891 Adelaide

MATTHEW ABRAHAM: South Australian Senator Leader of the NXT Party, Nick Xenophon joins us. Welcome. Welcome Nick Xenophon.

NICK XENOPHON: Good morning.

MATTHEW ABRAHAM: And also Christopher Pyne, Member for Sturt joins us as well. Federal Minister in the Turnbull Government. Good morning Christopher Pyne.

CHRISTOPHER PYNE: Good morning.

MATTHEW ABRAHAM: Nick Xenophon, you’re blocking some $5.6 billion now in budget savings and suggesting that you could for instance haul that money back from defence. How are you going to do that?

NICK XENOPHON: I just want to make it clear. Firstly in terms of the omnibus bill, we’ve said as a group, as a team that we cannot support it in its current form. We acknowledge that the child care measures are worthwhile, but we cannot support some very deep cuts to family tax benefits. The impact that will have on low incomes families, but of course it’s back to the drawing board with the Government and I’ll have patient discussions with the Treasurer, the Social Services Minister, the Finance Minister and with Simon Birmingham responsible for child care.

But in terms of defence, there is waste in defence and what Christopher Pyne tweeted not so long ago that somehow I want to reduce the number of submarines and ships built is a disgusting lie. What I’ve said is that we know form the history of defence that there’s been a number of cancelled defence projects where billions of dollars have been wasted of taxpayer funds. All I am saying is that we can do defence more efficiently and have…

MATTHEW ABRAHAM: …what $5.8 billion a year, every year?

NICK XENOPHON: No, no. Not $5.8 bill…well hang on a second. That’s $5.8 billion over four years and we are talking about ensuring that defence is more accountable. I’ll just give you two examples the Seasprite helicopter a number of years ago cost $1.3 billion. Secondly, a few years ago there was a watercraft made for amphibious ships and guess what, they didn’t fit. So that cost tens of millions of dollars. And more recently when I’ve asked the defence industry’s minister- minister’s office, how much will it cost to shift the offshore patrol vessels from Adelaide to Perth, what analysis have you done of the costs involved in that because there would be significant costs. None of this was done. That is a real concern.

MATTHEW ABRAHAM: Chris Pyne, you’re the Defence industry’s Minister for Malcolm Turnbull, Member for Sturt. Is this a disgusting lie?

NICK XENOPHON: Well my big concern Matt is that Nick’s talking about losses that occurred in the past. But his claim this morning is about savings to be made in the future, And if we were to make a $5.8 billion saving in defence in the future we’re not going to save that by using less paper clips. That’s the entire offshore patrol vessel gone in one fell swoop. That’s 12 vessels, starting Adelaide moving to Perth. This is a massive cut to naval shipbuilding.

So last year Nick Xenophon said he wanted 12 submarines, nine Future frigates and 12 offshore patrol vessels, and today to get out of a jam about savings in welfare, he wants to have those savings in defence instead. That is diabolical for South Australia. That will end the jobs of people in Osborn and less investment in infrastructure in South Australia. He can’t have his cake and eat it too. I’m trying to grow the South Australian economy. Nick Xenophon is talking about a massive cut to the naval shipbuilding program. And for goodness sake, we’ve done so much work to get this naval shipbuilding program on track, it’s $90 billion and he now less than 12 months later wants to start cutting it.

MATTHEW ABRAHAM: You’re not suggesting though that that program’s in any way at risk are you? Because that would be diabolical for you and for your re-election hopes.

CHRISTOPHER PYNE: It’s at no risk from me and it’s at no risk from the Labor Party but it seems to be at risk from Senator Xenophon who this morning nominated cuts to defence as the way to pay for $5.8 billion of savings in welfare. Now you can’t just find that in the bottom drawer of the Defence department. That is a massive cut to capability and operations and obviously defence industry and we’re just getting South Australia back on its feet in terms of defence industry. People like Simon Birmingham and I and Matt Williams and others, we sweated blood and tears to get those programs and now Nick Xenophon is putting them under threat. I’m absolutely shocked and surprised.

MATTHEW ABRAHAM: Nick Xenophon, South Australian Senator, do you concede though that it is a classis- it’s like government saying we’ll cut down on consultants. You know, 5.8 billion, even over four years is an enormous amount to take out of any budget, particularly defence.

NICK XENOPHON: Matt, let’s put this into perspect…and let’s put this lie that’s been propagated now to bed once and for all. The fact is the point I made is that there are savings to be made in respect of defence waste. That is something that has been the subject of much commentary of parliamentary inquiries not to cut the local content. Not to cut any of the programs that are going to be implemented in terms of naval shipbuilding but I have said not all the cuts of course should come from defence. But the point I was making is that the Government is seeking to take- well seeking to take money off vulnerable families on low incomes or on single incomes. And I’m saying that there is some scope for defence savings because some of the systemic issues with respect to defence procurement and in terms of dealing with waste have not been dealt with. But in terms of other expenses, in terms of other sources of revenue, for example, Google and Facebook in this country rake in something like $3.2 billion in revenue, but the tax rate they pay is miniscule. If they were to pay a tax rate more in line with what Australian companies are paying who have on – who can’t offshore their profits, I think that would make a very appreciable difference to the budget black hole.

MATTHEW ABRAHAM: Chris Pyne, are you being alarmist? Nick Xenophon is saying – he’s not saying that the entire cuts would come from defence and he’s saying that he’d only target the waste, not these programs for South Australia.

CHRISTOPHER PYNE: Look, Nick Xenophon is trying to have his cake and eat it too. He wants to be the person who promotes defence industry in South Australia one year and the next year after the election, he wants to be the person who cuts defence. Now he’s saying on your radio program, having said on Fran Kelly this morning that the savings could be found in defence on Radio National, $5.8 billion, he’s now saying can be found elsewhere.

Well he’s a very slippery customer because one minute he wants to cut defence, now he wants to cut elsewhere but won’t tell us where. Now he knows that we’ve made the changes to international tax rules which means that we are getting everyone to pay their fair share of tax. He let slip this morning that he was prepared to have a $5.8 billion cut to defence, then he tried to pretend that it could be found in the petty cash tin at the Defence Department on Russell Hill.

The reality is I fought along with my Liberal colleagues for 12 submarines and nine future frigates to be built in South Australia, and offshore patrols vessels to begun, it was a major battle, we won it. Its $90 billion of spending, it secures South Australia’s economy for decades into the future and now Nick Xenophon is saying it’s under threat. Well it’s not under threat from us but it is under threat from him.

MATTHEW ABRAHAM: Chris Pyne, thank you. And just coming back to you, Nick Xenophon, the – putting that aside, you’ve also talked about business paying its fair share and yet you don’t – there is a Committee for Adelaide and we’ll bring you an interview we’ve just done with Colin Goodall, they want to meet with you today. He’s a former BP executive, representing many large companies in Adelaide. They want you to support budget – the budget measures, including cuts to company – the company tax rate.

NICK XENOPHON: Sure and can I just address very quickly in terms of Christopher Pyne? What he is saying is a gross lie and I’m just appalled. I mean Christopher Pyne calling me a slippery customer? That really takes the cake. Can I just say the Committee for Adelaide will see me, will see my colleague Stirling Griff later today, or later this morning.

But the biggest issue facing South Australia at the moment is energy costs. That is what is hurting businesses, hurting investment. Back in 2009 when Malcolm Turnbull was Opposition Leader, we jointly commissioned Frontier Economics - that is Malcolm Turnbull and I – to come up with an alternative scheme to reduce emissions that would also have the effect of reducing prices. The great paradox is the Coalition walked away from that.

You now have people like Jay Weatherill embracing it. The modelling that I have seen on this would make a difference at 5 per cent to 10 per cent immediately on its implementation for power prices here in South Australia as well as making sure we had secure supply. That’s what I’ll be raising with the Committee of Adelaide. That’s what we need, which is bigger than any tax cut that is still a number of years away.

MATTHEW ABRAHAM: Will you also be raising to them – with them – that business leaders in Adelaide were the main cheerleaders for the privatisation of ETSA?

NICK XENOPHON: With one – with only one exception and that exception was Stirling Griff when he ran the Retailers Association.

MATTHEW ABRAHAM: Nick Xenophon, thank you.

NICK XENOPHON: Pleasure.

MATTHEW ABRAHAM: Senator Nick Xenophon, Leader of the NXT Party. Interesting day in Canberra and Chris Pyne thank you, Member for Sturt, is the Defence Industries Minister and also very influential player in the Federal Coalition.