2GB – The Alan Jones Show

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






Liddell power station, National Energy Guarantee, Snowy Hydro, migration

ALAN JONES: The Federal Finance Minister Mathias Cormann is on the line from Melbourne, which I must say is a much more respectable time zone than that of Perth, which is his home city. Mathias, thank you for your time. 

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

ALAN JONES: Can I just say that to my listeners, being able to talk to Mathias Cormann gives us some insight into the Turnbull Government. I have avoided saying this but Malcolm Turnbull refuses to talk to me on this program. And indeed he refuses to answer my invitations to come on the program. I might point out that no Prime Minister has ever done that. So we are very grateful of someone of the standing and status in the Federal Government of Mathias Cormann to answer what are some difficult questions. I should say too that Mathias and I have no discussion prior to this segment, so he has got no idea what I am going to ask him and he wouldn’t expect to have any idea. Can I just then begin Mathias by saying this, Tony Abbott said that we should buy Hazelwood power station to maintain baseload power. Malcolm Turnbull immediately couldn’t wait to say no. He said we should buy Liddell power station. Malcolm Turnbull said it is nationalisation and it is socialism. The Energy Minister Josh Frydenberg jumps into the coup. What is going on here? The public do not understand. These are very sensible proposals. 

MATHIAS CORMANN: The Government should not be using taxpayers’ money to buy coal-fired power stations. What we have got to do is ensure that the policy framework is in place to attract private sector investment into energy generation from any type of energy technology. Coal is a very important, a very significant and very important energy source and will continue to be a very significant and very important energy source. By removing subsidies from renewables and by levelling the playing field, which we are proposing to do through the National Energy Guarantee, it gives coal fired power generation the best possible opportunity to be profitable and successful into the future … interrupted

ALAN JONES: Just let me clarify that quite clearly again, because I am going to take up a point that you just made. Subsidies to renewable energy on my assessment they would be approximately $60 billion by 2030. Will there be no subsidies to renewable energy and if so, on what date will those subsidies end?

MATHIAS CORMANN: There will be transitional arrangements in the context of existing commitments. But what we are proposing to do is wind down generating new subsidies for renewable energy from 2020 under the National Energy Guarantee proposal, because we do want to level the playing field … inerrupted

ALAN JONES: But there will be subsidies?

MATHIAS CORMANN: We would not be making any new commitments to … interrupted

 ALAN JONES: So existing commitments will apply. Why should, there will be people listening to you, I have said this to you before Mathias, you are the Finance Minister, this is taxpayers’ money, the people who are listening to you who are just pastry cooks or mechanics. There is a restaurant here, I am broadcasting from the beautiful Southport Yacht Club, it is a restaurant. No one provides them with any subsidies at all. Why on earth does some one who sticks up a wind turbine get a subsidy from taxpayers?

MATHIAS CORMANN: I was not there when certain decisions were made in the past. But the truth is, once you have attracted investment under certain conditions, you can not just change the goal posts along the way. You have to work your way through an appropriate transitional period to ensure that people can adjust their investment approach. The proposal for a National Energy Guarantee does provide the best possible opportunity in a technology neutral fashion to attract additional investment, to give investors the certainty they need to provide additional investment into energy generation, which in the end, the whole purpose is to bring down the cost of electricity and improve reliability and still meet our emissions reduction targets, which incidentally we signed on to in the period of the Abbott Government, when I was a Minister in the Abbott Government. 

ALAN JONES: But it won’t surprise you to know that I don’t agree with any of that. And you’re being loyal to policy for example, no one is prepared to mention nuclear energy and we are not going to discuss that. I want to take you up on the point that you made and the fact that you can’t have governments buying into coal-fired power stations and Malcolm Turnbull has said that is nationalisation. Frydenberg has said it is socialism. If it is energy nationalisation or socialism to buy the Liddell power station, why isn’t it energy nationalisation and socialism to buy out two state government shareholders to the tune of $6 billion in Snow Hydro. Why is one nationalism, it is okay to buy out Snowy Hydro not okay to buy out Liddell. I tell you out there in listenerland it doesn’t make sense.

MATHIAS CORMANN: There are a couple of distinctions here. Firstly, what was being suggested as I understand it was not some sort of consensual transaction in relation to Liddell, but some sort of compulsory acquisition by the Government of a privately owned asset, which at the moment is not for sale. The proposition that somehow the Government should move in and compulsorily acquire a privately owned asset, that is akin to what would happen in a socialist country. That is not something that you would do in a country committed to free enterprise… interrupted

ALAN JONES: Hang on, hang on, hang on. Your job, Mathias, with respect, your job is to look after Australians. Here is an American running AGL. He says it is not for sale, therefore Liddell just is dormant and is ineffective, no coal-fired power. What does that mean? It is like bananas, there are fewer bananas in the market, the price of bananas go up. Less coal-fired power in the market, the price of electricity goes up. He just happens to have Bayswater, so he gets increased revenue from the Bayswater power station and he gets a subsidy because he goes into renewable energy. This bloke is holding this country to ransom. Do we stand back with our arms folded and say that is okay and start preaching socialism and nationalisation?

MATHIAS CORMANN: No we are not standing back with our arms folded. Let me just finish the answer to your initial question. So what is the difference between Liddell and Snow Hydro? Snowy Hydro was a publicly owned asset. It was a Government owned asset. It just happened to be owned by three different Governments, which meant inefficiencies in relation to decision making in relation to that business. What we have done here is streamlined the government ownership structure. It is a government business enterprise. It was before. It still is now. The investment … interrupted

ALAN JONES: But we have nationalised it. The Government owns it.

MATHIAS CORMANN: The Government has always owned it. The Government has owned it since... interrupted

ALAN JONES: But that is my point. It is okay for Government to own Snowy Hydro, it is not okay for the Government to own Liddell. There are people laughing here Mathias. Mathias there are people listening to me and they are laughing. 

MATHIAS CORMANN: No, it is not okay for a business that is owned by private owners to just be compulsorily acquired … interrupted

ALAN JONES: Hang on, if this bloke is not behaving in the national interest, who is going to stand up to this Vessey? Who is calling this bloke in and saying you will not hold us ransom? If you want to use Liddell, hang on Mathias, do you want use Liddell or not? If you do not we want coal-fired power and we want you to sell it. Now are you going to sell or aren’t you? If you aren’t you are forcing us to act. I mean come on. 

 MATHIAS CORMANN: The Prime Minister has called in the management and the CEO of Liddell. He has had conversations with him along the lines of wanting to ensure that the coal-fired power station continues to function for longer than what is currently planned. We certainly want to see the extension of the Liddell coal-fired power station and we are pursuing these sorts of conversations … interrupted

ALAN JONES: Hazelwood?

MATHIAS CORMANN: ... but there are certain things that we should be very, very careful of and that we should not just … interrupted

ALAN JONES: Well I will tell you what, Mathias, I will tell you what you better tell your Prime Minister to be careful of, every time Abbott opens his mouth and says something, Turnbull immediately says it is wrong. Turnbull is on the nose. When is someone going to understand this? These polls are taking you people over the cliff and there are good people in the conservative party, there are good people in the Liberal who are going to go out, the lemmings following him over the cliff, on energy policy … interrupted

MATHIAS CORMANN: To be fair, just to pick you up on this point, when Tony Abbott as a former Prime Minister makes certain statements, all of us from the Prime Minister down get asked about it. Tony Abbott is entitled to express his views, but as a Government we have a responsibility to then explain why we are or are not prepared to do certain things. As far as the polls are concerned, as I said to you on your program last week, we are in a much better position than John Howard was in the lead up to any of the elections that he faced as Prime Minister as the serving Prime Minister and was re-elected. Whether it was in the lead up to 2001, or in the lead up to 2004, John Howard was consistently further behind than what we are at the moment. 52-48, yes we are behind, yes we have a lot of work to do. Yes we have got a lot of work to do to ensure we can successfully win the next election, but it is not actually as far behind as what John Howard had been at similar periods in the period that he served with distinction as Prime Minister. 

ALAN JONES: Mathias, I have known you a long time, loyalty is a wonderful trait in any individual, but being loyal to false causes leads you to all sorts of trouble. I want to come back to Abbott … interrupted

MATHIAS CORMANN: I support our cause.

ALAN JONES: Okay, there are some people who do not, who give the impression that they are on the other side. I want to come back to this Abbott issue though because he said yesterday, why do Malcolm Turnbull and some senior Members of the Government get their knickers in a twist over a news report about Australia’s migration policy. Have you had any discussions with Peter Dutton and Prime Minister Turnbull, you are a senior man, one of the top four in the country, over cutting Australia’s permanent migrant intake by 20,000? Have you had any discussions with Peter Dutton? Did Peter Dutton propose to a group of Ministers like you, that we cut the migration intake form 190,000 down to 170,000?

MATHIAS CORMANN: Firstly, I reject the proposition that anyone is getting their knickers in a twist. I think that is clearly a very unhelpful comment to make … interrupted

ALAN JONES: Well I think they are. 

MATHIAS CORMANN: The second point is, as the Prime Minister and as Peter Dutton have made very clear, there has never been a proposal to Cabinet or any of its Cabinet sub-committees to cut the permanent migration intake beyond the … interrupted

ALAN JONES: No, there has not been a submission…interrupted

MATHIAS CORMANN: Please let me answer, beyond the reduction that has previously been implement. 190,000, that is not a target by the way, that is a ceiling, it is not something that we have to hit, it is an upper limit. Finally, every year as part of the process leading into the Budget and Tony Abbott would know this very well, Departments assess various numbers and various indicators in the Budget. This is one of the things as a routine matter that gets revisited on a yearly basis as part of the Budget process. But there has been no suggestion that we should be reducing the overall net permanent migration number further. 

ALAN JONES: I will come to that in a minute, just one simple question, does Abbott ever say anything that is worthwhile? Does he ever say anything? Or do we have to have this knee jerk, knickers in a knot every time he opens his mouth? Now I am asking you this question, Peter Dutton is on the record as saying that he confirmed that he did hold discussions with Cabinet colleagues about cuts to Australia’s migration program. He did have those discussions, Peter Dutton said that. Have you had discussions about cutting the migration program, forget about taking something to Cabinet, that is the end result. Have you had discussions with anyone, Turnbull or anyone or Peter Dutton about cutting Australia’s migration program because Peter Dutton says you have. 

MATHIAS CORMANN: No, that is not quite right. Peter Dutton has made very clear again yesterday that his position and the Prime Minister’s position is identical. There has been no discussions about a proposal … interrupted

ALAN JONES: Mathias, Peter Dutton said yesterday he did hold discussions with Cabinet colleagues about cuts to Australia’s migration program. He said that.

MATHIAS CORMANN: There are discussions every year about the number which has been consistent now since 2011-12 roughly, it is a bit less than what it used to be. It is certainly much less than what it was under the period of the Rudd and Gillard Governments at its peak. There are hundreds of things that get discussed in the context of any Budget every year … interrupted

ALAN JONES: But that is the point. See Mathias, all that Abbott is saying is why would the Prime Minister and other senior Ministers get their knickers in a twist over something which really is a sensible policy. Why wouldn’t we say to the public yeah, hey, hey we understand that house prices are very high, we understand our roads are clogged, we understand that this is putting downward pressure on wages, we are constantly looking at the whole question of migration levels. Instead of bashing Abbott up, why wouldn’t we say look we have these conversations and yes I did have conversations. Turnbull goes out and says Clennell is wrong, this is wrong, fake news and the public are sick of it Mathias. 

MATHIAS CORMANN: The way the story was pitched was not quite right, but that is beside the point. The truth is that we support the migration level as it is currently determined. There is no proposal to reduce it further. That is really the bottom line. 

ALAN JONES: Okay, we always run out of time, but we will be back next week. Snowy 2, I just want to come to that. Is there are a business or financial model somewhere that I can read? I understand that the business model, I have asked for it and financial model of Snowy 2 has been redacted, no one can compare this with anything else. Is there a business case for Snowy 2.0? 

MATHIAS CORMANN: There is a business case … interrupted

ALAN JONES: And who has seen it?

MATHIAS CORMANN: These things are considered through the appropriate processes of Government. It is outside my portfolio so I will have to seek some advice on… interrupted

ALAN JONES: Have Parliamentarians seen it? But you are the Finance Minister.

MATHIAS CORMANN: I have certainly seen all of the information that we need to see to make assessments on the financial performance here. The projections are for a very strong internal rate of return of about eight per cent. The investment is proposed to … interrupted

ALAN JONES: My information, to interrupt you, we are just running out, I want to finish on this point to make so you can consider for next week, I have noticed one of the most reputable modelling outfits for energy internationally is a firm called Lazard and Lazard’s figures that I was reading last night cite the cost of energy from the Snowy 2.0 is between $200 and $257 per megawatt hour. Come on, where is the business case? We need to see it.

MATHIAS CORMANN: This is well and truly outside my portfolio but I will take that on notice …interrupted

ALAN JONES: Good on you and we will have yarn next week.

MATHIAS CORMANN: … and we can talk about it next time. Good.

ALAN JONES: Good on you Mathias, thank you for your time. 


Senator the Hon Mathias Cormann, Minister for Finance, Perth