Senator the Hon Mathias Cormann

FRAN KELLY: This week could turn out to be a critical one in the life of the Turnbull Government. The pending High Court ruling on the citizenship fiasco could see the Coalition’s one seat majority placed in mortal danger. On another key battlefront, the Government will finalise its long awaited energy policy. But a decision today, almost certainly from Cabinet to formally reject a clean energy target will be a deal breaker for Labor. Meaning there is a little prospect it would seem of a settled investment climate for business. 

MARK BUTLER [EXCERPT]: What we are very worried about, what I think people in the community who care deeply about this energy crisis are worried about is the increasing likelihood that Malcolm Turnbull is walking away from the clean energy target under pressure from Tony Abbott and if that is what he does, then he won't get the support of the Labor party. 

FRAN KELLY: That is Labor’s Mark Butler speaking yesterday on Insiders, all but ruling out as you could hear bipartisan agreement between the major parties. But the Government’s sharper focus on affordability has been given a boost today by a new report from the ACCC which reveals prices have surged more than 60 per cent over the past ten years. Mathias Cormann is the Finance Minister and Deputy Government Leader in the Senate. Minister, welcome back to Breakfast. 

MATHIAS CORMANN: Good to be back Fran.

FRAN KELLY: I want to come back to the clean energy target in a moment. But this report from the ACCC on electricity pricing lays the problem pretty bare. Power prices have spiked 63 per cent since 2007 and a lack of competition is cited as the major driver. Will you take action to try and reduce the market domination now of the three major power companies, AGL, Origin and Energy Australia? 

MATHIAS CORMANN: Our focus clearly is on pursuing policy reforms which will help put downward pressure on prices and which will improve reliability of energy supplies. This report by the ACCC is one of the inputs into the Government’s policy development. A range of these issues that the ACCC has identified require cooperation between the Commonwealth and State and Territory governments. This is now something that we will continue to pursue. The Prime Minister has provided significant leadership in making sure for example that the supply of gas into the domestic market is increased, reaching a consensus with the major East coast gas exporting businesses. This is a holistic, overall approach and everything we do is focused on putting downward pressure on electricity prices, improving reliability and doing so in a way that helps us meet our emissions reduction targets. 

FRAN KELLY: Yes but the ACCC report was pretty clear and one of the big problems is the lack of competition in the market. We have energy companies that are vertically integrated, they are not just retailers, they are also generators. The domination of the three major power companies is a key contributor to price rises, one of the key issues the Prime Minister wants to deal with. Will the Government make any moves to reduce the market domination of the three major power companies, what will it do? 

MATHIAS CORMANN: The Government will ensure that the system is as competitive as it possibly can be. Of course we will. The ACCC preliminary report has identified a range of inefficiencies in the market related to network costs in particular, regulatory arrangements, price setting arrangements and the like. The Government across the board will now consider the recommendations that the ACCC has made in terms of possible avenues to improve policy settings moving forward. But the simple objective, the very clear and unequivocal objective of the Government is to do whatever we can to put downward pressure on electricity prices, to improve reliability and to do so in a way that helps us meet our emissions reduction targets. 

FRAN KELLY: Where does that leave environmental schemes? We have got some more data from the ACCC today. The environmental schemes contributed only 7 per cent of that 63 per cent hike in prices over the last ten years. Does that put the kibosh on Tony Abbott’s argument, supported by some in the Coalition party room that renewable energy is to blame for the price pain? 

MATHIAS CORMANN: What the report actually showed is that the biggest drop in wholesale electricity prices came when the Government abolished the carbon tax …interrupted

FRAN KELLY: It also showed though that the environmental schemes only contributed 70 per cent of the price scheme as close to 50 per cent contributed by over investment in poles wires.

MATHIAS CORMANN: What the ACCC report shows it that any policy settings, any environmental schemes as you call them, need to actually provide a proportionate benefit, need to provide a benefit that is proportionate to the level of additional cost that it imposes on the system. That was not the …interrupted

FRAN KELLY: I guess what I am asking you quite clearly is, do you accept on this data that it is now right to say that the renewable energy target and schemes and subsidies are to blame for the price pain? 

MATHIAS CORMANN: We have to ensure that our policy settings are appropriately balanced. I take you back to what I have said right from the word go. The Government’s clear objective is to bring down electricity prices, put downward pressure on electricity prices, to deliver reliable energy supplies and to do so in a way that helps us meet our emissions reduction target - that is, that our energy framework is environmentally as efficient as possible. But we always have to ensure that we do not impose disproportionate costs on families and business when it comes to pursing environmental objectives. We have to ensure that the environmental objectives are pursued in the most efficient, cost effective way possible. That is what the Government is committed to do. 

FRAN KELLY: It seems that one of the levers you are going to pull there is to not go ahead with the clean energy target, which was recommended by the Chief Scientist in that review that was commissioned by your Government. The clean energy target as we heard there from Mark Butler, supported by Labor, we know it is supported by environmentalists, we know it is supported by the States and we know it is supported by many of our large business groups and industry groups. Why would you want to pass up what might be your last shot at drafting an energy policy that can gain bipartisan support? 

MATHIAS CORMANN: I thought that Mark Butler was particularly reckless yesterday, getting way ahead of himself. It is always dangerous to lock yourself in before you have actually seen what is on the table. The Government will put forward a policy framework that is in the national interest, that is in the public interest, that is focused on bringing down the cost of electricity, that is focused on improving reliability of energy supplies and that is focused on making sure that Australia can continue to meet our emissions reduction targets. I think that …interrupted

FRAN KELLY: But will you put forward a policy that there is any hope of getting bipartisan support, because that is what industry wants. 

MATHIAS CORMANN: That has got to be a matter for the Labor party. I think that Mark Butler does not do himself any credit by locking in a position before he has even seen what the proposed policy reforms are. It is just incredibly reckless and irresponsible for the Shadow spokesperson to lock themselves into a position before he knows what he is talking about. 

FRAN KELLY: The Coalition repealed Labor’s emissions trading scheme. You then toyed with your own emissions intensity scheme for the electricity sector, you dumped that. You are now set to reject the clean energy target, which came out of the review you commissioned. How do you address this perception that Tony Abbott, with his mantra that climate change does more good than harm, is driving your energy policy? 

MATHIAS CORMANN: We are not getting distracted by any of this sort of commentary Fran. Labor imposed a carbon tax, which imposed massive additional costs on families and on business for no …interrupted

FRAN KELLY: And did drive down emissions though.

MATHIAS CORMANN: And for no tangible environmental benefits, so... interrupted

FRAN KELLY: No, there was a measurable drop in emissions after that.

MATHIAS CORMANN: I would challenge you to show me where it actually helped reduce global greenhouse gas emissions. We can go into this argument again, it shifted emissions and jobs into other parts of the world, where for the same level of economic output emissions were higher. So the world was no better off, Australia’s economy was worse off, Australian families and Australian businesses were worse off and jobs and emissions were exported into higher emissions areas. That was the crazy policy framework that the Labor party put forward. We are focused on making sure that we can put downward pressure on electricity prices, ensure that there is reliable supply of energy and do so in way that is as environmentally as efficient as possible. That is a matter of making sure that policy prescriptions and policy reforms are carefully calibrated and carefully thought out and we have taken the necessary time to ensure we get that right. 

FRAN KELLY: Just one last question on this because as you have told us the Government’s priorities are now very clearly on reliability and affordability. But the Government is still committed to the Paris climate targets, a reduction in emissions that was signed onto by Tony Abbott when he was the Prime Minister. If there is no clean energy target, what is going to drive that abatement? Is the Government planning to invest more money in the Emissions Reduction Fund? 

MATHIAS CORMANN: I have said to you all the way through we are committed to three objectives, putting downward pressure on electricity prices, improving reliability of energy supplies, keeping the lights on and doing so in a way that helps us meet our emissions reduction targets …interrupted

FRAN KELLY: Yes, but how? That is what I am asking you, how are we going to do that?

MATHIAS CORMANN: The how will be announced in due course. As you are well aware, the Government has been considering the relevant recommendation of the Finkel Review for a little while now. We will be making relevant announcements when all of the deliberations have been finalised.

FRAN KELLY: Could there be more money for the Emissions Reduction Fund? 

MATHIAS CORMANN: I am not going to preempt announcements that are yet to be made based on decisions that are yet to be made. 

FRAN KELLY: You are listening to RN Breakfast, our guest is the Finance Minister Mathias Cormann. Mathias Cormann you may have to deal with a High Court ruling this week on the fate of Barnaby Joyce, Matt Canavan, Fiona Nash. We are not sure when the Court will rule, but they are going to try and do it as quickly as they can. If the Court rules that these politicians are ineligible, will they have any option but to resign from the Parliament? 

MATHIAS CORMANN: The Government has made our case as to why we believe Barnaby, Fiona and Matt are not in breach of Section 44 ...interrupted 

FRAN KELLY: Sure I understand you feel they are not in breach, but if they are ruled to be in breach will they have to resign from the Parliament? 

MATHIAS CORMANN: This is now a matter for the High Court and I will not preempt the findings of the High Court. Let us just wait and see what the High Court determines. When we get to that point, we can make decisions on next steps if and as required. 

FRAN KELLY: Well I think everybody listening would hope the Government might have a plan. This could be put upon you and us in the next few days. Have you approached Labor about pairing, if you do not get pairs would consider cancelling the remaining four weeks of Parliament. How are we going to deal with this? 

MATHIAS CORMANN: Fran you are getting way ahead of yourself. The Government’s position is that we believe that Barnaby, Matt and Fiona are not in breach of Section 44. The High Court now is deliberating in relation to these matters. It is a matter for the High Court. It would be entirely disrespectful to the High Court for us to now start floating what we would do in what scenario. I think it is incumbent on all of us to wait for the decision of the High Court before we then make decisions on next steps. 

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

MATHIAS CORMANN: Always good to talk to you.