it isn't a question of consensus. It's a question of science. And I'm asking the question: where is the empirical evidence to show that increases in CO2 impact temperatures? And as I said, we look at the climate models, 98 per cent of them were wrong. In my old business, if I had financial advisers who were 98 per cent wrong I'd fire them. It's not a consensus thing. It's a question of what has the climate done? And we've had, since 1996, 17.5 years where the temperature has shown no measurable increase. In fact, it can be argued since 2003, it has cooled off somewhat. And yet CO2 has been going up about six or seven per cent. So what do we make of that? What do we make about the pause?

EMMA ALBERICI: That it's a pause. I guess that's what scientists say. It's a pause. They look back 800,000 years as I understand it, so 17 years in the scheme of things isn't an enormous amount of time.

MAURICE NEWMAN: I agree, but then you've got scientists, climate scientists now in Norway, in Germany, in Russia, in America, saying we're now going in for a period of 30 or 40 years of increasingly cool climate conditions.

EMMA ALBERICI: I'll only ask you one more questions on this because I do want to talk about other things, but both Marius Kloppers and his successor at BHP Billiton Andrew McKenzie agree that climate change is human induced. So what if those 97 per cent of climate scientists and all business people across the world, like the likes of Bill Gates and Richard Branson and the miners here in Australia, what if they're right and you and the scientists you quote are not right. Doesn't it make sense to have a policy that at least transitions Australia to cleaner fuel sources?

MAURICE NEWMAN: Emma, let's not confuse the issues. Cleaning the atmosphere, which is what carbon pollution is about, not CO2, CO2 is not a pollutant. But cleaning the atmosphere, being more efficient, all of that makes sense. That's got nothing to do with climate. That's to do with economics and being efficient.

But I would say to all of those people who are arguing that CO2 creates global warming and man is adding to the global warming to show the empirical evidence of where this is so. Because I'm saying to you that where this originates is from models. Computer models which are wrong. Now, if you can show me where there is some sort of correlation that proves beyond doubt that what we have is global warming as a consequence of CO2 and man's contribution to CO2 in the atmosphere, well then we can have a different conversation.

EMMA ALBERICI: I'm sure there will be scientists lining up to give you that information but we'll move on.

MAURICE NEWMAN: Well we'll look forward to seeing it.

EMMA ALBERICI: Let's talk about Asia. You accompanied the Prime Minister on his recent trip. Are you entirely comfortable with the decision to lower tariffs on Japanese cars and electronic goods in return for a 19.5 per cent tariff on frozen Australian beef or 23.5 per cent for fresh beef?

MAURICE NEWMAN: These sorts of agreements are like a box of chocolates. You never get all the things you want. But I think what we have done has been a triumph really, because we've been looking to get a free trade agreement with Japan for something like 20 years and while it is a long process to get to the end line, I think what it does do is to provide us with greater access to the Japanese markets. Greater access to the Korean markets. The effect that - the fact we can import Japanese cars more cheaply and I believe something like $1,500 a car less, means that all of those Australians who are likely to buy a Japanese car will have $1,500 in their pocket now which we wouldn't have had before, which they can spend on other things.

EMMA ALBERICI: The United States though through his trade negotiator Mike Froman and the American farm lobby has been less than impressed by Australia's agreement with Japan. They're concerned it undermines negotiation force the Trans-Pacific Partnership which involves Australia, US, Japan and nine other countries. What do you say to those who would say we settled on too little? We got too little out of the agreement?

MAURICE NEWMAN: Well I think you've got to ask the question, if we were to have postponed the agreement, what incremental additional benefit would we have received by having waited another year or two years? My sense is and I wasn't involved in the negotiations, but my sense is, probably very little.

EMMA ALBERICI: We're told the age of entitlement is over. Should that apply to the aged pension?

MAURICE NEWMAN: Well, there is no age of entitlement. I mean, everything that we receive has...

EMMA ALBERICI: I'm quoting the Treasurer.

MAURICE NEWMAN: I know you are. I mean, there is - there is no age of entitlement. You have to work for everything in life. If you aren't working for it and someone else is giving it to you, then it's the old no free lunch. So there should be no age of entitlement. Everybody should recognise that they have to make a contribution and that there are some people who are less fortunate than others that we do, as a compassionate society, try to help.

EMMA ALBERICI: When it comes to the aged pension, should the government be looking at things like eligibility in terms of including the family home in the asset test, increasing the - lifting the retirement age?

MAURICE NEWMAN: What we know Emma is that there is only so many dollars to go round. The Australian deficit has been growing rapidly over the last six years. It's continuing to grow. The amount of money that the Australian people are on the hook for, both at a Federal and State level is growing as we speak. So - in fact I think the last I saw from the OECD, Australia's growths trajectory in debt is faster than any other country. So we need to put some sort of limitations on this.

And while everybody may have an idea that they want some of this and some of that, it's not affordable. So we have to look at priorities. There are those who are desperately in need and we should consider what we do about them. For those, for example, there's a lot of commentary about the co-payments at the moment. It doesn't seem to me to be just that I should be receiving a completely free if I go to the doctor, that my consultation should be free. I should of course make some sort of contribution to that. So I think it's a question of where we are with middle class welfare, with corporate welfare and all these other things. Yes, there should be a basic safety net. And I don't think anybody disagrees with that. But my safety net and your safety net could be very different. And I think that's where the politics comes in as to where the trade-off should be.

EMMA ALBERICI: But if someone is sitting on a home worth a million dollars when they retire, should they be allowed to have the aged pension?

MAURICE NEWMAN: Well, I think it's a very good question. The view in favour of it is that well you've lived in the house for all of your life and therefore you should be allowed to live out the rest of your life in dignity in your own home. But if you haven't made provision that allows you to be able to do that, there is a question, should everybody else in the community support you? Because one of the other things we know Emma is that there is a gradually diminishing number of people who are working because more of us are becoming of an age where we're retiring. And so we can't have more and more people being supported by those in work, otherwise there will be fewer people in work.

EMMA ALBERICI: You've spoken previously about how important it is for Tony Abbott to keep his promises to the Australian public. Does that include the pledge not to cut Medicare Locals and funding to the ABC?

MAURICE NEWMAN: If the Prime Minister and the Government made a commitment as an election promise, then my understanding is the Prime Minister and the Government will keep those pledges. They believe in restoring trust to Government and even though I may disagree on occasions with the decision not to cut here or there, I respect the fact that decisions were taken prior to the election which they will hold to.

EMMA ALBERICI: You were the Chairman of the ABC for five years until the end of 2011. A valuable experience, I imagine, for the Abbott Government to draw on as it contemplates the future of the Australia Network contract, for example. A deal's just been struck with the Shanghai Media Group giving the Australia Network the most extensive access to Chinese audiences of any western broadcaster. How big a coup is that?

MAURICE NEWMAN: It's a significant step forward towards ultimate landing rights. The Shanghai Media Group is a very respected and substantial organisation within China which has got ambitions to expand outside of China as well. So it and CCTV seem to be vying for a significant - the premier position within China from a broadcasting point of view and the ABC or Australia Network should be congratulated I think in having achieved that outcome.

EMMA ALBERICI: What do you see as the role for the Australia Network and is it, as Tony Abbott suggested previously, supposed to be a kind of cheer squad for the Australian Government?

MAURICE NEWMAN: I don't know whether it's a cheer squad, but quite clearly the basis on which - Australia Network is what we call soft power. It's there to promote Australia in a positive light. The BBC carried out a survey when I was here which essentially said wherever the BBC is heard or seen, people who are the audience in whichever country it might be have a more positive view about the United Kingdom than where the BBC is not. I think that pretty much is what I would see as the Australia Network presence in whatever part of the world we happen to be or they happen to be broadcasting.

EMMA ALBERICI: So it is a positive for the country, for the Australia Network?

MAURICE NEWMAN: I think it's a positive. From a government point of view, they have to weigh up whether or not the money can be spent better elsewhere. I think it's a great tragedy for the ABC and for Australia Network that the whole basis on which the current contract has been awarded was so flawed in the process. And we don't need, we don't have time to go into all of that, but I think you know what I'm talking about, I'm sure the audience will know that this was a very flawed process and it wasn't the proper tender. Twice, it was won by another party, but was awarded to the ABC and I think this is sort of - left a bad taste in everybody's mouth and I think the Australia Network, for all the good work that it is doing and has done, is suffering the legacy of that flawed process.

EMMA ALBERICI: So you think it's damaged the entity?

MAURICE NEWMAN: I don't know whether it's damaged the entity. I think it's damaged the whole aura around the Australia Network product that I think if we hadn't had to put up with what went on as a consequence of that. My view was at the beginning when the discussions were first taking place with the then Prime Minister subsequently Foreign Minister, is that it should've been awarded to the ABC end of story, not put to tender. If you want to go to tender, you have to be prepared to accept that it may not go to the party that you want it to go to. Now I don't know who Mr Rudd wanted it to go to. But the party it went to wasn't the ABC. And then when prime minister Gillard and senator Conroy the minister intervened and awarded it to the ABC, you can't be surprised that it left a lot of people feeling very disenchanted.

EMMA ALBERICI: And we're really out of time but I just want a very quick answer. You once said that the ABC and SBS should merge, is that still your view?

MAURICE NEWMAN: Yes, it is.

EMMA ALBERICI: Nice quick answer. Thank you so much for your time this evening, Maurice Newman.

EMMA ALBERICI: A pleasure, thanks Emma.