Senator the Hon Mathias Cormann

FRAN KELLY: Parliament is back today for the final sitting fortnight before the winter recess. And changes to the citizenship laws, the Gonski funding package and the increase in the Medicare levy will all be up for debate over the next two weeks. As will Alan Finkel’s roadmap for a lower emissions future. The clean energy target will be discussed in the Government party room this morning. Former Prime Minister Tony Abbott has already rejected the proposed target saying it is an unworkable plan that puts a tax on coal. 

TONY ABBOTT [EXCERPT]: It is going to be a magic pudding. Now we all know there is no such thing as a magic pudding. If you are rewarding one type of energy, inevitably that money has got to come from somewhere, either from consumers or taxpayers. If it is from consumers it is effectively a tax on coal. That is the last thing we want.

FRAN KELLY: So, Tony Abbott signalling the so called climate wars are far from over. Mathias Cormann is the Finance Minister and Deputy Leader of the Government in the Senate. He is in our Parliament House studios. Minister welcome back to Breakfast. 

MATHIAS CORMANN: Good morning. Good to be back.

FRAN KELLY: The Finkel Review of the electricity market, it is going to be discussed in your party room this morning. The PM obviously needs to take the temperature of the backbench before deciding whether to adopt it and what actual target to adopt. Will it get the support in the party room?

MATHIAS CORMANN: It is a very important blueprint to ensure that we can have secure, reliable energy supplies into the future, which are affordable and which still help us meet our emissions reduction targets. It will be a very important conversation for us to have. The Cabinet and the party room have yet to make decisions in relation to some of the specifics. What we have received so far is a report which went to the Council of Australian Governments from Dr Finkel. The Government and the party will now consider our response. 

FRAN KELLY: It is a market based mechanism, you are the Finance Minister, will you be recommending to your colleagues to endorse this? Do you support it?

MATHIAS CORMANN: As I say we are yet to make decisions. I certainly support …interrupted

FRAN KELLY: What do you think?

MATHIAS CORMANN: I certainly support us providing a very thoroughly considered response to the Finkel report. To do nothing is certainly not an option. The biggest cost and the biggest tax that we could impose on consumers and taxpayers would be to do nothing. What we do have to do is to ensure that we embrace a blueprint that will help us bring down the cost of energy, which will help us ensure increased security and reliability of energy into the future. That is what families and that …interrupted

FRAN KELLY: And do you think is the right blueprint that is what I am wondering, whether you think this is the right plan?

MATHIAS CORMANN: It is a very good blueprint. But we are yet to make specific decisions in relations to things like the appropriate baseline for a clean energy target for example. It is a very substantial report, it is a very important report. As a Government, as a country we need to embrace this once in a generation opportunity to sustainably transform our energy policy framework. 

FRAN KELLY: That is where the tension is, isn’t it, the emissions intensity threshold or base line as you described it? The Finkel plan modelled 600 kilos of CO2 per megawatt of electricity, is that right? Which would advantage renewables like wind and solar and gas, but so called cleaner coal technologies would not make that baseline most people consider. When it comes to striking the right balance, is that the right setting do you think?

MATHIAS CORMANN: I am going to have that conversation as part of the Cabinet deliberation and the deliberations within our party room. I am not going to pre-empt these sorts of conversations. What I would say in relation to renewable energy for example, is the very important recommendation in the Finkel report that we ought to actually ensure that for new renewable energy generation into the future that there ought to be appropriate provision for storage for example, to ensure that there is better stability in the system. The Finkel report is a very substantial report, which goes across the whole gamut of energy policy challenges that we need to consider moving forward.

FRAN KELLY: Senator Xenophon was on AM, obviously the three votes that his party controls in the Senate are key to this. He said there is nothing in this plan to bring down the price of gas and that the Chief Scientist was not asked to look at gas prices and yet he says we could be facing a recession within a year because businesses will close due to skyrocketing gas bills. 

MATHIAS CORMANN: We are focused on bringing down the cost of electricity. We are being technology agnostic. What we need to ensure is that we have an environment for investors where they can have confidence to invest in what are very capital intensive investments when it comes to energy generation. We want to bring down the cost of energy overall, put downward pressure on the prices of energy overall …interrupted

FRAN KELLY: This does not do that much though. I mean it stops it going up but what is the estimate, $90 for households the electricity bill will go down?

MATHIAS CORMANN: Dr Finkel says that energy prices under his blueprint will be 10 per cent lower for consumers, 20 per cent lower for industrials. That is a significant reduction compared to the status quo. That shows you what sort of tax, what sort of cost burden we would be imposing on consumers and on business if we did not act. The truth is that Australia is an open trading economy. We compete with countries around the world. Having reliable, secure access to affordable, competitively priced energy supplies is a very important part of our international competitiveness. If you look at a proposition by Dr Finkel where energy prices for industrials will be 20 per cent lower than they otherwise would be, that is a very significant reduction compared to the status quo.

FRAN KELLY: Obviously there is a lot of politics around, you heard that grab from Tony Abbott at the start of the interview where he says this clean energy target is a magic pudding, which is nothing other than a tax on coal. Is it? Is a price on carbon as is implied within this system? Is it a tax on coal?

MATHIAS CORMANN: It is not a tax on coal. Very clearly it is not a tax on coal. What you will see if you look at the data and if you look at the evidence is that the price of electricity has been going up in recent times. It is projected to continue to go up and up and up if we do nothing. The worse thing that we could do for consumers and taxpayers is to do nothing. We need to embrace this blueprint that has been put forward by Dr Finkel. What Australia needs more than anything is a broad consensus around a soundly based energy policy framework into the future. Energy generation is very capital intensive. Investors do need certainty in terms of policy settings. It is very important for us to get this right. 

FRAN KELLY: Earlier this year your frustration with Tony Abbott boiled over when he said the Government was ‘drifting to defeat’, you said he was being deliberately destructive and self-indulgent and not helping our cause and not helping our country. Now here he is opposing the clean energy target, which everyone was hopeful might be the bipartisan path to some action here and telling the 2GB audience that there is no doubt as things stand, Bill Shorten is the favourite to win the next election. Is this more self-indulgence? 

MATHIAS CORMANN: When it comes to the energy policy debate, we are at the beginning of a very important conversation. Dr Finkel last Friday …interrupted

FRAN KELLY: Is Tony Abbott helping here?

MATHIAS CORMANN: He is participating. Dr Finkel last Friday released his report. It was put to the Council of Australian Governments. We will now have a very important process within Government. I will be engaged in that process. I look forward to all Members and Senators engaging in that process. Ultimately, we need to …interrupted

FRAN KELLY: Will you talk to Tony Abbott and ask him to keep his comments private? 

MATHIAS CORMANN: Ultimately, we need to settle on a policy framework that will help bring down the cost of electricity, that will help ensure that we have reliable, secure energy supplies and that we can still meet our emissions reduction target and generate our energy in an environmentally efficient way. That is certainly what I am focused on. 

FRAN KELLY: You are listening to RN Breakfast, it is 16 minutes to eight. Our guest in the Finance Minister and Deputy Leader of the Government in the Senate, Mathias Cormann. The Government will be legislating changes to the citizenship laws in the next few weeks. A four year wait before becoming an Australian citizen, a tougher English language test. Now the Opposition has been briefed in the changes, is it correct that the new English language test will demand an English language proficiency of university level, is that the test and is that fair? 

MATHIAS CORMANN: I will let my good friend and colleague Peter Dutton go through all of the specifics. It is true that there is an increased level of English proficiency required. We believe in all of the circumstances that is appropriate given English proficiency is an important component of integration into our community. Australian citizenship is a great privilege. It comes with responsibilities. We want to ensure that those who join us here in Australia as citizens have the best possible opportunity to be successful. Having sound, very good English language skills is a very important component of that.

FRAN KELLY: And just one final question on the Gonski schools funding bill, which will be put to a Senate vote in the next fortnight. Labor will vote against. You still have not won over The Greens but that is key. Richard Di Natale told us yesterday The Greens want the $18 billion fast-tracked to schools and they want the States to guarantee they will do more of the heavy lifting. Will you come at that? Will you fast track the spending? 

MATHIAS CORMANN: We have put $18.6 billion in additional funding into schools. We have committed ourselves to reforms which deliver genuine needs based funding as was envisaged by David Gonski, but never implemented by Labor who just went for a whole range of very expensive special deals …interrupted

FRAN KELLY: Will you speed up that funding as The Greens are demanding?

MATHIAS CORMANN: Our policy is reflected in the Budget, but everybody knows that the Government does not have the numbers in the Senate. So as we always do, business as usual, we are engaging with non-Government Senators. My colleague Simon Birmingham as the Minister for Education is going through that process as we speak. 

FRAN KELLY: So it is possible, you might agree to speed it up?

MATHIAS CORMANN: Our policy is reflected in the Budget.

FRAN KELLY: Mathias Cormann, thank you very much for joining us. 

MATHIAS CORMANN: Always good to talk to you.