Sky News – AM Agenda

Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia






US Presidential election, Chinese economy, Hazelwood closure, Government priorities

KIERAN GILBERT: First though we’re live to Hong Kong, Finance Minister Mathias Cormann joins me, where Minister you have been meeting colleagues and counterparts of yours both from the region, but also from Europe. There must be a great deal of focus from all concerned on the events in the US right now in the closing stages of that Presidential race. Much anticipation. 

MATHIAS CORMANN: There is always a lot of focus on US Presidential elections. You are absolutely right there. We also all recognise that this is very much a matter for the American people to settle. From an Australian point of view, any Australian Government works well and will work well with whomever the American people choose to be their President.  

KIERAN GILBERT: But there must be some concerns on an economic level, given the various warnings we’ve heard about a trade led recession and so on. We’ve seen the rattled markets as well. Given the polls narrowed and the prospect of a Trump Presidency looks more likely. 

MATHIAS CORMANN: Once a decision is made everybody will know what the administration will be for the next four years. At the moment there is a level of uncertainty because we don’t have a result. Once we have a result, everybody knows what the team is going to be for the next four years, who the President is going to be. From an Australian point of view, it is very much in our national interest for us to continue to work very well and have a good relationship with whomever the American people choose to be their President. 

KIERAN GILBERT: And you are meeting in Hong Kong, with as I say, counterparts from the region as well as from Europe. Can you explain exactly to our viewers what the nature of the talks are. And secondly, what is the mood like in Hong Kong in terms of Chinese growth is it confident at the moment given what we’ve seen, a resurgence certainly in terms of commodity prices for our economy.

MATHIAS CORMANN: Firstly, the main purpose of my visit is leading a delegation of Australian businesses which are participating in the Asia Pacific Conference of German Business. More than a thousand of Germany’s most senior business leaders are here in Hong Kong meeting for their bi-annual Asia Pacific conference. Their Deputy Chancellor and a number of representatives of the German government are here as well. One of the jobs that the Prime Minister has given me is to leverage my German-speaking background and my European background to help promote stronger ties and more business, increased trade and investment between Australia and Germany and between Australia and Europe more generally. Yesterday, I met with the Deputy Chancellor Sigmar Gabriel to discuss our desire to conclude a free trade agreement with the European Union as soon as possible. In relation to growth in China, I did meet yesterday with the Financial Secretary for Hong Kong, John Tsang. Our outlook is the same. We recognise that China is going through a very important transition in their economy, from record investment driven growth to more balanced, sustainable domestic consumption driven growth. The double digit growth of years past was never going to continue forever. China will continue to grow strongly. China continues to make a significant contribution to global growth. China is going through an important and necessary transition in their economy. Certainly the perspectives in Hong Kong are similar to the perspectives in Australia in that regard. 

KIERAN GILBERT: One of the key transitions as you alluded to there is to try and boost domestic demand in China, one of the things that has been put forward by economists, is the Chinese, as part of their reform plans need to provide more rights to what they call migrant workers, people from the country. Hundreds of millions of them who are in the city but don’t have the full citizens rights in the city. That would boost the property market immediately and provide a boost to that demand. Are you confident and the various people that you are talking to there, that the Chinese are undertaking the sort of reform necessary?

MATHIAS CORMANN: It is a massive reform. It is a very big country with a very big population. The scale of the reform is arguably, historically unprecedented. The Chinese are working their way through it. As would be the case in Australia, when you go through this sort of process you need to make adjustments along the way. I am very confident that the Chinese Government is considering all of these issues, including the ones you mentioned and is making the necessary decisions in response. 

KIERAN GILBERT: Now a few domestic issues before I let you go. Hazelwood the closure of the power station. How do you see that? Is that just part of the natural transition that we are seeing in our economy away from those dirtier sources of energy. And given it appeared inevitable for a long time, was enough done in the La Trobe valley by both the Federal and State authorities to plan for it?

MATHIAS CORMANN: It had been foreshadowed for some time. Today and in the short term, the Australian Government’s key focus has been on making sure that the workers at Hazelwood receive all of their entitlements and that appropriate support is provided to assist them through the transition that is now required. When it comes to energy security, the best available advice that we have, that Josh Frydenberg as the Minister for the Environment and Energy has got from the Australian Energy Market Operator, is that the national electricity market will be able to absorb the closure of Hazelwood. Hazelwood is a very significant supplier of energy, as you know, more than 20 per cent of the Victorian energy supply is provided by Hazelwood, 4 per cent of the national electricity market supply, 16 per cent of supply in the South Australian market. It is a very significant change, we have about 14-15 months to the next peak period after the closure in January/February 2018, the next period of peak demand, to make further transitional arrangements, make further preparations. The best advice that we have is that yes, the system will be able to absorb the change.

KIERAN GILBERT: But it shows you how important it is to manage the transition in the energy supply given the Minister concerned, Josh Frydenberg making the link to the events in South Australia, the reliance on renewables and so on. But the need to get a national plan and to secure one ASAP given what we are saying with the closure of Hazelwood and most likely we will see that transition continue over the coming years.

MATHIAS CORMANN: You are absolutely right. It is very important to remain focussed and to remain focussed nationally on ensuring energy security and also making sure that energy supply is as affordable and as competitively priced as possible. Josh Frydenberg continues to lead the charge for the Australian Government in that regard. Whenever this closure was going to happen, it was going to happen one day, there was always going to be a transition to be managed when you have an energy supplier of this size and magnitude closing shop.

KIERAN GILBERT: Now the Senate, the Opposition says it is chaos, Malcolm Turnbull laughed at that yesterday. First of all, how much concern is there for the Government in terms of navigating its agenda through the remainder of the year. And what is your response to suggestions that the Government does need to accept some of the accountability for the way this has been managed?

MATHIAS CORMANN: The Government is just getting on with implementing our plan for the economy and our plan to ensure Australia is as safe and secure as possible. In the Senate the Government did not have the numbers before the events of this past week and we will not have the numbers from here on in, until it may change at a future election. The positions of former Senator Day and Senator Culleton will be resolved in the not too distant future. The final composition of the Senate will be confirmed once the High Court has reviewed all of the necessary information and made relevant determinations. These are events that occurred outside of our control. We had no involvement in relation to the Culleton matter in any way, shape or form. It is going to be a question of law now for the High Court to resolve and that will happen. In relation to Senator Day, again the High Court will resolve these matters.

KIERAN GILBERT: Alright, we are out of time, Mathis Cormann thanks live from Hong Kong. Talk to you soon. 



Senator the Hon Mathias Cormann, Minister for Finance, Perth