TONY JONES, PRESENTER: Here is our guest, the Climate Change Minister and former ACTU secretary Greg Combet.

He joined us a short time ago from Melbourne.

Greg Combet, thanks for being there.

GREG COMBET, CLIMATE CHANGE MINISTER: Pleasure, Tony.

TONY JONES: Now why is the Government mounting a legal challenge against James Ashby's case?

GREG COMBET: Well, first of all, I'm not an authority on all that may have occurred in the court today, but as I understand it, Mr Ashby's brought a claim against the Australian Government as well as a claim against Mr Slipper and that's why the Australian Government solicitor would be in the proceedings, but I don't know the details of those matters, but the Australian Government is not representing Mr Slipper in the proceedings.

TONY JONES: Very specifically not, is that what you're saying?

GREG COMBET: Well that's my understanding, yes, but there's a separate claim that apparently Mr Ashby's brought against the Commonwealth as well.

TONY JONES: There may be legitimate legal arrangements over the way Mr Ashby has conducted himself in this, but what about the perception? Isn't this going to look like the weight of the Commonwealth is coming down on one man, the one who's making the allegations?

GREG COMBET: Well I don't know that I'm a commentator about it and I don't think it's a very appropriate thing to be commenting on a case that's before the courts, but ...

TONY JONES: There's no jury involved in this matter, so I don't think ...

GREG COMBET: Yeah, but as I - but nonetheless, it's a matter that the courts have to consider. I don't know the detail of it. I haven't read any of the documents, I don't know anything about it. I wasn't in the court today.

There's not much I can offer in terms of insight into it other than the fact that as I understand it Mr Ashby's brought some sort of claim against the Commonwealth Government as well and that's why the Government solicitor is there and I would imagine that the Government solicitor is suggesting that the case brought against the Commonwealth is not a very strong one.

TONY JONES: The problem is once again the Opposition has a very simple message. Tony Abbott says all that matters is a) did the Speaker sexually harass his staffer and b) has he misused his entitlements? Now the Government's got to make the case that it's defending itself against Ashby and that Ashby acted inappropriately.

GREG COMBET: Well I don't know what else I can offer about it. If a case is brought against the Commonwealth, the Australian Government solicitor has to represent the Commonwealth in the court and do so in a professional manner. But there's nothing much I can say about the matters before the court, I'm afraid.

TONY JONES: Are you worried that if you raise questions about James Ashby and talk about them, you could end up being charged with breaching his civil rights like Senator Carr?

GREG COMBET: No, actually, I don't spend too much time thinking about it. I mean, it's a serious matter that he's brought that should be heard by the courts. You know, I don't think it's appropriate for someone in my role to be a commentator on it, especially when I don't know much about it.

TONY JONES: Alright. Let's go to the ACTU congress - you certainly know a fair bit about that. Bill Shorten gave his most rousing speech today. Did it make you feel like rushing to the barricades?

GREG COMBET: Well I didn't see it. I wasn't there either. So I'm glad that it was a rousing speech and I hope the people enjoyed it.

TONY JONES: Oh, you've missed all the reporting on it as well, have you?

GREG COMBET: No, I've read the reporting. That's good. I'm glad he's done a good speech.

TONY JONES: Does Shorten have real leadership potential?

GREG COMBET: Well, he's an exceptionally talented person and he's got a really strong future in the labour movement.

TONY JONES: This was a rare chance though to show his leadership potential. Do you think he achieved that?

GREG COMBET: Well, I've no idea, Tony. I'm afraid I wasn't there. I've seen the reporting and it was a good speech by all reports.

TONY JONES: The consistent message of the congress seem to be that not only is the future of your Labor Government at to stake here, your political fortunes, if your political fortunes don't turn, but also the future of the labour movement. Do you agree with that assessment?

GREG COMBET: Oh, I think people have prophesied lots of things over the years about the future of the labour movement.

I think the labour movement is an enduring institution in Australia and it's made a tremendous contribution to this country because of the values that it holds, values of fairness and justice and fighting for people's rights, and so I think the labour movement's going to be around a long time.

But in terms of the immediate political circumstances, it's obvious that there are significant issues and problems and challenges before us and it's going to be very important over the next 12 months that the Government and in the broader labour movement, the trade unions and other like-minded institutions in society, argue for the values that we believe in and that we stand for and that we explain as a government just how we're pursuing those values with specific policy initiatives.

And I think the budget was a pretty good and clear case in point where we're clearly endeavouring to address the cost-of-living concerns that many people in the community have by doing specific initiatives like the school kids' bonus, you know, $820 for a child in secondary school and $410 for a child in primary school for families who are eligible for family tax benefits.

And there are many other great policy initiatives that we're pursuing to help families, tax cuts coming in from 1st July, particularly for people earning up to $80,000 a year, a trebling of the tax-free threshold, a million people, low income earners who won't have to submit a tax return anymore.

Increases in family tax benefits that started flowing yesterday related to the introduction of our clean energy package and there's a host of important things; further increases in the pension on the back of the most significant increase in the pension for decades.

I mean, it's a government - when you can cut through some of the political static around the place - that is doing some great things for people.

TONY JONES: Well, the political static's critical here. What if people are really so fed up with scandal and spin that they've actually stopped listening to all of the things that you just talked about it?

GREG COMBET: Well none of what I just put is spin; they are facts. They are things that we are doing for the community.

TONY JONES: Well, I know that's clearly the case and I don't really think we need to go through a list of other facts in favour of the Government, but there've been plenty of examples ...

GREG COMBET: Well actually they're pretty important.

TONY JONES: Yes, they are, but that's not what my question was related to. Because the question is why people have stopped listening, have they stopped listening? And there are many examples of actual spin.

I mean, for example, after the very long delay in suspending Craig Thomson and sending him to the crossbenches, the sudden announcement that some line had been crossed. What was that line?

GREG COMBET: Oh, well, I just think that in relation to the general issues that you're raising that it is critical that the Government keeps arguing its case.

I mean, you know a bit about my background too. I've been a person involved in the labour movement for many years and faced many tough challenges along with my colleagues, but when you believe in what you're doing and you stand up for what you think is right and you argue your case to the community and the odds look pretty difficult, people will listen and you can reach through to them and they will understand what you're on about.

We're working very hard as a government to manage the economy effectively and successfully in the interests of working people in this country, ensuring that we protect their rights, endeavouring to assist them with cost-of-living measures, we've got unemployment low, interest rates coming down, inflation contained, delivering budget surpluses, investing in infrastructure, making important economic reforms like the clean energy package.

These are all very important changes for the country that I think far outweigh in importance many of the other matters.

TONY JONES: OK. I'm going to bring you back to the point that I was making which is people being fed up with spin.

And another example would be the national advertising campaign on compensation for the carbon tax which does not mention the carbon tax. Now when you looked at the plans for this, did you not sit down and say to the people proposing these ads, "We should mention the carbon tax this compensation is for"?

GREG COMBET: Well we always called the tax cuts, the pension increases, the increases in family tax benefits and all the other increases in payments the Commonwealth makes to people in the community, we always called it the Household Assistance Package and that is what we're advertising.

We're advertising the facts: tax cuts, increases in family tax benefits, $110 for a child for a family that's eligible for Family Tax Benefit Part A and pension increases and the like.

I actually don't see what's wrong with that. We've not hidden our light under a bushel in relation to the introduction of the carbon price. We always made it clear that it would be introduced in conjunction with a package of household assistance that was socially just and socially fair and socially equitable and that is exactly what we're doing.

TONY JONES: Which would leave better off than the amount of money they would stand to lose as a result of any increases in electricity and other things as a result of the tax, isn't that correct?

GREG COMBET: Well, now that you raised it, the average electricity price impact that we predicted of $3.30 a week, average it across households throughout the country, is now being verified by regulators.

In fact, in the Northern Territory today it's turned out that it's $2.60 a week. In WA, it looks like it's going to be well under $3 as well. The regulators are now determining these outcomes.

And up against that electricity price increase less than what we predicted is an average of $10.10 per week in assistance to households through the measures I described earlier and we are helping low and middle income families because we're a Labor government.

TONY JONES: And all of that help is related to the carbon tax.

GREG COMBET: What I've just outlined is all related to the introduction of the carbon price from 1st July.

TONY JONES: How much in percentage terms will electricity prices rise with the introduction of the carbon tax?

GREG COMBET: Well the Treasury modelled across the country 10 per cent, but it is coming in under that in a number of jurisdictions.

TONY JONES: So, what will it be in NSW, for example, in Victoria, two very large states, or Queensland?

GREG COMBET: Around 10 per cent and the Independent Pricing and Regulatory Tribunal in NSW put a draft determination out recently along those lines and it's exactly $3.30 a week averaged across NSW households, and I emphasise again we're providing assistance through tax cuts, family tax benefits, pension increases and the like that average $10.10 a week in assistance.

TONY JONES: Do you agree that the future of - your own future, I guess, and the future of the Government now rests entirely on how the carbon tax is received by the public?

GREG COMBET: Oh, well I don't think so. I think what we'll see after 1st July is that people will have the experience of the carbon price being introduced. I think what they will see is that Tony Abbott has over-egged the pudding somewhat.

He predicted, for example, that the coal industry would be destroyed and wiped out. Now just in terms of checking it against reality, since we announced the carbon price, package tens of billions of dollars of investment have been committed to the coal industry. He also predicted whole regions would be wiped out, there'd be unimaginable price increases and in fact electricity would go up by some unimaginable amount.

And of course it's all rubbish. As my colleague Bill Kelty indicated, well that's what you expect someone like Tony Abbott to do, but I think people will see that with the lived experience of the carbon price coming into place it's a perfectly manageable economic reform.

It will benefit the environment, it will cut greenhouse gas emissions and it's not going to be the end of the world and in fact, it will be introduced in a socially fair and equitable manner.

TONY JONES: Alright. There's one basic thing that I don't believe has ever really been understood by the public and certainly by a lot of journalists and others: why did you need a three-year fixed price on the carbon tax?

GREG COMBET: Well I think we introduced a fixed price at the start of an emissions trading scheme for some predictability and certainly in how the scheme will operate, that is that businesses in particular would know what the carbon price would look like, how to do their assessments of their liability and have some certainty about that for several years before we transition to a flexible price with an emissions trading scheme that will link international.

TONY JONES: But, I mean, the obvious riposte to that is that Kevin Rudd's rather painstakingly negotiated emissions trading scheme had a one-year fixed price that. Now that would actually be concluded before the next election if it went on time. I mean, wouldn't you have preferred a one-year than a three-year fixed price with a carbon tax?

GREG COMBET: Well, as I think you're well aware, we negotiated this package to get through Parliament and of course the scheme that you refer to when Kevin Rudd was prime minister was defeated in Parliament.

I mean, at the end of the day, if you're going to make big reforms, we need to work within our parliamentary system and you need to secure passage of the legislation and that is what the Government did. I think the three-year fixed price period is in fact an appropriate one because ...

TONY JONES: But can I just ...

GREG COMBET: If you'd stop talking over me for a minute. Let me finish a sentence, please.

TONY JONES: Well, some of your sentence are rather long so we'd like to get a few questions in as well.

GREG COMBET: Well, some of your questions are lengthy too.

But a three-year fixed price period is an appropriate one because it does provide business with some certainly about the pricing over the course of the next few years, it allows people to get used to the carbon price in the economy and people to have certainty about their investment decisions.

TONY JONES: If I might I say so, that's pretty much what you just said. Now you've repeated it. Anyway, is it the case that the three-year fixed price or carbon tax was actually a non-negotiable demand of the Greens Party?

GREG COMBET: No, that's a load of drivel.

TONY JONES: Well, that's a load of drivel that the Greens Leader, Christine Milne, suggested was the case on our program last week.

GREG COMBET: Well, I didn't hear it, but that's not true. We had a whole set of issues that we negotiated to secure package of it and that's not the case.

TONY JONES: Well, I mean, Christine Milne said that the three-year fixed price was non-negotiable and they negotiated with the Government and it was part of the process, as you say, of getting these things through Parliament. Why distance yourself from these negotiations?

GREG COMBET: Well, I'm not distancing myself from it at all. I was in the room. I was the lead government negotiator and that is not at all my recollection of the situation.

TONY JONES: Well, then, perhaps you could explain it to us. Who came up with the three-year fixed price?

GREG COMBET: Well, I don't think I do have to explain it to you. I explained a little while ago that to make major reforms you have to negotiate with other parties in our parliament, democratically elected, in order to secure passage of legislation through the Parliament and that's what we did.

Many things were discussed. It's a very comprehensive package of measures. They were discussed, negotiated, not just the Greens, but also with independent MPs.

TONY JONES: So, out of all of this, can you actually tell us where the three-year fixed price, as opposed to the one-year fixed price, which would have been well and truly over by the next election, if it were to happen on time, or on the appropriate time, who came up with a three-year price?

GREG COMBET: Well it was something that was discussed for some period of time in the room, but I actually don't see a great degree in merit in trawling over it all. We had a set of negotiations, many issues were discussed, we agreed on a package at the end.

TONY JONES: What is the current global market price for a tonne of carbon?

GREG COMBET: It's about $9 - Australian dollars in the European market at the moment.

TONY JONES: And is that the differential then between $23 and $9, that's the balance, $12 is the disadvantage Australia is putting itself against - up against its competitors, is that correct?

GREG COMBET: Well the European carbon market collapsed along with pretty much a lot of other markets in Europe after the Greek debt crisis really took hold mid-2011 and it's taken quite some time to recover.

We of course, as we've just discussed, have a three-year fixed price period and I think carbon markets in Europe and internationally will recover during that period of time.

But when we link our emissions trading scheme in 2015 with other markets, and I anticipate including the European market, the prices will equalise. And so if you can predict what the price will be in Europe in three years' time then you'd be doing better than some of the futures market analysts I think at the moment.

TONY JONES: But you might be able to predict what it might be in one year's time before the election, so there may be political consequences for going ahead with a three-year fixed price as opposed to the original one-year fixed price. Do you accept those consequences may actually be fatal for your government?

GREG COMBET: Well, look, Tony, the previous proposition was defeated by the Parliament.

The - Tony Abbott joined with the Greens to defeat it in the Senate on two or three occasions. That's past history. We've now secured legislation last year through the Parliament to introduce a carbon price in the economy which has a three-year fixed price period.

It does provide certainty for the business community and then it transitions to an emissions trading scheme that will link with international carbon markets. So that's the fact of the matter. That's what we've got through.

There's one thing about it though I'd just like to say so that I clear up some misconceptions. The $23 price is the nominal price for the carbon units when the scheme starts on 1st July, but in important industries that are internationally exposed, that are trade exposed and that are emissions intensive, the effective carbon price is an actually only an average of $1.30 a tonne and that's because we'll be issuing to those industries like steel or aluminium smelting around 95 per cent of their permits for free and the average carbon price they'll face is only $1.30.

And that's why it's important to put in context some of the discussion that we're having about the relationship with the international carbon markets.

TONY JONES: Greg Combet, we're out of time. We'll have to leave you there. We thank you very much for coming in to join us tonight.

GREG COMBET: Thanks very much, Tony.