Fiveaa – David and Will

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






ACCC Report, Tax Avoidance

MIKE SMITHSON: Well, Australia’s massive energy debate is heating up again. The consumer watchdog ACCC has delivered a no-nonsense report to the Prime Minister. It is calling for a major overhaul of energy generation across the country, federally guaranteed dispatchable power, turbines. Well, they seem to head the list. It says consumer prices must come down. Federal Finance Minister Mathias Cormann, Senator, joins us. Senator, good morning. 

MATHIAS CORMANN: Good morning.

MIKE SMITHSON: Is your Government going to get serious about these recommendations and if so, when?

MATHIAS CORMANN: Well we are very serious about bringing electricity prices down and making sure we can continue to keep the lights on. We commissioned this report. We have just received it and we are serious about considering anything that can help us bring electricity prices down. That is what we will do with this report and recommendations.

MIKE SMITHSON: So when would you see this happening? By the end of the year the Prime Minister has hinted at, and what form would it take? Do we see power stations, energy generation pop up all around the country and coal firmly back on the agenda?  

MATHIAS CORMANN: We have already done a lot to bring electricity prices down and we will continue to pursue the National Energy Guarantee. As Rod Sims from the ACCC has said, it is incredibility important to pursue our policy on energy in a technology neutral way. If Government prescribes one energy source at the expense of another it drives prices up, which is why Labor’s obsession with pushing renewables to an excessive extent at the expense of other energy sources with subsidies and the like is a recipe for higher electricity prices. Now we will continue to pursue a technology neutral approach, but we will see how best to complement the approach of the National Energy Guarantee based on the recommendations from the ACCC with other measures. But the ACCC did make very clear that the National Energy Guarantee was the right way forward to bring prices down and to improve the stability and the reliability of the system.

MIKE SMITHSON: Do you see in South Australia’s case , we have had a change of Government and your Government was very critical of the Labor State Government and its reliance on renewable energy and you know, there is an argument and a counter-argument as there always is. Do you see an interconnection between South Australia and New South Wales as put forward by Steven Marshall’s new Government, is that the ultimate answer for South Australia?  

MATHIAS CORMANN: The ultimate answer is to take a technology neutral approach. The previous State Labor Government had an ideological obsession with pushing renewables in an excessive fashion without properly managing the risks when it comes to reliability and price that come with the intermittent nature of that energy source. We are all in favour of more renewables as part of a considered energy mix, making sure that we can keep prices affordable and the system reliable and stable. That is something that the previous State Labor Government failed on. We are working very well with the new Marshall Government in relation to progressing an energy policy framework that delivers lower electricity prices and a more reliable energy supply. 

MIKE SMITHSON: So what about, for instance, I notice part of the ACCC, its recommendation, rooftop solar subsidy schemes around the country. Are they now out of whack with commercial reality? Are the states subsidising for solar rooftop and the rebates they give back, has that gone a bit too far now?

MATHIAS CORMANN: We will consider all of the recommendations in the report and will provide our response once that has happened. But in terms of our overall approach, it is that we are looking at phasing out subsidies for any energy source and to provide a framework that gives certainty to investors so that the increased generation and supply of energy that comes with increased investment in energy generation will bring prices down. If you have increased supply, that is the key ingredient to ensure that in the face of growing demand you get more affordable prices. That is really what we are trying to do. We are trying to phase out subsidies. We are trying to make sure that based on increased investment there is increased generation and as such, lower prices and increased stability. What specific responses we make to the report that has just been received, that is something we will make clear in the next little while.

MIKE SMITHSON: Well, we will look forward to any developments there. Hey, it is tax time right Senator, right around Australia obviously. I read in The Australian this morning, individual Australians who have over-claimed on their tax return cost the Federal Budget almost $9 billion in the 2014/15 financial year. I am not saying it is a national sport in Australia, to try to squeeze a little more out of your tax return than you are eligible for, but plenty of people do it. But I did not realise it was such a big cost to the bottom line of the Federal Budget.

MATHIAS CORMANN: Well, in aggregate across the economy when you have millions of Australians over-claiming it can add up. The Tax Office is resourced to ensure compliance with our tax laws. It is unfair if most Australians pay their tax fairly and squarely and fellow Australians do not. So the Tax Office is always focused on making sure they enforce our tax laws as appropriate and pursue avoidance where it needs to be done.

TOM REHN: We are talking to Senator Mathias Cormann. Senator I just wanted to ask you about the rescue effort and a lot of Australians involved, a South Australian, Dr Richard Harris, involved in Thailand to help rescue those 12 soccer boys plus their coach. An amazing effort, and particularly by the Australians involved.

MATHIAS CORMANN: Well it was an amazing effort. What a beautiful, heart-warming story that all of those kids and their coach have been able to be rescued. It is very sad that one of the Thai rescuers lost his life. But you are right, quite a number of Australians have absolutely distinguished themselves by deploying their expertise and helping to bring this venture to a successful conclusion for those boys and their coach. What a heart-warming story it was. 

MIKE SMITHSON: It certainly was. It had its highs and its lows, very definitely, but in the end the 13 that were involved, the young boys, all got out safely and a magnificent rescue effort from the team. Senator, thanks very much for joining us this morning and enlightening us on what is happening at a Federal level and especially in the wake of the ACCC report, which is eventually going to affect all Australians, including those in South Australia, so we thank you for your time this morning. 

MATHIAS CORMANN: Always good to talk to you.


Senator the Hon Mathias Cormann, Minister for Finance, Perth