Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Thursday, 19 April 2018
ALAN JONES: It is fifteen after seven on Thursday April 19. And Mathias Cormann the Federal Finance Minister is on the line from Washington. Senator Cormann good morning.
MATHIAS CORMANN: Good morning Alan. Good morning to your listeners.
ALAN JONES: Good afternoon. It is Wednesday 2:15 in the afternoon. I should have asked you this question ten years ago I guess, but I am just getting some notes from my listeners who are working out whether you are Ma-thai-as Cormann or Ma-tea-as Cormann.
MATHIAS CORMANN: Ma-tea-as. Like a cup of tea.
ALAN JONES: Ma-tea-as, well they are wrong and I am wrong. Mathias.
MATHIAS CORMANN: But it is all good. It does not matter. Happy to be called whatever.
ALAN JONES: I will have to practice. I will have to practice. Mathias Cormann there you are.
MATHIAS CORMANN: That is what my mum would say.
ALAN JONES: Good on you. Look, given what has been revealed in the Hayne Royal Commission will you use your influence as one of the senior people in Government to persuade your people to extend the life of the Royal Commission. And in asking that question can I say to you, if you don’t you will be bludgeoned to political death by the Labor party and accused of protecting your mates in the big end of town. Should this Royal Commission be extended just until Justice Hayne has completed his work?
MATHIAS CORMANN: We will not protect anyone. Justice Hayne, the Royal Commissioner whom we selected and we appointed, is doing an outstanding job as you rightly pointed out in your editorial at the beginning of the show. We will take our advice from him. If the Royal Commissioner says to us that there is more work to be done, that he needs more time, the Government would act on that. Buti t is very much a matter for him to provide advice to the Government in relation to what … interrupted
ALAN JONES: That is a very interesting point, you wouldn’t just consider, you would act on it. If Kenneth Hayne says we need more time, this problem is bigger than it appeared in the beginning, your Government would give him that extra time?
MATHIAS CORMANN: We have indicated right from the outset that we believe that the time allocated is appropriate. But, if the Royal Commissioner were to come to the Government and say I need more time, I think you can safely assume that the Government would accept that request.
ALAN JONES: That is a good answer. Thank you for that. It is an indictment is it not that and we are getting a bit personal here of the Treasurer, when he made the comment that in April last year, our banking system is well regulated and it is important that it is well regulated and it is important that as enforceable authority ASIC has the powers of a Royal Commission and in fact has greater powers than a Royal Commission and yet with all these statutory authorities this rubbish has gone on.
MATHIAS CORMANN: We have to make sure that we do not throw the baby out with the bath water. We do have a vey stable financial system and it is very important for Australia to have strong, profitable and stable banks. But clearly, if things were done that were bad, then they have to be identified and they have to be acted on. It is a matter of public record that we were not in favour of another inquiry. But having said all of that, we put it in place. We selected the Royal Commissioner. The Royal Commissioner is getting on with the job, doing an outstanding job. All of the relevant regulatory authorities will take action in relation to anything that comes out of this inquiry as appropriate… interrupted
ALAN JONES: I think the public listening to you would say that the regulatory authorities have plainly failed and they were aware of that for a long, long time. We have now got a very smart man, Kenneth Hayne highlighting the extent of that failure. Look, I finished last week talking to you about Snowy Hydro. I will come to that in a moment. But I note today, and I have to say Mathias. You have got me.
MATHIAS CORMANN: You will figure it out.
ALAN JONES: You have got me in trouble here. I will call your Senator Cormann. That is easier.
MATHIAS CORMANN: No, no please do not do that.
ALAN JONES: I read with some disbelief today that State Labor governments are going to support your Government’s National Energy Guarantee at tomorrow’s Council of Australian Governments energy council meeting. But they will ensure they say that a future Labor government, and this terrifies Australians, could increase carbon dioxide emissions reductions targets. Now Bjorn Lomborg …
MATHIAS CORMANN: People should not vote for a future Labor government. If anyone is concerned about that … interrupted
ALAN JONES: I agree, I agree. But you have got to give …
MATHIAS CORMANN: ... the same as you and me, they should not vote for it.
ALAN JONES: I agree with that, but my god there is not much difference between them on energy. See if I just come to Bjorn Lomborg ...
MATHIAS CORMANN: That is not right. That is not right.
ALAN JONES: Let me come to Bjorn Lomburg he is regarded as a world authority on these things. He wrote recently that according to the United Nations’ own climate model the difference between a world with all the promised Paris carbon dioxide cuts and one without them, is 0.05 of a degree centigrade. And if every nation including the United States extended its carbon dioxide promises past 2030 and kept them going right through the century temperatures would drop by less than 0.2 of a degree centigrade. Why are we doing all this damage to our economy when we should in Australia have the cheapest energy in the world. We have got the opposite.
MATHIAS CORMANN: We are focussed on making sure that energy prices are lower into the future, that energy supplies are more stable. In order to achieve that we need to attract more investment. Investment into energy generation very much depends on investor confidence in what the policy settings will be over a 30, 40 year horizon. If we were not to make the decisions that we are proposing to make today, we would not attract the necessary investment… interrupted
ALAN JONES: But you won’t, because you are backing Finkel, Labor is backing Finkel, Finkel is 40 per cent renewables and coal out the door. You back Paris and all the difference is that Labor says 50 per cent renewables, which is absolute madness. But human beings Mathias, human beings produces three per cent of all the carbon dioxide in the atmosphere, Australia produces .001 per cent. What the hell are we putting Australia through all this economic pain for, apart from ideology?
MATHIAS CORMANN: Firstly, the emissions reduction target that we have signed on to, we signed on to in the period of the Abbott Government. They are sensible and they are achievable. Under the Howard Government, we delivered on certain targets under the Kyoto protocol. Under the Turnbull Government we are making the necessary decisions to deliver on the commitments that we made during the period of the Abbott Government. Our main objective is to ensure that we can have more reliable, cheaper energy. We are approaching it in a technology neutral way. We are proposing to remove subsidies for renewables. We are proposing to ensure there is appropriate opportunity …interrupted
ALAN JONES: But Finkel is 42 per cent renewables. 42 per cent renewables. When coal-fired power is the cheapest source of power, I did a thing, I just mentioned to my listeners, I did a figure just last week in relation to producing energy here and on one day last week only, just one day 91 per cent in New South Wales was coal-fired energy. Now solar and hydro would produce enough to most probably provide energy for Bathurst and nothing else. Why are we turning our back on coal-fired power when India and China and Japan and everybody… interrupted
MATHIAS CORMANN: We are not turning our back. That is the point. We are not turning our back. But we have to ensure that people can have confidence …interrupted
ALAN JONES: Hang on Liddell is going to close, Hazelwood has closed.
MATHIAS CORMANN: Again, we want Liddell to stay open and that is a matter of public record…interrupted
ALAN JONES: Hazelwood, Tony Abbott said it should stay open so Malcolm Turnbull says it must not stay open.
MATHIAS CORMANN: The horse had well and truly bolted by the time we had the change of government … interrupted
ALAN JONES: See I don’t understand, Mathias, I don’t understand. United Arab Emirates, they have got more oil and gas than they know what to do with and they have got no local coal. They have made a decision to build a 2,400 megawatt sate of the art new coal-fired plant, double the current capacity of Liddell and they will have to import black coal from us and from Indonesia and from South Africa. Can you tell me where there is a brand new coal-fired plant being built in this country?
MATHIAS CORMANN: If it was profitable and it was cheap …interrupted
ALAN JONES: But it is not profitable because of the subsidies to renewables.
MATHIAS CORMANN: … which will be wound down … interrupted
ALAN JONES: Not entirely wound down. They are not going to be chopped off, they are not going to be chopped off. You are just saying new plants might not get subsidies, but there is a whole heap of them out there with subsidies.
MATHIAS CORMANN: The whole purpose of the National Energy Guarantee is to remove, among other things, remove subsidies on renewable energies from 2020. As I said on your program last week it is important to have transitional arrangements in the context of investment decisions that were made in the past under certain policy settings. That is a principle …interrupted
ALAN JONES: Yes, coal won’t come to the party, Mathias. Coal won’t come to the party. See I mentioned to you last week, I honestly think this can win an election but not the way you people are going about it. I just don’t know why common sense doesn’t prevail. I asked you last week about Snowy and about economic modelling and you are the Finance Minister, and you said oh well I will check it all out. I went back and I thought perhaps I am wrong so I then actually checked this feasibility study for Snowy 2.0. Is it economic viable? Well yes there is a feasibility study, but key chapters, chapter three on the commercial viability of the project, redacted. Chapter four on the business case and modelling. Redacted, chapter 14 on the cost estimates redacted. So it is obvious there is stuff in there that Mr Turnbull, it is his baby, does not want you to know about because Parliamentarians can’t read it… interrupted
MATHIAS CORMANN: That is not right. Alan, I have to correct you there. Firstly, Snowy Hydro is a government business enterprise which operates independently of government like any other business. These are not decision that are made by the Prime Minister …interrupted
ALAN JONES: Well why is that stuff redacted?
MATHIAS CORMANN: Because there are commercial sensitivities in relation to some of the information, in relation to a business which is competing in an open market.
ALAN JONES: I am telling you, I am telling my listeners, I am telling my listeners and someone can correct if they can prove I am wrong that this is a complete dud. Snowy it is not viable …interrupted
MATHIAS CORMANN: Again that is not right. You know that I have supplied you with information last week after our interview last week. The internal rate of return that has been put in the public domain by the managing director of Snowy Hydro that is expected from the …interrupted
ALAN JONES: I think the managing director of Snowy Hydro Mathias, the managing director of Snowy Hydro, I am sorry, I would not feed. I would rather look at an outfit like Lazards …interrupted
MATHIAS CORMANN: That is not very … interrupted
ALAN JONES: Now Mathias, well hang on, we have got to nail this thing here, this is critical, business is listening to you, consumers are listening to you and they are being put out of business because we are pushing some kind of ideological argument here which is damaging to the economy. Now Lazards … interrupted
MATHIAS CORMANN: There is nothing ideological about it. This is essentially an extension of what Snowy Hydro is already doing now. It is essentially providing a massive battery, which will be able to supply electricity into the market at a time of peak demand or volatility in… interrupted
ALAN JONES: Mathias, you are spending another six billion, perhaps more than that, ten billion. 2017 Lazards, an internationally regarded firm, listen to me, Lazards published a report on the estimated costs of the different types of energy storage deliver to the grid and the costs include buying the electricity for Snowy to pump the water up hill, the capital cost, we have talked about that six billion you have paid to New South Wales and Victoria, we have talked about that… interrupted
MATHIAS CORMANN: You are mixing two different things up…interrupted
ALAN JONES: But let me finish, let me finish, okay let me just finish though. Using generous assumptions for pumped hydro, Lazards, an international energy firm acclaimed for its accuracy, estimated the cost of Snowy 2.0 electricity at between $200 and $257 per megawatt hour. That is understated they say because the first estimate of the cost of Snowy was $2 billion, that has now been put $4.5 billion. $200 to $257 [per megawatt] an hour when we can get coal-fired for less than $60 megawatts an hour. How are we meant to think that you have got a responsible economic policy in relation to electricity.
MATHIAS CORMANN: You are mixing up two different propositions here. Firstly, the investment that the Commonwealth has made into consolidating the ownership 100 per cent in federal Government hands instead of having it split three ways between New South Wales, Victoria and the federal level. That is one thing. That is quite separate from the pumped hydro Snowy 2.0 proposal, which would be entirely financed by Snowy Hydro itself off its own balance sheet, which will be making a sufficient and very attractive internal rate of return, which will be profitable. It is an extension of their current business.
ALAN JONES: Only if you knock coal-fired power out of the market… interrupted
MATHIAS CORMANN: That is not right.
ALAN JONES: It is completely correct. Kristina Keneally, Kristina Keneally asked questions about this in Parliament at a Senate Estimates Committee earlier this month. She made this point when she was talking to this bloke Whitby from Snowy Hydro and she asked a simple question, is it right that if coal-fired power is given a mandate in this country, would Snowy power be viable and he said, well answer simply no. That was his word.
MATHIAS CORMANN: What does that mean, a mandate? What are you trying to suggest?
ALAN JONES: If we go open slather and made coal-fired power on the same level playing field as everything else and we build coal-fired power stations …interrupted
MATHIAS CORMANN: That is what we are doing, we are putting coal-fired power generation on… interrupted
ALAN JONES: Well what Whitby said was it would not be viable. Snowy 2.0 would not be viable. I will read you the exact exchange Mathias, she said, Senator Keneally, this bloke Whitby, he is Snowy’s Chief Operating Officer, Keneally said is it the case that if additional coal-fired power plants are built and a lot more base load is added to the national energy market, Snowy 2.0 would have its economic viability threatened? Whitby from Snowy Hydro said simply put, yes.
MATHIAS CORMANN: Again, they are making judgements on what their expectations are and what is going to happen in the energy market moving forward. Based on all of the best available information to make these sorts of judgments they have come to the view that it is a highly profitable proposition … interrupted
ALAN JONES: That is not what Whitby said.
MATHIAS CORMANN: … which will be able to improve the stability in the electricity market across the east coast and will also contribute … interrupted
ALAN JONES: Well Lazards said whole sale price an excess of $200 per megawatt hour, coal-fired power $60 per megawatt hour. Can we resume the discussion/debate next week?
MATHIAS CORMANN: What I would suggest Alan, I always enjoy having these conversations, but these very specific energy questions, you probably should have a chat to Josh Frydenberg about. It is very much in his portfolio.
ALAN JONES: Alright Mathias.
MATHIAS CORMANN: I might send him your way. Happy to talk to you next week.
ALAN JONES: Talk to you next week.