Senator the Hon Mathias Cormann

EMMA ALBERICI: Now returning to federal politics and today’s Cabinet meeting held against the background of the stillborn WA Senate result, Labor’s stance on a price on carbon, car industry support and community concern about MP’s expense claims. The new Finance Minister Mathias Cormann joined us from Canberra.

Mathias Cormann, good to have you with us.

MATHIAS CORMANN: Good to be back.

EMMA ALBERICI: You’re a senior West Australian Liberal, tell us how big of a blow to Australian democracy has been the loss of these 1375 votes in your home state.

MATHIAS CORMANN: Look what happened there is very unfortunate. Obviously the integrity of our electoral system is of paramount importance. There are some processes to get through and they should be allowed to take their course, but if ultimately there is another election in Western Australia, the good news is of course is that the people of Western Australia will have another opportunity to send Bill Shorten and the Labor Party a message about the carbon tax. We will have another referendum on the carbon tax because Bill Shorten and Labor don’t appear to have heard the message at the last election.

EMMA ALBERICI: We’ll have plenty of opportunity to talk about the carbon tax later, but you’ve just come from a Cabinet meeting and of course I’m not going to ask you to reveal the discussions that you had there, but set against that background I’m wondering how concerned the government is about sending an entire State back to the ballot box so soon after the September election.

MATHIAS CORMANN: Well we shouldn’t get ahead of ourselves, but the Electoral Commission is a statutory agency which is independent from government and it should be. What happened here shouldn’t have happened. There is currently a review under way by former Federal Police Commissioner Mick Keelty. That should be allowed to take its course. Then there are some legal processes to be pursued, which I suspect some of the interested parties will initiate, if not the Electoral Commission itself. Then of course we’ll have to await a decision by the High Court and I wouldn’t want to pre-empt what the decision may or may not be. Suffice to say that this is very concerning. It is very unfortunate. It shouldn’t have happened. We now have to find the best way possible to deal with this moving forward.

EMMA ALBERICI: But in the event that another vote is called, which is looking increasingly likely, are political parties and individuals who stand going to be asked again to finance an expensive election campaign?

MATHIAS CORMANN: Again we’ve got to wait on what happens to those various processes that need to be allowed to take their course. Not least of which, a decision by the High Court. If indeed the High Court does decide that there ought to be another election then we will just have to deal with that. It will have to take place and we will just have to make the best of what is a very unfortunate set of circumstances right now. But the silver lining is that people in Western Australia will have another opportunity to send a message to Bill Shorten and the Labor Party about the carbon tax…interrupted

EMMA ALBERICI: I think we’ve heard you loud and clear on that. Independent Senator Nick Xenophon says he wants new laws to stop parties with tiny proportions of the vote getting elected under complicated preference arrangements. Does the government agree with Mr Xenophon that those new laws should be passed before any fresh election in WA?

MATHIAS CORMANN: The important thing here is that we’ve got to consider any suggestions for improvements in an orderly and methodical fashion. What invariably happens after elections, after every election in fact, is that there is a committee of the Parliament which reviews the conduct of the election just gone and after having considered things through a proper, careful process makes recommendations on possible improvements. I don’t think that we should rush now to make judgements in order to meet a timetable for a subsequent election in Western Australia. I don’t think that that would be appropriate.

EMMA ALBERICI: Senator Cormann you’ve by now had many briefings with Treasury and with your own Department, I’m wondering if you can summarise for our viewers exactly how you would state the current state of the economy?

MATHIAS CORMANN: Well we have had a whole series of briefings of course and we’ve already made a series of announcements as well. If you wanted me to summarise what we’ve inherited from the Labor Party, we’ve inherited a Budget that is in a mess. Of course in 2007, the former government inherited a very strong Budget position…interrupted

EMMA ALBERICI: I’m sorry to interrupt you but I specifically wanted you to give us your view at this point in time of the Australian economy, not necessarily the Budget position but the broader Australian economy.

MATHIAS CORMANN: Well right now Australia faces a number of challenges given the global economic context and we’ve got a number of opportunities. As a result of decisions over the last six years, Australia is not in as strong a position as we could have been and as we should have been. At a time when we should have focused on improving our international competitiveness, at a time when we should have focused on improving our productivity and on strengthening the economy, what has happened over the last six years is that way too many additional burdens were imposed on the economy, with again the carbon tax, the mining tax, more than 21,000 new pieces of red tape, the uncertainty of government decision-making, a whole series of things that really have made it harder for us to be as successful, as resilient as we could have been and as we should have been. Of course moving forward our commitment is to remove some of those burdens and to really focus on taking Australia back to a global competitive edge when it comes to taxation and regulatory arrangements and policy settings and of course providing certainty and stability in terms of the way government goes about making decisions.

EMMA ALBERICI: What sort of impact would the loss of the car industry have on the Australian economy?

MATHIAS CORMANN: We would like to see a strong and sustainable car industry for the very long term. In the lead up to the election we were very clear on what our policy approach would be. We flagged that we would be pursuing a Productivity Commission inquiry to ensure that government support is properly targeted and is properly directed at ensuring that there is a strong and sustainable car industry and of course we are currently going through that process. The Terms of Reference are out there, the Productivity Commission inquiry is under way and the government will make decisions in a proper, orderly and methodical way.

EMMA ALBERICI: So it’s possible that you would review your decision to scale back assistance to the car industry as a result of the Productivity Commission report?

MATHIAS CORMANN: Well we’ve made some very clear announcements in the lead up to the election. We are now facing a set of circumstances which of course we are considering. The Productivity Commission inquiry is going to be a very important report to the government to help us make final judgements.

EMMA ALBERICI: So just to be clear – you could well review your decision to scale back the assistance?

MATHIAS CORMANN: Well I’m not pre-empting anything and I wouldn’t want you to read too much into it. What we are currently doing is to go through the process that we flagged before the election that we would go through. We do want to see a strong and sustainable car industry, we do want to see an industry that focuses on being competitive again when it comes to exporting cars manufactured in Australia, we want to be satisfied that whatever additional government support goes to the car industry will help, or has a chance to help, those sorts of outcomes. So I wouldn’t want to pre-empt what is going to be at the end of that process, but of course the fact that we are having a review means that we will consider the findings of that review when it reports to us.

EMMA ALBERICI: On the carbon tax, electricity bills have been rising rapidly, according to the Productivity Commission they are up more than 70% in real terms in the last 5 or 6 years. Now that is not Labor’s fault is it?

MATHIAS CORMANN: Well the carbon tax of course has increased electricity prices by more. Whenever there are changes to the…

EMMA ALBERICI: Sorry when you mean by more than what?

MATHIAS CORMANN: Obviously in relation to anything, prices will increase for a range of reasons. Some of these things are directly under your control and some are not under your control. The carbon tax is a self-inflicted decision to push up the cost of electricity…

EMMA ALBERICI: So we don’t muddy the waters too much, you talk about what is not in your control or is in your control and in June of this year the Productivity Commission said improving competition in the market, privatising state networks and fixing floors in the regulatory environment would save consumers hundreds of millions of dollars a year. What are you doing to address those things?

MATHIAS CORMANN: Well of course we want to put downward pressure on electricity prices across the board. The fastest way to reduce electricity prices is to scrap the carbon tax. That is the most immediate way to reduce the cost of electricity.

EMMA ALBERICI: You must have a breakdown Senator, can you tell us how much of the rise in household power bills can be directly attributed to the carbon tax.

MATHIAS CORMANN: Obviously the most recent breakdown we have got is the former governments own modelling that showed the carbon tax would push up electricity prices by 10%, which is on top of anything else that happens. That is what we have seen happen in the market. Now the truth is the carbon tax is intentionally designed to push up the cost of electricity in order to drive certain behaviours when it comes to the consumption of electricity. Let’s not muck around with this. That is the purpose of the carbon tax.

EMMA ALBERICI: Does your government not want to encourage Australians to use alternative energy or less polluting energy?

MATHIAS CORMANN: We want to encourage people to provide alternative forms of energy to the extent that it is sensible in an economic way. What we have said very clearly is that the carbon tax is not a sensible way. It hurts families because it pushes up the cost of electricity for them. It hurts our economy because it makes us less competitive internationally, because it is imposing a cost of doing business on manufactures and others here in Australia which is not faced by our competitors in other parts of the world. The carbon tax makes us less competitively internationally without actually doing anything to help reduce global greenhouse gas emissions. It imposes a sacrifice on families and puts burdens on the economy without actually doing anything for the environment.

EMMA ALBERICI: You talked there about economics. A study just last week found that 33 of 35 Economists prefer Labor’s carbon pricing to your Direct Action Plan, not because they don’t think that your plan won’t reduce emissions but because they think Labor’s plan is cheaper.

MATHIAS CORMANN: We don’t agree. Labor’s plan is pushing up the cost of electricity for families. Pushing up the cost of electricity for business and it is making overseas emitters more competitive than more environmentally efficient equivalent businesses here in Australia. It helps overseas emitters take market share away from their competitors here in Australia. So to the extent that it pushes up the cost of electricity it actually encourages a shifting of emissions and a shifting of jobs, with a shifting of economic activity to other parts of the world. That is not a sensible way, that is not effective action on Climate Change.

EMMA ALBERICI: Now you are the Minister in the Cabinet responsible for parliamentary entitlements. What are you going to do to tighten the rules given the instances of abuse that we have recently heard a bit about?

MATHIAS CORMANN: Essentially what we have heard about in recent times is the system at work. Politicians, in particular federal politicians, as part of their job have to travel. Let me assure you that as somebody from Western Australia it is not the best part of the job, but we have to travel. Travel claims should be made within the rules, politicians should at all times respect taxpayers money and should at all times err on the side of caution when they are submitting claims, but essentially we are providing…

EMMA ALBERICI: Do you think Don Randall was erring on the side of caution?

MATHIAS CORMANN: Don Randall has corrected some of the claims that he has previously submitted on reflection and again this was the system at work. We have to report on our travel in great detail to the Parliament. Those reports are tabled on a regular basis, journalists and others can scrutinise them as they invariably do and that is the system at work. Let me just add very quickly here that whenever there are sensible suggestions to improve the system, of course we would consider that…

EMMA ALBERICI: Where will those suggestions come from Senator?

MATHIAS CORMANN: There have been a number of reviews in recent years and there have been a number of recommendations implemented in recent years. This is a system that keeps evolving and I am sure that it will continue to evolve as we move forward.

EMMA ALBERICI: Given this has become a problem for you so early in your government, wouldn’t taxpayers expect that you would be looking at this issue right now with some degree of alacrity?

MATHIAS CORMANN: In the first instance, this is of course the area of responsibility for the Special Minister of State, Senator Michael Ronaldson. Of course he is looking at these issues and he will no doubt, at some point in time, be making some recommendations to the government on whether there are some areas that can be further improved.

EMMA ALBERICI: What do you think the public is making of all of this?

MATHIAS CORMANN: This is obviously an area where the public expects politicians to act responsibly and act within the rules. But I think the public well appreciates that as part of representing them in the Parliament here in Canberra that people who are coming from the length and breadth of Australia, from Perth to Kununurra, from Hobart up to Cairns, that these are people that in the course of their duties, in the course of representing them here in Canberra that there is a level of travel involved. Whether that is in relation to parliamentary sittings or committee work or in relation to opposition responsibilities of holding the government to account. Of course there is a level of travel involved so there’s got to be a set of rules, there is a set of rules, Members of Parliament ought to comply with those rules and whenever there are issues that emerge they have got to be fixed and that of course is what is happening.

EMMA ALBERICI: Mathias Cormann, we have to leave it there. Thank you so much for your time this evening.

MATHIAS CORMANN: Always good to be here.