SENATOR DEAN SMITH
SHADOW ASSISTANT MINISTER FOR COMPETITION, CHARITIES AND TREASURY
LIBERAL SENATOR FOR WESTERN AUSTRALIA
TRANSCRIPT – ABC DRIVE WITH GARY ADSHEAD
Topics: Whyalla Steelworks, RBA rate cut, mortgage stress under Labor, BHP CEO IR comments, North-West Shelf delays
E&OE
GARY ADSHEAD:
Okay, first up and we’re watching just on the TV at the moment, actually, we were just glancing there. Whyalla Steelworks. Madeleine King, this is of course, you know, historically a major steelworks in South Australia. Are there any implications for the Federal Government in the fact that this will now be forced into administration by the South Australian Government?
MADELEINE KING:
Well, it’s a very important step that the South Australian Government has taken under the leadership of the Resources Minister Tom Koutsantonis and, of course, Premier Malinauskas. This is a great industrial city in South Australia. It’s important that the South Australian Government stepped in so that they could save those jobs and look for a future for Whyalla, as it has had some poor management decisions, to say the least. Obviously we as a Government have been closely in contact with the South Australian Government about the Whyalla Steelworks and I have no doubt there’ll be more to be said about our assistance in this regard in the future. But, right now, we’re totally in line with Premier Malinauskas and his intentions to save the steelworks, but also to save the jobs of all those workers, which is really important. There’s been a lot of doubt around this, and doubt creates a lot of tension in the community and that needed to end.
GARY ADSHEAD:
Is there potentially any way that the Federal Government would be asked to sort of come in with funding to try and save it in the meantime? Because if it goes into administration, then obviously first thing is creditors that have to be looked at and so on, and then you have to work out whether there’s another operator that would come in and run it. But, in the meantime, there might be a need for the Federal Government to commit to funding, yeah?
MADELEINE KING:
Well, there’s a lot of options being looked at. The preference, of course, is always that the private operators, you know, invest in projects. Like it’s not a project, it’s a longstanding facility, the Whyalla Steelworks. And I have no doubt that is exactly what’s going on right now is seeking other investors and experienced steelwork operators. There are a number of them around the world. What we really want to concentrate on is making sure the community is reassured that the steelworks can continue, but that will, that will take a lot of effort. The South Australian Government has stepped up and will step up alongside with them to make sure the Whyalla Steelworks survives, and that will involve talking to other operators around the world and encouraging that investment, because we know we’ll continue to need steel and Australia needs our steelmaking capacity to continue.
GARY ADSHEAD:
Is this a bipartisan view that, you know, saving this particular steelworks is important? Or are there politics at play here?
DEAN SMITH:
There’s no doubt that the Whyalla steel mill is critical to Australia’s sovereign capability. I think 75% of the steel production of Australia’s steel production comes from Whyalla. A thousand jobs at risk here. You know, I think the town has 20 to 25,000 people, so there’s no doubt that this is an important piece of national and South Australian infrastructure. But we are at the beginning of this, there’s no doubt about that. I think there are some questions. Why is it only now that the South Australian Government might be choosing to step into this? I mean, there have been issues around the Whyalla operation for a considerable period of time, not just the operator, but in terms of its, sort of the technology that it uses, etcetera. I think the furnace has been out of action. I would worry how deeply South Australian taxpayers and perhaps even Commonwealth taxpayers might be drawn into this. You know, we would prefer to have private operators of large industrial developments like this. Of course, we know that the international dynamics around steel manufacturing are changing and changing very, very competitively. So, this actually could be the beginning of what could be a bad outcome. Just because steel production is getting more expensive, we don’t know the full impact of tariffs, for example, we don’t know what is going to be the nature of changing Chinese demand. I suspect this has got a long way to run yet.
GARY ADSHEAD:
132 720. I have with me Madeleine King, the Resources Minister, Dean Smith, the Liberal Senator. If you want to get involved in the conversation, feel free to give us a call right now and we’ll put you through. Our interest rate cut. It’s been a long time coming. When’s the Federal election? Because you’ve been waiting for it, haven’t you?
DEAN SMITH:
I’m looking intently at Madeleine as well.
MADELEINE KING:
I mean, we’ve had this conversation a few weeks running. And, even in the room, we’re having the same…
GARY ADSHEAD:
Now we can look at each other in the eyes. But no, seriously, though, I mean, this is important for the Government settings in terms of going into an election campaign. To see that interest rates have finally been eased up somewhat.
MADELEINE KING:
But more importantly, and much more importantly, it’s in the interests of Australians, particularly mortgage holders, of which there are many. My electorate has one of the highest rates of people with a mortgage in the country. So, it is really important for people, you know, everyday families and workers right around the country. So, that really is the focus and that’s where the benefit accrues to. But it’s a benefit that, you know, the hardworking women and men of Australia have earned through joining us on this fight against inflation, which was going up. And, you know, we’ve turned it down. It’s lowering. It’s now got a two in front of it. You know that expression we say a lot. But also we’ve kept, you know, unemployment is really low and wages are going up as well. So, we’re really lucky in Australia. But it’s not just luck. It’s hard work as well. And you know, I take my hat off to…
GARY ADSHEAD:
Well, what I’m going to do is – I’m like, you know what’s fascinating here, before Dean says anything, is that here we are, we finally get an interest rate cut. And me, as an observer, thinks, look at the headlines in the paper. I mean, honestly, The Australian, the one cut wonder, you know. So even though we finally get a cut, that’s not good enough. I mean, The West was – I can’t remember what the West was, but it was rate cut and run, you know, and then an editorial saying, well, that doesn’t mean anything’s going to be better for the Government. Why can’t we just accept that we’ve got a rate cut and we’re going in the right direction?
MADELEINE KING:
Dean Smith, that’s a good question.
DEAN SMITH:
First thing, we welcome anything that relieves some of the mortgage rate pain that Australians have been feeling for two years. And this pain is extreme. And some of your listeners might have seen the story that was in the Sunday Times regarding some research I did that actually looked at what is the magnitude of this pain for people living across Perth suburb. In Armadale, for example, we’ve seen 190% increase in the mortgage repayments of families. So we welcome the rate cut, but let’s keep this in perspective. A rate cut after 12 rate rises. The Governor of the Reserve Bank was very clear yesterday in dampening expectations that one rate cut means that there will be another and another and another. That is not the case. So, this rate cut, it’s estimated that this rate cut will deliver about a $1,000 improvement to people’s financial wellbeing over 12 months. That is at a time when they’ve been expending over $50,000 on higher mortgage rate costs. So we’ve absolutely got to keep this in perspective. This is not a job that is finished. Our interest rates are still high. They are causing families and businesses, I might add, a tremendous amount of pain. That pain is real for people. And while it is important that we recognise that this might be a step in the right direction, it’s a sustainable reduction in rates that we are looking for. And that is not what was delivered yesterday.
GARY ADSHEAD:
So, Madeleine, you know, that sort of leads me to the question then. So do you need another rate cut before the Prime Minister might call an election? I mean, is that is that where we’re getting at here?
MADELEINE KING:
I wouldn’t think…and…well, I know, that the date of the election is not decided by what the RBA Governor and the board does. I know people get very excited about joining together
GARY ADSHEAD:
Helps…
MADELEINE KING:
Well, all manner of things help. Of course it does. But you know, Dean said and you agree this is a step in the right direction. But moreover, we have managed the economy very well for the past three years, which means that is likely to keep going in that direction. But, by all means, it’s definitely not guaranteed. And I accept the words of the RBA Governor. But we have lowered inflation. It has gone down markedly.
DEAN SMITH:
But…
MADELEINE KING:
Hold on a moment. Since we got into Government, and it was you who had a six in front of it. Everyone has seen the graphs in the paper and there was a…
GARY ADSHEAD:
Six in front of it when the Liberals were in power, wasn’t there?
DEAN SMITH:
I’d call that a post-pandemic six.
MADELEINE KING:
Oh, any excuse.
DEAN SMITH:
Well, hold on a second. The pandemic…
MADELEINE KING:
Okay. Okay, I accept that. I accept that, Dean. But then we are doing the hard work to lower it. If it was indeed a post-pandemic inflationary bump, the hard work has been done and it’s going in the right direction. And all the while inflation is going down and wages are going up. And that’s a good thing for Australian working women and men. And also there’s low unemployment. So this is…we’re in a great position. We all know there’s more work to be done. And Australians are doing that hard work. And we’re putting the policy settings in to enable that sustained reduction.
GARY ADSHEAD:
I’ll come back to it if I could, Dean. Because there’s Ashley being very patient waiting on the phone, and she’s got a question in relation to Whyalla. Hi, Ash.
CALLER:
How are you going? Sorry.
GARY ADSHEAD:
Did I say she? My apologies, because I work with an Ashley, I assumed…
CALLER:
All good, mate. All good. Listen, my comment is, is why doesn’t the Government take on the Whyalla Steelworks and bring it back in under the Government fold? And this comes up because both state and national Governments for decades now have been selling off public infrastructure, which is essentially selling the farm. And then where do you get your income from? It would preserve jobs. It would also expand…it had the potential to expand our export capability as far as the end product, rather than just always exporting the raw product. I can’t see it as anything other than a benefit to our country on an economic and a social level. Is it… and it could be expanded, like, you know, modernise it and expand it.
GARY ADSHEAD:
Is it a possibility that it becomes state-owned?
MADELEINE KING:
Thank you, Ash. I have some sympathy for Ash’s view, and this has been raised a number of times with other industries that we see, or facilities that struggle because of international markets, and that’s part of the problem here. But there are other problems here as well. And I agree with Dean. It is better that private operators that are the experts in steelmaking and those operations do run these things because the Federal Government, it’s just not really our skill set. I mean, obviously we can find funds to support different facilities, but every time you do that, every time a Government does step in, that’s taxpayers’ money, every single taxpayer across the country. So, we really need to be very much aware of when Governments step in, who pays for it? It’s the people. So, every investment has to be prudent. It has to be very thoughtful and it has to have, you know, the conditions around it. But I do accept what Ash has said, though, that there has to be space for Government support into helping particular industries, and that’s similar to what we’ve done with the critical minerals, trying to have the tax incentive to grow that industry. And there are other facilities that have different types of Government interventions in them. But at its heart, nationalising a steelmaking industry…that brings on a very, very long-term burden for the taxpayer.
GARY ADSHEAD:
Can I just jump ahead here, if I could? BHP’s boss, of course, has been out saying that they’re very worried about the unions getting a foothold back in the Pilbara. Now, of course, you know, the doomsayers would say we can’t go back to what happened at Robe River in the 80s. And so, therefore, the status quo is better than unions now being able to renegotiate all of the contracts for the workers. Of course, the Australian Workers Union, you know, they say in a statement that I’ve got in front of me now, they’re saying that if you look at the wages and conditions of the workers on the ground, the operators and technicians and truck drivers, mechanics responsible for carting millions of tonnes of iron ore to WA ports, they’re going backwards, those conditions. Now, Dean Smith, if you were to come to power, what would you do? Would you rip up this ability that the unions have to now renegotiate some of these deals?
DEAN SMITH:
My understanding of what the chief executive of BHP was saying is that BHP is looking for investment-positive policies. They are looking to make a significant investment across their iron ore production in the next little while, to lift Australia’s iron ore exports to about 350 million tonnes out of the northwest of our state. And what he is saying is that renegotiated union agreements that add costs to business are likely to jeopardise that sort of investment. So when an investment of that scale is jeopardised, it’s jeopardised not just for the workers and their families across iron ore or BHP sites. It’s jeopardised for the wealth and prosperity of the state and for the whole country. What the BHP CEO is saying is that in this country, we must be very mindful of the fact that we export the things we make and the things we pull out of the ground, that that international environment is getting very competitive. And people like BHP have got other places to take their capital. We know that there are new iron ore mines coming on in Africa. We know that Chinese demand is changing. We know that the commodity price is falling. So, what he’s saying is that we must have competitive industrial relations arrangements on our sites to maintain high levels of productivity, so that we stay competitive in international markets.
GARY ADSHEAD:
And FIFO workers that might be listening at the moment, just call us at 132 720. I mean, from what I understand, anyone that I know that goes to work up north in relation to BHP or any other facility and mine, they’re pretty well compensated. What would you say to that, Madeleine?
MADELEINE KING:
Well, I would say to your original question, the Robe River of the 80s is not the Pilbara of today, and neither is it anything like some doomsayers try to compare our IR to something of Britain in the 50s. I mean, this is ridiculous and patently ridiculous. In regard to, you know, making the Pilbara a good destination for investment. Well, I mean, just ask Mitsui. Today they’ve invested $8 billion into a Rio Tinto iron ore project. And Mitsui are one of the biggest trading houses in the world. And they think there’s a pretty strong future in the Pilbara, as do I. And I take your point about FIFO workers. Yeah, they’re well recompensed. And so they should be, like, if you’re doing two weeks on and one week off, like, I don’t think that one week is seven days of frolicking. It’s two days to recover, one day of travel and maybe three days with the kids if you’re lucky. And then 14 days with split shifts, long shifts, you know, night shift, 12-hour shifts. Like, this is super hard work. I couldn’t do it. And I have a lot of respect for those that do do it. And a lot of them live in my electorate and outer suburban areas of Western Australia. And, you know, they deserve to have the representation that they choose through AWU. And, you know, AWU is a sensible union. They really are. I’ve worked with them for a number of years with Alcoa and Nickel West and other facilities in WA, and it’s a very different world to the 80s. It really is. Conditions alone, and I mean safety conditions as well as payment conditions, just how mines work these days are very different indeed.
GARY ADSHEAD:
Alright, let’s just go back to the lines, if I could. Brendan’s there. G’day, Brendan. How are you going?
CALLER:
Hi, Gary and panel. Just on the point that someone made earlier. Actually, both of your guests, that every time the Government steps in and rescues an industry or whatever, it costs the taxpayers. And yeah, but like, you look at Qantas. They sold that off. It went to crap and we bailed them out. I think we bailed them out a couple of times now. Telstra was a national network, sold that off. And you know, we’re paying them to have this infrastructure. This, like steelworks in Australia, is a strategic asset. We should be keeping it on our shores along with fuel production. And the Government should be in control of that. So, it can’t be signed off at the whim of some billionaire that’s just going to go, “Oh, I don’t care,” and just close it down.
GARY ADSHEAD:
What about a public-private sort of partnership off the back of going into administration? Something’s going to have to give on it, do you think, Brendan?
CALLER:
Yep. A public, but majority publicly owned. So, they cannot close it down without, you know, without approval. And just going back to your earlier point, Gary, about the newspapers, how it was saying “one cut hero” or whatever it is.
GARY ADSHEAD:
Yeah.
CALLER:
You know, you look at who owns all the media. It’s in their interests for Albo to be voted out. And I’m not a fan of Albo, but you look at how the US has gone. They’re licking their lips going, “Yep, we can do this here.”
GARY ADSHEAD:
You might be right. You could well be right. I’m not sure if I’m allowed to comment, but thank you very much for that, Brendan. Get myself in trouble. We’ve got a bit of a resources ….
MADELEINE KING:
Who owns the media…
GARY ADSHEAD:
I’ll let you off the hook there. I won’t even get you to play that game and comment on who owns all the media and what their motives might be for headline writing and editorials. Hey, just another one, of course. The Chamber of Minerals and Energy, as you would be well aware, Madeleine, have put out a statement saying that the latest decision to delay the North-West Shelf project extension is a blow and that it’s unnecessary and it shouldn’t be happening, and it’s gone on for too long. Is it right that Tanya Plibersek has hit back and sort of suggested. Well, it’s the bureaucracy, it’s sort of paperwork that’s the problem. What do you say to that?
MADELEINE KING:
Well, firstly, characterising Minister Plibersek as hitting back, I don’t think that’s quite true.
GARY ADSHEAD:
There’s a…I’ve seen a response.
MADELEINE KING:
But that’s just…it’s just pointing out the facts. I don’t think it’s trying to do anything other than that. The North-West Shelf is a long-term asset of this State. It’s very important. It’s employed many thousands. It’s with the Dampier to Bunbury Pipeline. It’s, you know, behind Western Australia and therefore the nation’s prosperity. But I would just point out on the bureaucracy, this has been in the State system for six years, and there are various reasons for that. And some of it’s to do with the proponents, and a lot of it’s to do in the courts and local processes. So, I can’t really and I won’t pretend to know what’s happened over those whole six years. But the Federal Government’s had this for six weeks, six weeks. Any reasonable person would expect that a Government would have time to go over the documentation. Some of the documentation that we’ve requested has only just been received. But I can assure listeners and the CME, and I’m sure Minister Plibersek has reassured them as well, the decision will be made in appropriate timing. It won’t be delayed unduly. Six years versus, you know, six weeks. It’s hard to… how can they possibly be compared?
GARY ADSHEAD:
But nothing before you go into caretaker?
MADELEINE KING:
Oh, I don’t know when we’re going into caretaker, so I couldn’t tell you.
GARY ADSHEAD:
Worth a try, Dean?
DEAN SMITH:
This is a really important point, and it’s a theme that we’ve touched on today, and it’s a theme that we were touching on last week. I think we have to be very careful in Western Australia. Particularly on the east coast, but even in this State, this view that the prosperity that we’ve enjoyed for a long time will always be there. And the harsh reality is it will not always be there. If there are environmental processes that slow down investment decisions, if there’s an industrial relations regime that might allow unions to disrupt the north west of the State in a way that they haven’t been able to in the past. We have to be very real about… are these investment decisions being supported in the best way they can by efficient processes? And what I found interesting about the commentary this morning around North-West Shelf is that there was a statutory deadline. And what I take that to mean, Madeleine, is that in the law, it said a decision had to be taken by this date, which I think was the February the 28th. Then, lo and behold, someone comes along and changes the date to March the 31st. Now, when you’re making billions of dollars worth of investment and you’re saying to investors, this is the time frame, this is how long you have to wait, these timeframes will not be delayed. And the investor says, yep, that’s good with me. I’m going to put my money in this project in Western Australia, as opposed to a project anywhere else in the world. We’ve got to remind ourselves that we’re actually competing with the world. We’re not competing with ourselves. And we’re not even competing with the eastern states because we are an export-orientated State. Our success is because large sums of international money come to support mining and industrial projects here in Western Australia and delays like this will impoverish us over time. There’s no denying that.
MADELEINE KING:
I would have to say these laws, that Tanya Plibersek is administering as we speak, are the same laws that John Howard introduced under his Government. But I would also say on the…
DEAN SMITH:
Extension timelines have been pushed out.
MADELEINE KING:
Yeah, they have been pushed. These documents became…not Christmas Eve, but close to, you know, the WA State Government had shut down. Any Government, any workplace around the country around Christmas does slow down. So, we need time to consider it. And we’re asking for more information. And that has come through now. And Minister Plibersek will do her job.
GARY ADSHEAD:
Alright. It’s been a great discussion. I really appreciate you joining us both.
ENDS