BARRIE CASSIDY
Minister, welcome.

ARTHUR SINODINOS
Thanks, Barrie. Great to be with you.

BARRIE CASSIDY
Do you think the Liberals would seriously put One Nation ahead of the Nationals even if it is just in the upper house in WA and would that bother you? Would it concern you there might be federal implications?

ARTHUR SINODINOS
Barrie, the One Nation of today is a very different beast to what it was 20 years ago. They are a lot more sophisticated, they have clearlyresonated with a lot of people. Our job is to treat them as any other party. That doesn't mean we have to agree with their policies. When it comes to preferencing, we have to make decisions - this in this case, a state decision, not a federal decision - based on the local circumstances. My job, Malcolm Turnbull's job, is to take votes away from One Nation, away from Labor, away from the Greens and maximise the LNP vote.So I'm not particularly focused on preferences at the moment, I'm focused more on the policies that help us to get voters back.

BARRIE CASSIDY
You say they are more sophisticated, but how have they changed in any other regards? They haven't changed their policies.

ARTHUR SINODINOS
What I've noticed is the way the media treat One Nation today and Pauline Hanson is very different to 20 years ago when there was more of a concerted effort, including by the media, to campaign against her. The media have started to treat her with a bit more respect this time round. I find that quite interesting. They're taking more seriously because they've realised she's also changed the way she operates.

BARRIE CASSIDY
Yeah they might, but does that justify the Liberal Party changing the position John Howard adopted in 2001 when he said Coalition would always put One Nation last?

ARTHUR SINODINOS
You look at these according to local circumstances, you look at the way these things have evolved. This party has evolved. I'm not focused on preferencing decisions, I'm focused on how we get the voters back. That is a big issue in Canberra, not just a big issue for the Coalition but also the Labor Party and as one of your reviewers on the panel there said, there are a lot of people out there who at the moment are mad as hell, as it were, and it's going to take some time for policies, I think, to seep through to them and convince them that the way of One Nation is not the way to go. One footnote on that, the bloke who came up with their 2% tax policy years ago has just gone bankrupt. If this is economic policy these characters are going to be running, I think it is going to be very important for us to make sure the public understand the implications of One Nation's policies where they exist.

BARRIE CASSIDY
Sure but do you think preferences would, to an extent, reflect values? Would you say the values of One Nation are more closely aligned with the Liberal Party than the values of the Labor Party?

ARTHUR SINODINOS
Look, Barrie, if you want to take it down the route of values, when Labor preferenced the Greens in certain seats, does that mean they agree with all of the Greens' policies or when various parties preference each other, they have to agree with their values? Each of us have very clear values and we stand up for those values. If you are seeking to ask me would we ever go as far as - some parties want to ban particular groups coming to Australia, our policy on that is very clear. We run a non-discriminatory policies, we vet people and we will campaign for those policies very strongly when we're campaigning out there.

BARRIE CASSIDY
Pauline Hanson said before the Prime Minister met with Queensland MPs - federal MPs - during the week, George Christensen wasn't one of them, is that right?

ARTHUR SINODINOS
I don't know whether if that's the case. But the PM meets all of our MPs. He meets Geroge, he meets all of our MPs. In the case of Queensland during the week, they would have had a discussion about the general situation given the immenence of a state election up there. Obviously, Queensland is a very important state to the coalition in a federal sense. You have seen the way the numbers can swing in Queensland. We are doing everything we can through the various infrastructure and other policies up and down the coast to try and support economic development in Queensland. We know Queensland has been affected by the mining downturn, particularly in regional areas, and we are doing everything we can to promote strong policies of regional growth and industry adjustment.

BARRIE CASSIDY
Tony Abbott made the point when Cory Bernardi left, the party should be doing more to remain united. If he didn't meet with George Christensen, that would be a poor reflection?

ARTHUR SINODINOS
As I said, the Prime Minister meets with all his colleagues from time to time. In the case of George, what I think George Christensen is standing up for his electorate. He has had issues around sugar, he's had other issues because of the downturn in the mining and related sectors. George is being a good local member by standing up for his electorate.

BARRIE CASSIDY
So you think he will stay?

ARTHUR SINODINOS
I'm not going to speculate on all that except to say I think he is a person of some potential and he should stick around.

BARRIE CASSIDY
You are not confident enough to make that prediction?

ARTHUR SINODINOS
Well I'm not in the business of making predictions. I just give you a view. My view is he is standing up for his electorate, he has got potential and I think he should stick around.

BARRIE CASSIDY
On the speech, the Prime Minister's speech during the week - I can understand you feel that Bill Shorten's had a free ride for too long but if you want to have a go at him, is rubbing shoulders with billionaires the best you can do?

ARTHUR SINODINOS
Look, Barrie, what that speech was the Prime Minister framing Bill Shorten as someone who says one thing and does another. You go back through his career, whether it is support for company taxes, cuts at other times, the first Workplace Minister to actually have a reduction in penalty rates and awards, you look at the way he did turn his back on some of his own workers at places like Chiquita Mushrooms and Cleanevent and negotiate away some their entitlements, this bloke will do anything for a vote. And in politics -

BARRIE CASSIDY
What's that got to do with him rubbing shoulders with millionaires?

ARTHUR SINODINOS
The point is this. He goes out there, he attacks Malcolm Turnbull for the money Malcolm Turnbull earnt and yet at the same time he is rubbing shoulders with billionaires and everybody else so clearly he prefers some billionaires are probably more equal than others in the eyes of Bill Shorten.

BARRIE CASSIDY
Yes but then Barnaby Joyce and Julie Bishop went to India courtesy of Gina Rinehart. It happens on both sides.

ARTHUR SINODINOS
They did. Gina Rinehart is a major Australian business woman who is doing a lot to promote the development of the Australia north. Good on her.

BARRIE CASSIDY
And always looking for a tax break.

ARTHUR SINODINOS
We will determine our policies not based on who we have met but on what's in the national interest, including in relation to Gina Rinehart or anybody else.

BARRIE CASSIDY
But you see the problem here that the messenger might have been the wrong person?

ARTHUR SINODINOS
I disagree. I think when Malcolm Turnbull is standing for mainstream policies and jobs, as someone who has helped generate jobs through the various things he has done - this is a person who came to politics at the age of 50 after a very full career in journalism and business and elsewhere, so this is not someone who has come into politics to have a career, he has come in there to get things done and I think that resonates with people out there.

BARRIE CASSIDY
Now if we can talk about the energy policy, the two arguments the government has put - and that's that renewable energy is causing blackouts, renewable energy is to blame for the big price increases. We'll go to the blackouts first. Some experts disagree with you, at least in part on that, because they say you need to build better interconnectors. The problem is you need better and more efficient ways of moving electricity between the markets.

ARTHUR SINODINOS
Well Barrie, there is a whole range of issues that the South Australian blackouts last week brought to the fore. I under-estimated the extent of the cost of the transition to greater reliance on renewables, I have to admit. I didn't realise the extent to which that increases the volatility of the system, the need to have proper back-up and security of supply. That was brought into sharp relief with what happened in South Australia. What's happpened is that it's also raised issues about the way the national electricity market works, the need for greater competition, greater interconnection, we need to create more gas exploration, what's needed to be done is we need to calmly sit down, work our way through those issues. This is not an attack on renewables or on coal or on anything else. This is about getting the best energy mix at an affordable price which reduces greenhouse gas emissions. We've got three targets we've got to hit. We've got an energy security plan we are putting together to help us address those.

BARRIE CASSIDY
Right. So you accept that's the responsibility of the Federal Government as well?

ARTHUR SINODINOS
Oh no, the Federal Government will lead the development of the national plan because we can't have a situation where States can impose their own policies oblivous to the cost of their own systems but the costs across the country.

BARRIE CASSIDY
And on prices, the wholesale price dropped after the carbon tax was axed as you'd expect, but under your watch the prices are rising steadily this year, why is that happening?

ARTHUR SINODINOS
Prices are rising whenever demand is increasing relative to supply. You have to look at that balance always within the system. What that indicates is you have to make sure you have policies to improve supply. For example, in the gas space, we need to have more gas exploration and development. For me as Industry Minister, that's becoming a major issue. I'm getting calls from companies about the facts their contracts are being torn up by energy companies, they are being asked to in some cases pay double what they were paying before. We need to get rid of moratorium on gas exploration, whether it is New South Wales, whether it is in Victoria, whatever state and we need to do more to encourage competition in that space.

BARRIE CASSIDY
And do you accept it is too simplistic to say prices are high in South Australia because of renewable energies when you get spikes in Queensland where the reliance is minimal, you get these price spikes that sometimes are bigger than South Australia?

ARTHUR SINODINOS
There have been spikes in Queensland but the point is in South Australia you have a structural situation where their energy prices are the highest in the developed world. The problem that's got is they also come to us asking for assistance, whether it's with the transition in the auto industry, whether it is the Arrium steel works. Yet the fact of the matter is they have very high energy prices which is undermining what used to be one of Australia's great comparative advantages.

BARRIE CASSIDY
Will a new coal-fired power station ever be built?

ARTHUR SINODINOS
The answer to that is the Prime Minister in his speech laid out a policy of being technology agnostic going forward. He set out a frame work for transitioning to low emissions. If coal-fired power stations - which are ultra super critical - have carbon capture and storage, major reductions in emissions and are economic compared to doing other sorts of things, the Prime Minister is now talking about pumped hydro storage, he is the first Prime Minister to raise that - so what we're saying is we set out a frame work for what our targets are on reducing emissions and we allow the market to sort out the best way to do this.

BARRIE CASSIDY
They'll never be built?

ARTHUR SINODINOS
Look Barrie, I can't answer that definitively because over the next few years as carbon capture and storage in particular is able to work in a realistic way, that can reduce greenhouse gas emissions by 90% and that can be retrofitted potentially.

BARRIE CASSIDY
But the industry is telling you if you were to build a new coal-fired power station, then the investment would not be acceptable, it would mean more expensive electricity because they need to recover the cost?

ARTHUR SINODINOS
What industry is saying to us is they want certainty over a lower emissions future. You put all the options on the table, that can include gas as well, pumped hydro storage, there is great capacity for us to do that in Australia, across the country, not just in places like Tasmania, and then allow the market to sort it out. But if industry wants certainty, there has to be a way of achieving bipartisan policy around this because we are talking about investments which take 20, 30, 40 or 50 years.

BARRIE CASSIDY
Minister, thanks for your time this morning. Much appreciated.

ARTHUR SINODINOS
Thanks, Barrie.