Senator the Hon Mathias Cormann
Minister for Finance
Deputy Leader of the Government in the Senate
Senator for Western Australia
Date: Thursday, 16 March 2017
PATRICIA KARVELAS: The project is expected to cost $2 billion. But how that cost will be shared is yet to be determined. Snowy Hydro is jointly owned by the Commonwealth and the New South Wales and Victorian Governments. Senator Mathias Cormann is the Minister for Finance and the Deputy Leader of the Government in the Senate. And I spoke to him a short time ago.
Senator Cormann, welcome back to RN Drive.
MATHIAS CORMANN: Good to be back.
PATRICIA KARVELAS: A $2 billion price tag. What is the funding structure? Who is going to pay? The Commonwealth or the States?
MATHIAS CORMANN: What we have announced today is that we would initiate a feasibility study into a project that Snowy Hydro has identified. Subject to that feasibility study coming back successfully, these are all decisions that have to be made at the right time.
PATRICIA KARVELAS: Where is the Commonwealth money going to come from? Will you accept a sizeable hit to the Budget bottom line?
MATHIAS CORMANN: I think that you are getting a bit ahead of yourself. What we have … interrupted
PATRICIA KARVELAS: Well you guys made the announcement. Game changer. Infrastructure. Nation building.
MATHIAS CORMANN: Indeed. It is a very, very significant opportunity. The first step is a feasibility study, which will be funded through the Australian Renewable Energy Agency. That has to identify a whole range of issues, deal with a whole range of issues, physical, technical and environmental requirements in particular. It will also finalise a framework for the ultimate structure for any investment that would be required. New South Wales and Victoria are co-shareholder Governments. These are all decisions that subject to a successful feasibility study will be resolved at the right time.
PATRICIA KARVELAS: How long will the measure take? Is it five years? Is it ten years?
MATHIAS CORMANN: The intention is to have the feasibility study finalised this year. On the basis of the outcomes of the feasibility study, we will be able to make the relevant decisions.
PATRICIA KARVELAS: Bill Shorten has asked today is it really just going to be $2 billion, or will the cost to Australians be much higher? That is a reasonable question isn’t it?
MATHIAS CORMANN: Again, Bill Shorten is a very negative person. He wants to kill a project by the sounds of it, before it has been properly looked at. The reason we are doing a feasibility study is to make sure that all of the things that Snowy Hydro believe it can deliver, stack up. That all of the environmental, physical and technical requirements are properly dealt with. If they are and if they can be, then the relevant decisions will be made, including in relation to appropriate structuring of equity and any other funding contributions by State and Federal Governments as appropriate.
PATRICIA KARVELAS: Will the Government commit to using energy from renewable sources to pump the water at off peak times?
MATHIAS CORMANN: Again, you are asking me to answer questions that will be answered once the next step in the process of the feasibility study has been properly conducted.
PATRICIA KARVELAS: Okay then fair enough. Do you accept that this has been announced as a done deal, as an amazing big investment that is going to solve Australia’s energy problems, when ultimately none of the questions can be answered, because none of that has been worked out?
MATHIAS CORMANN: I don’t accept that at all. What I am putting to you and what the Prime Minister announced today is that this is an exciting opportunity. It is absolutely necessary and appropriate for us to ensure that all of the necessary homework is done before final decisions are made. That is why we have been entirely up front about the fact that the next step is a feasibility study, which will be funded though the Australian Renewable Energy Agency. Subject to the outcomes of that feasibility study further decisions will be able to be made at the right time. Are you suggesting that we should have conducted the feasibility study in secret and not told anyone about it?
PATRICIA KARVELAS: No, I don’t like secrets and you know it.
MATHIAS CORMANN: Exactly, that is what I am talking about.
PATRICIA KARVELAS: What I am talking about is that it has been announced as a done deal, as the answer without the question answered.
MATHIAS CORMANN: I don’t agree. I don’t agree with that characterisation. I think we are being entirely open and upfront about the fact that the next step is a feasibility study. That feasibility study has to provide answers to a whole range of questions that need to be appropriately settled.
PATRICIA KARVELAS: If you are just tuning into RN Drive my guest is the Finance Minister Mathias Cormann. And the number if you want to have your views about this idea that was announced by the Prime Minister and lots of other issues 0418226576. You can also use Twitter and comment using the hashtag RN Drive. Just on another issue, in 2015 you said allowing Australians to access their superannuation for property would increase demand for housing and drive prices up. The idea is being floated again. Assistant Minister Michael Sukkar is not ruling it out, it is on the agenda. Do you still think it would drive prices up?
MATHIAS CORMANN: My position is on the record. I stand by what I have said in the past. I do not agree with your characterisation that that is what Minister Sukkar is floating. In fact I have actually, before I came onto this interview read an interview he had with Jon Faine today. He explicitly refused to talk about anything that may or may not be in the Budget in relation to housing affordability related issues. There is a lot of speculation out there. People are wanting us to play the rule in rule out game. We are not playing that game …interrupted
PATRICIA KARVELAS: Sure, but you are ruling it out, you are saying…interrupted
MATHIAS CORMANN: The Budget is on the second Tuesday in May. My assessment, which is basic economic fundamentals in relation to the particular proposition you put to me is on the public record. My views in relation to that have not changed. Let me just make the general point, the reason there is a housing affordability issue is because demand exceeds supply. Any measure that boosts demand, all other things being equal will drive up prices by more. If we want to improve housing affordability we have to increase supply. We have to actually see how we might sensibly be able to reduce demand pressures in the market. The work that APRA has been doing in a very carefully calibrated way has reduced demand pressures. There is work needing to be done in particular by State Government through planning processes and the like to increase supply. I know State Governments, in particular the State Government in New South Wales, are looking at all of these things very carefully. That is the appropriate way to go.
PATRICIA KARVELAS: But some of your backbenchers want more dramatic action. John Alexander, a crucial backbencher in this area has said he does think this issue of negative gearing needs to be on the agenda before the next election. Is it worth revisiting?
MATHIAS CORMANN: John Alexander is a valued member of our team. He is a backbencher. He is absolutely entitled to participate in a debate on public policy. As far as the Government is concerned, we took a very clear position to the last election. It was a clear position that we would not make the sorts of changes to negative gearing that Labor proposed, including, because it would actually drive up the cost of rental accommodation for the many people across Australia who are in rental accommodation. It would also drive down the value of existing properties in particular for people across Australia, something that we do not believe is desirable. In terms of policies in the lead up to the next election, that is well and truly premature, two years out for us to settle any propositions that we may or may not take into the next election. Let me say though, for this term, we made very clear commitments before the last election. We stand by those commitments.
PATRICIA KARVELAS: Okay then, there has been a particularly extraordinary stoush today by South Australian Premier Jay Weatherill and Josh Frydenberg, the Federal Minister in front of cameras. I do not know how voters would be feeling about it. I am going to play a bit of it here.
JAY WEATHERILL: It is a little galling to be standing here next to man that has been standing up with his Prime Minister bagging South Australia at every step of the way over the last six months. To be standing here on this occasion, him suggesting that we want to work together is a disgrace. The way that your Government has treated our state is the most anti-South Australian we’ve seen a Government in memory. I’m sick and tired of getting these criticisms across the air waves from the Eastern States about South Australia. We can’t wait for a Snowy Mountain Scheme in four to seven years’ time. We have a plan to make South Australia self-sufficient, to stand on our own two feet today and that’s what we’re getting on with.
PATRICIA KARVELAS: You have repeatedly used South Australia as a policy punching bag when in fact their renewable energy is contributing to the national target of 23 per cent. What did you expect Jay Weatherill to do?
MATHIAS CORMANN: Jay Weatherill is a man under pressure. He has delivered energy blackouts and higher electricity prices for South Australia. He knows that people across South Australia are extremely disappointed with his failure, with the failure of his energy policy. The conduct that we saw from Jay Weatherill today was completely unbecoming for the head of a Government in Australia. He is clearly a man under pressure.
PATRICIA KARVELAS: I think there are a lot of people under pressure. That’s pretty consistent across politics at the moment. And voters look at scenes like that and think, what are these guys doing. I would suggest that they are going to think that about both of those men standing in front of those cameras. Don’t you think that’s how they seem?
MATHIAS CORMANN: I totally disagree. Josh Frydenberg is working very hard on a properly coordinated national approach in relation to energy policy, which helps ensure a reliable, secure supply of energy, a more affordable supply of energy in a way that still helps us meet our emissions reduction targets. Instead of pursing ad hoc, panicked, unilateral action out of South Australia, the South Australian Government would be much better off to join in a nationally coordinated effort. That is what Josh Frydenberg appropriately is working on.
PATRICIA KARVELAS: On another issue before I let you go, Immigration Minister, Peter Dutton, has urged CEOs to stop shoving, and I quote ‘politically incorrect nonsense down our throats and focus on running their businesses’ after I think about 20 heads of some of the nation’s biggest companies urged Malcolm Turnbull to legislate for same sex marriage. Do you agree with Minister Dutton?
MATHIAS CORMANN: My very good friend, Peter Dutton, can speak for himself. What I would say is that our position on this issue is very clear. Everybody knows that we went to the last election proposing to give the Australian people a say on whether or not the definition of marriage should be changed and for that to happen, through a plebiscite. What I am focussed on and what I think business leaders across Australia are also focussed on, is how we can ensure that we have a more growth friendly tax system and how we can ensure that our businesses are more internationally competitive so we can boost investment, boost productivity and create more jobs for better wages over time.
PATRICIA KARVELAS: Sure, but my question is, do you think these heads of these big companies should be speaking about gay marriage?
MATHIAS CORMANN: It is a free world. I am not a commentator on comments by others. Everybody has the freedom to say what they want to say. What I would put to you though is that the Government’s position is very clear. We went to the last election with a promise to conduct a plebiscite on this issue, to give the Australian people a say on whether or not the definition of marriage should be changed. This is clearly an issue where there is a diversity of strongly held views on both sides of the debate across the community. That is also reflected in the Parliament. The best way to resolve a diversity of strongly held views like this is through a democratic vote.
PATRICIA KARVELAS: Mathias Cormann, thank you so much for coming on the program.
MATHIAS CORMANN: Always good to talk to you.