2GB – Alan Jones Show

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






Minister Cash, Energy policy, Company tax cuts, drug test of welfare recipients

ALAN JONES: The unflappable Senator Mathias Cormann and yes the accent you hear, he was born in Belgium. But in political terms he is a young bloke, he is a West Australian Senator, was the Acting Prime Minister last week. We spoke to him about a range of issues. He has kindly agreed to talk to me again. We are trying to do this a bit more often, so that you can get your head around some of these major political issues. He is on the line in studios in Canberra. Mathias good morning. 

MATHIAS CORMANN: Good morning Alan. Good morning to your listeners. 

ALAN JONES: Thank you very much for your time. Before we start on the issues, are Labor perhaps protesting a bit too much about Michaelia Cash? I mean the great thing about the Government supporters is they love Michaelia Cash because she gets into the ring with them. 

MATHIAS CORMANN: Michaelia Cash is an outstanding Minister. As Minister for Jobs and Innovation, she has been presiding over record jobs growth, more than 400,000 jobs created in Australia over the last year on her watch. The Labor party does not like Michaelia because Michaelia is a very effective operator …interrupted

ALAN JONES: That is it.

MATHIAS CORMANN: … the unions do not like her because she has been successful in … interrupted

ALAN JONES: She gets into the ring. 

MATHIAS CORMANN: … passing very important reforms like the restoration of the Australian Building and Construction Commission, the Registered Organisation Commission. She has been fighting union corruption. The Labor party is an agent for the union movement and some of the worst elements of the union movement clearly do not like her. 

ALAN JONES: Just one thing, I was not going to talk to you about this, but I will since you have made this point. Can you just clarify what is happening? I know legislation is before the Parliament and I was trying to get some information about this yesterday because every other day there is a union leader, an individual fined, normally large amounts of money for defying court orders or for behaviour in relation to employers. That fine is normally paid by the union. Are you passing legislation, which will prevent that from happening and what is the status of that? Where the individual will be liable. 

MATHIAS CORMANN: In relation to that specific issue I will have to take that on notice and talk to you about that when I next come onto your program. What I do know is that Michaelia, one of the pieces of legislation she has been able to progress through the Parliament is the so called corrupting benefits legislation, stopping corrupting benefits being provided by employers to unions. Bill Shorten was, as an agent for the union movement, was opposed to that legislation. The other day The Australian revealed that Bill Shorten has already flagged that if he is elected Prime Minister, he will take action, not on behalf of the public interest, not on behalf of working families around Australia, but on behalf of some of the worst elements of the union movement. Some of these quotes that were again published on the front page of The Australian are just revolting in terms of some of the commentary from some of these union thugs … interrupted

ALAN JONES: Well Dyson Heydon’s report is full of it. 


ALAN JONES: Okay, I was in Victoria at the weekend. There was a headline in the Herald Sun newspaper, a big headline on Sunday, which called this a national crisis. It argued this whole business about energy prices. That businesses were being stung with power prices rising by over 200 per cent. The editorial said ‘massive cost increases have forced some Victorian manufactures to delay hiring workers and shelved expansion plans and equipment investment’. Surely you must be getting correspondence like this? I am getting it every day. This business about electricity prices and they are just concerned about this commitment to renewable energy and billions of dollars being provided in subsidies which is distorting the market. 

MATHIAS CORMANN: People are right to be concerned about what has been happening to energy prices and to the reliability of energy supplies. We are taking action. Firstly, we are wanting to bring the subsidies to an end. We want to put forward a policy framework, through the National Energy Guarantee, which is technology neutral …interrupted

ALAN JONES: Can I just interrupt you there Mathias, can I interrupt you? I have not heard you say that before, say that again. So you are wanting to bring these subsidies to an end? My view is that many of these outfits, often foreign owned wouldn’t be in renewable energy were it not for the subsidies and hence the argument that they are rent seekers. Are you saying you are wanting to end those subsidies? That would be good news. 

MATHIAS CORMANN: The renewable energy target is due to end in 2020. We want to replace it with the National Energy Guarantee, which is designed to attract additional investment on a technology neutral basis into boosting the supply of energy. Boosting the supply will bring down prices. Already the action we have taken so far has had an effect on bringing down wholesale prices. The regulators are predicting that over the next two years that will flow through lower retail prices, with retail prices expected to come down by about 12 per cent. In short, you are right, your listeners are right, electricity prices have been going up by too much. That is because of policy failures in the past. We are focused on addressing that. 

ALAN JONES: Are those policy failures related and I think I used this analogy to you before, but I will repeat it again. If you are making bread and I am making bread and I think I can make better bread than Mathias Cormann, so I am going to open up a bakers shop and someone says to me, hang on a minute, hang on, you are not going to be able to compete. This Mathias Cormann is being subsidised in his bread making by the taxpayer, you will not be able to compete. Now if you use that, renewable energy versus coal fired power, this is what has caused the problem in coal fired power, not just all these renewable energy advocates closing them down in South Australia under Labor governments. But it is not viable while subsidies are provided to renewable energy. Are you saying that will end in 2020?

MATHIAS CORMANN: The renewable energy target is due to come to an end in 2020. The problem is what we have had is a too disjointed and too ad hoc policy approach in different states in different parts of Australia. In South Australia they pursued an excessive … interrupted

ALAN JONES: Well that is a joke.

MATHIAS CORMANN: …renewable energy target and the lack of reliability of energy supplies and the price volatility that comes with significant fluctuations in the level of reliance on renewables. There are times when the wind does not blow and the sun does not shine. Then all of a sudden they had to draw on energy sources from elsewhere, which then becomes very expensive. 

ALAN JONES: Right but at the same time Mathias, you are signatories to this Paris and we are committed under the Paris Agreement to a 42 per cent renewable energy target. How is the Government, a conservative government going to get out of this? 

MATHIAS CORMANN: We do believe that we can bring down the cost of electricity, that we can improve the reliability of energy supplies, while at the same time making sure that our energy is generated in an environmentally efficient way. We believe, as we have under the Howard Government and the Abbott Government ... interrupted

ALAN JONES: But this presupposes we can’t ... 

MATHIAS CORMANN: ... as we have under the Howard Government and under the Abbott Government we have always been able to meet our international emissions reduction commitments. We can do so while bringing down the price of electricity and improving energy reliability. 

ALAN JONES: But see, this presupposes doesn’t it that the carbon dioxide is just going to destroy the planet and the Australian of the Year Flannery says we will never see snow again and the dams will all be dried up and metropolitan Australia won’t have water and so on. All that stuff, alarmist stuff has been out the door. Now what is wrong with coal fired power? High efficiency, low emissions, but you can’t get the corporate sector to invest, because there are subsidies for the other side for renewable energy?

MATHIAS CORMANN: We want the corporate sector to invest. That is why we want to ensure we can provide certainty to investors to invest in whatever energy technology. We are entirely technology neutral. Whatever delivers the best possible bang for our buck in a way that is consistent with the overall energy framework. We want to attract investment into any source of energy as long as it complies with the overall settings. 

ALAN JONES: Okay look, as I said to you last time, you are one of the blokes that gets out in the public place to try and persuade and prosecute the case on this company tax. My own view, I have said this a million times here, on company tax, the Labor party and the Greens are on another planet and unelectable. But I am just wondering why you can’t succeed in persuading the electorate that, because the argument that is often used and sometimes used by the Reserve Bank, they said well by all means have company tax but don’t blow out the deficit. But the Parliament’s independent budget watchdog, independent budget watchdog, the Parliamentary Budget Office has said hang on, the company tax cuts are fully factored into the Budget and won’t affect any return to surplus. 

MATHIAS CORMANN: That is right. 

ALAN JONES: Isn’t that one of the guts of it. And still we can’t seem to persuade the electorate to realise that Labor on this are being very irresponsible.  

MATHIAS CORMANN: Labor on this have been very irresponsible and they know better. What saddens me, the Hawke and  Keating governments proudly focussed on making Australia more globally competitive, to make us a stronger, more resilient economy. These days, Bill Shorten has taken Labor far to the left. He is pursuing essentially a socialist agenda, which will leave everybody worse off. His agenda will make business less successful and less profitable. Less profitable and less successful businesses will mean few jobs, lower wages, higher unemployment, lower wages. I had a conversation with Kristina Kennelly in Senate Estimates yesterday and what worries me is that some of the basic fundamentals have been forgotten. The Labor party now is saying that increased returns to shareholders is like a dirty word, it’s a terrible thing. If you can bear with me for a second here … interrupted

ALAN JONES: Yeah, sure. 

MATHIAS CORMANN: Increased returns to shareholders, the prospect of increased returns to shareholders is what drives the additional investment. Additional investment is what helps business grow their business. Growing their business is what helps drive increased employment. If we can create more jobs, increased employment, it means that there is more competition for Australian workers. Increased competition for Australian workers means that business has to pay more to secure their services, ie that means higher wages. It is a win win win circle. For some reason now to suggest that something will also lead to an increased return to shareholders is supposedly a bad thing. People forget, self-funded retirees, people saving for their retirement, all of them are invested in the big businesses around Australia, their shares are in the big businesses in Australia through their superannuation. Increased returns for shareholders actually also means increased returns for self-funded retirees. 

ALAN JONES: Good on you, good case. I keep saying Mathias that you cannot have a profitable employee without a profitable employer. 


ALAN JONES: I will just say to our listeners here and this is the guts of this, the Parliamentary Budget Office is independent. It is the independent watch dog. The independent budget watch dog. Jenny Wilkinson, the Parliamentary Budget Officer told a Senate Estimates Committee last week, that not only are the proposed company tax cuts accounted for in the Budget, but that the Budget position is improving more rapidly than expected. Simple as that. 

MATHIAS CORMANN: That is right.

ALAN JONES: So this is affordable and Labor and the Greens on this are unelectable. Can I just come back to what looks like being a bit of a toxic weed though that you have got to face here, politically. One of the real political issues you face amidst some of these good economic stories is the revelation by the Bureau of Stats that growth in full time wages last year fell below inflation, which would mean that the average working bloke has copped a pay cut. How do you address that?

MATHIAS CORMANN: Firstly, wages growth has been more subdued on recent years on the back of lower global growth and a difficult transition in our economy. While we continue to grow, economic growth in Australia was slower. Wages growth is picking up and the most recent data was 2.1 per cent growth which is slightly above inflation. The way you address wages growth is by making sure businesses around Australia can be more successful and more profitable. Unless we get more successful and more profitable businesses we will not be able to secure more jobs and higher wages. 

ALAN JONES: You can only pay for that out of profit can’t you.

MATHIAS CORMANN: More jobs and higher wages do not grow on trees. They are created and paid for by successful, profitable businesses. 

ALAN JONES: It’s out of profit. Unless you are in the public sector and they seem to be able to afford any sort of stuff. Just on this, I made some points yesterday, you seem to be struggling as a Government with this legislation, and listeners can’t understand this, which requires welfare recipients to be drug tested. Again on this, Labor and the Greens, I said yesterday are unelectable. They have gone troppo. I am just wondering how you can lose this argument. It is taxpayers’ money, drug taking is illegal. Surly we do not pay taxpayers’ money to people that are breaking the law. Isn’t it simply valid to argue that if you want welfare, we you will play by our rules. And if you do not like our rules, forget about taking the money.

MATHIAS CORMANN: I do not believe we are losing that argument in the community. 

ALAN JONES: No you are not. 

MATHIAS CORMANN: What is happening is that in the Senate not enough non-Government Senators are persuaded to back in the Government’s legislation. What we want, we want people on welfare to get back into work. If somebody has a chronic drug problem that is an issue that will make it harder for them to get back into work. So we want to ensure that they get the appropriate support to deal with their drug problems so that is one issue less that stops them from getting back into a job.

ALAN JONES: Good on you, we will go now. I hope that we can talk next week. We will try to find…


ALAN JONES: Ok, because I want to talk to you next week about this electoral legislation amendment funding disclosure reform. It sounds very, very complicated, but people are a bit worried about it. 

MATHIAS CORMANN: Happy to talk about it.

ALAN JONES: Thank you for your time. 


ALAN JONES: Mathias we will talk next week.



Senator the Hon Mathias Cormann, Minister for Finance, Perth