Senator the Hon Mathias Cormann

PETER BEATTIE: Welcome to Beattie and Reith. I’m Peter Beattie and you must be...

PETER REITH: And I’m Peter Reith and I am going to support Mathias because I reckon he is a good operator. 

PETER BEATTIE: There you go Mathias, you got a fan here already. 

PETER REITH: Yeah not bad, yeah.

PETER BEATTIE: Mathias thanks for joining us. Ladies and gentlemen of course, the Finance Minister. Mathias I know you have been doing some negotiations in the Senate with One Nation to get bills through, was that the basis of the preference deal in WA, because you are a power broker in WA, so is that how the deal came about? And what does it mean, the preference deal with One Nation? 

MATHIAS CORMANN: I work across the Senate to reach a consensus across all parties in the Senate, including the Labor party, the Greens, One Nation, Family First when they were there, the Liberal Democrats, Derryn Hinch, you name it. I work with all Senators that have been duly elected by people across Australia and who have a job to do. I am focused on getting as much of the Government’s agenda through the Senate as we possibly can, to strengthen growth, create more jobs and ensure that Australia is safe and secure. When it comes to preference arrangements in Western Australia, that is, as far as the Liberal party is concerned, that is a matter for the WA Liberal party organisation. I might just make a few comments though, because a lot of inaccurate information has been circulated today. Firstly, the WA Liberal party is preferencing the National party in every single Lower House seat that we are both contesting. The National party is getting the first preference after our own candidates in every Lower House seat... interrupted  

PETER BEATTIE: That is all the Lower House seats?

MATHIAS CORMANN: Yes, all the Lower House seats. That’s right. In Western Australia, and that is not something that we have initiated, but because it is the preference of the WA National party, we are not in Coalition. There is an Alliance. Since Brendon Grylls has been the leader and since before the 2008 election, the WA Nationals at every election have preferenced other parties, including One Nation, ahead of WA Liberal party candidates in the State Upper House. That is an arrangement that the Liberal party in WA then followed in 2013. It is the same arrangement this time around. So when it comes to preference arrangements in the Upper House, courtesy of the fact that we are not in Coalition in Western Australia, but in an Alliance arrangement, this has been the way that preference arrangements have worked for some time. 

PETER BEATTIE: Mathias you know of course that whatever happens in Western Australia will have ramifications in Queensland, my home state. Naturally, the big debate is the Liberal party, even though it is in the Upper House I accept your point about that, doing preferences with One Nation, is really an enormous story. So do you see that as damaging to the Liberal brand?

MATHIAS CORMANN: The first point I would make is that Pauline Hanson and another one of her Senators today, have been quite adamant that they have had several approaches by the Labor party for preferences in Queensland. The Labor party probably never expected that this would become public. As you would expect, they are denying it. But Pauline Hanson and her fellow Senator from NSW, Brian Burston, are adamant that they have had several approaches from Labor representatives around arrangements around preferences in Queensland and indeed in Western Australia. The suggestion that Labor put to One Nation according to Pauline Hanson is that they wouldn’t run in certain seats in order to facilitate One Nation winning seats. The Labor party is entirely hypocritical about this. As far as the Liberal party is concerned, we want people to vote for the Liberal party. We believe we have the best policies in Western Australia and nationally, to take our State and our country forward. We want as many Australians and as many West Australians as possible to vote for the Liberal party. But if they do not vote for the Liberal party, then we want as many of them as possible to preference Liberal party candidates both in the Lower House and in the Upper House. It is entirely rational for us to pursue that. That is what the State executive of the Western Australian Liberal party has sought to do.

PETER BEATTIE: One final thing before I hand over to my mate, do you see any long term ramifications then at a Federal level? As you know John Howard and I agreed with this, put One Nation last at a Federal level. Do you see this blowing over to the Federal politics at the next Federal election? 

MATHIAS CORMANN: No I don’t, because at a Federal level we are a strong and united Coalition. My personal preference is for the Liberal and the National parties to always be in a strong and united Coalition. That is my preference in Western Australia. The reason we are not in a Coalition wasn’t the Liberal party’s decision. It was a decision the leader of the Nationals in WA, Brendon Grylls has made, because he wanted to be independent from the Liberal party in Western Australia. He has made decisions at several elections all the way back to 2008 to preference other minor parties ahead of the Liberal party in the Upper House, including One Nation in 2008, including the Christian Democrats and Family First and the Shooters and Fishers. This proposition that somehow, the Liberal and National parties have been preferencing each other at every election in the period of the Barnett Government in both Houses of Parliament is wrong. What we are doing is consistent with what we have done in the past, we will be giving our first preference after our own candidates in the Lower House, every single preference in the Lower House after our own candidates will go to National party candidates as you would expect to be the case.

PETER REITH: But isn’t it a bit of a problem with Grylls, and I will be interested to hear how you handle this, because in one sense, as you say, you got an alliance, but Grylls seems to have still pushing this really crazy idea of whacking a huge great big tax on the resources sector, or part of, the big parts, I think Rio and BHP and you can tell us about the rest. This situation, these Nats in Western Australia, they are a bit of a problem aren’t they?

MATHIAS CORMANN: The proposal to impose a mining tax on the West Australian iron ore industry is crazy. I am on the public record as opposing it. I have spent much of my period in Opposition fighting Labor’s anti-WA mining tax. I certainly don’t want to see a mining tax imposed on the mining industry in Western Australia under a Liberal-led state Government. Colin Barnett has been very clear to say that the Liberal party in WA will oppose any such proposal. The sort of tax that is proposed is anti-investment, it is anti-jobs and it is not something that we would support. The mining industry pays royalties on the resources they extract, the more valuable they are the more royalties the pay, the more volume they extract the more royalties they pay. They pay company tax on profits. That is a very appropriate arrangement for the community to get their return on what is the extraction of resources that the States own.

PETER REITH: It seems to me though and I hear what you say about the Upper House and the Lower House, the differences that you have got there on preferences. It seems to me though that there will be a general view within the voters and that is to some degree by having the preferences from One Nation there is sort of a sense if you can’t beat them, join them. I am not saying that is a negative thing, but I think it is an interesting one because in a sense it is bringing Hanson a bit closer to a more mainstream position. Now personally I am not against that necessarily, just talking about the issues. How do you feel about that as a public response to that and as they see that for the future, because it is not just about WA, it is not just Queensland either it could be some other seats in the Federal election next time around? 

MATHIAS CORMANN: Let me just give you a couple of examples of recent political history in Australia. The Labor Member for Herbert, in the North Queensland seat of Herbert, was elected on One Nation preferences. Sarah Hanson-Young, a Greens Senator from South Australia was elected on preferences from the mining magnate Clive Palmer and the Palmer United Party. I do not think there is anything unusual about what the WA Liberal party is doing in Western Australia. The WA Liberal party is in government with the National party. They have provided good Government for eight and half years. As a citizen of Western Australia I hope that the Liberal and National parties will continue to provide good Government for Western Australia after this election. We are separate parties. We are not in Coalition in Western Australia. We are in an Alliance. Each party, as I would expect the National party to do to when it comes to these sorts of preference arrangements, focuses on how we can maximise our respective votes at the end of the day. 

PETER BEATTIE: Yeah, Mathias, let me ask you this, I am a strong supporter of free trade, what worries me of course is that One Nation is very protectionist. Every time I see you on TV you are driving the agenda, I want to get this through, I want to see this economic reform, you obviously would be a supporter of free trade as well. How do you change that, how does the Government, how do you and other senior Ministers change the public debate so that people who support Pauline Hanson understand that protectionism is not the future of this country? Bearing in mind they will do reasonably well in Western Australia, reasonably well in Queensland. How much we do not know, so they are going to gain in strength. I am worried that the protectionist argument will gain in strength. So how do you stop that argument gaining in strength?

MATHIAS CORMANN: Firstly, I am a huge supporter of free trade. A great achievement of Labor and Liberal National party Coalition governments at a Federal level since the 1980s was to open the Australian economy to global competition. It has meant that Australian businesses are better able to sell Australian products and services into key markets around the world. It means that Australian consumers get access to better and better priced products from other parts of the world. It means that overall our economy has been forced to become more competitive internationally, which has been good for our standard of living generally. It has been good for the standard of living, to be honest right around the world. It is true that there is a populist argument when it comes to protectionism that we have to continue to combat. The way to fight it is by constantly explaining why trading with the world, why being an open trading economy is good for families, good for jobs, good for Australians to get ahead. It is good for our living standards, it is good for our economy and for investment and it is good for political and strategic relations across the world to be honest.

PETER REITH: Can I ask you about a general political environment at the moment, two things, one that didn’t get a lot of coverage which was a pity and that is the ability of the Government to go back to Derryn Hinch and talk about the ABCC. As I understand it that is now in the Committee to see if they can fix up the ABCC problems that were mistaken shall we say prior to Christmas. So I will be interested to hear how that Committee is going to go and your expectation. But the one that everybody is talking about was the Turnbull attack on Shorten. So I would be interested to hear what you have got say about that. I know what the voters on side think about it, they thought it was a great day and I would like to hear a bit more about it. 

PETER BEATTIE: He hasn’t shut up about it since he arrived here this afternoon. 

PETER REITH: Well, well, it’s not me mate. I’m telling you, people are talking about it. Down the street, they’re saying about it ...

PETER BEATTIE: We should let him answer your question, sorry.

PETER REITH: You shouldn’t, you shouldn’t but I would like to go on and on about it for a while, but I will stop now just for a moment, tell us about it. What’s the politics going?

MATHIAS CORMANN: Firstly, in relation to the re-establishment of the Australian Building and Construction Commission, that was a very important achievement before Christmas, which was something nobody thought we could do. It will help to reduce the cost of construction, it will help deal with lawlessness across building sites across Australia. It wasn’t legislated in the precise form that we would like. We went for the best or least bad deal we could get at the time. As we said at the time, the most important thing was to get the Australian Building and Construction Commission re-established. Once it was back in place, we could work to improve it. That is precisely what we are doing now. Michaela Cash has been doing a lot of good work, working with key cross benchers in the Senate. While we don’t ever take anything for granted, we are quite hopeful that we will be able to get these improvements legislated. When it comes to the Prime Minister’s speech in the House of Representatives last week, like you, I have been stopped in the streets by people who said that it was great to see the Prime Minister push back on Bill Shorten. He has been quite nasty and quite nasty in a very personal way for some time. The Prime Minister very magnanimously for a long time didn’t react to it. I think that people felt that this was an appropriate response. The feedback that I have been getting is they want to see more of that assertiveness, of us pushing back in policy terms, against some of the crazy arguments that are being put forward by Labor. In particular, on things like energy policy and tax policy and the like. 

PETER BEATTIE: Mathias as the key Government negotiator in the Senate to get bills through, one, tell our viewers how that is going in terms of relationship and secondly what sort of bill do you think you will be able to get through. 

MATHIAS CORMANN: The most important thing in maximising our chances of getting things through is not to talk about it before we are in a position to talk about it. Even on an august program like the Beattie and Reith show. I don’t think it would be helpful for our efforts if I provided a public commentary. Our agenda is there for all to see. We took an agenda to the last election, which involved a ten year enterprise tax plan, to reduce our company tax rate to twenty five per cent, to boost investment, boost productivity, help create more jobs and help business increase real wages over time. These are the kinds of things that we will continue to work on. We will try to get as much of our agenda through as we can get through the Senate. 

PETER REITH: Can I also ask you if I may, just looking forward a bit and reading some of the material about where the economy is going. The head of the RBA I thought was reasonably positive about where GDP might be in the next year or so. So I would be interested in hearing what you have to say about that, and also on the iron ore, we were concerned early that we might get a kick up and then might see it drop away. Well, what is the feeling about it now?

PETER BEATTIE: It seems to be holding up a bit better. 

MATHIAS CORMANN: Look in recent times the iron ore price has been running at somewhere between about $75 and $82, or $83 a tonne. That is where I think it was when I last looked. Very hard to predict with any certainty as to what is going to happen in the future. We have taken a very cautious approach when it comes to our revenue forecasts and the assumptions that are underpinning our revenue forecasts. Only the future will tell. What I thought was very interesting out of the independent Governor of the Reserve Bank’s speech last week was his very strong statements on how important it was to ensure that our business tax arrangements are internationally competitive. - pointing out that Australia as an open taking economy competes internationally for investment and that given where international company tax rates are at, given what the Trump administration is planning to do with taking the tax rate in the US down to 15 per cent, it is incredibly important for us to reduce our corporate tax rate down to 25 per cent. Even after we have done that we are only middle of the pack. Right now we are an outlier at the high end and if we leave this in place much longer it will start hurting our economic prospects into the future. 

PETER BEATTIE: Mathias one of the policies of the Government which is sound and important to the nation is the innovation strategy and policy that you have got. I don’t see though enough articulation of what it means and what it is doing. Some of those tax breaks and some of those investments you have made are good, but I don’t see enough dialogue. Is there a communications strategy based around that, because that is about changing culture in Australia to be innovative in what we do.

MATHIAS CORMANN: Innovation is something that needs to apply right across the economy, in all sectors of the economy. Beyond that we are focused on supporting the Australian start-up scene to be as successful as they can be and to create the next generation of successful, profitable Australian businesses. We do a lot of very high quality and world class research in Australia but the one thing historically we have not been as good at as we might be, is the commercial application and translation of research into profit making business ventures. These are all areas where with the right incentives the Government is keen to provide another leg to our diversified economic base. 

PETER BEATTIE: I mean the truth is we have got great science, great research but the commercialisation of it has not been up to world standards. Whereas our research is certainly world class and making that gap and getting people do to it is the challenge. 

MATHIAS CORMANN: Yes, that is exactly right. Some countries do very well at this. Germany and Israel in particular do very well at this. There are things that we believe we can learn from the experiences in those countries to fill that gap more effectively than what we might have done in the past. 

PETER BEATTIE: We have only got a couple of minutes left, let me ask you one final thing. Without getting too far into the energy policy, coming from Queensland I am interested in clean coal. I have seen the debate that has taken place in relation to that. Where will the Government go in relation to that, because putting money into it is the real problem. There is a lot of investment that will not go into coal fired about generation so how do you get over that problem? 

MATHIAS CORMANN: From an Australian Government’s point of view, what we are interested in is making sure that families and businesses have access to reliable and affordable energy in a way that still helps us reach our emissions reductions targets. What the Prime Minister has said is that when it comes to achieving that we are entirely technology agnostic. We do believe there needs to be a stronger focus on things like storage. What has happened in recent years is that there has been a near religious zeal in some parts of Australia to increase the renewable energy target up to 50 per cent without actually property thinking through the implications for energy security, for the stability of the system. Without properly thinking through some of the other features of our energy policy framework that we need in order to properly accommodate that. These are all things that we need to have a sensible, mature, adult conversation about. We need to improve the policy framework right across Australia to ensure that people can have access to reliable, affordable energy in a way that is as environmentally efficient as possible. 

PETER BEATTIE: Mathias thanks for being with us. We appreciate it is Cabinet night tonight and thanks for making the sacrifice in time. 

PETER REITH: Good luck. Thanks very much.

MATHIAS CORMANN: Good to talk to you.