EMMA ALBERICI, PRESENTER: On the most recent numbers, 33 coalition members will take their seats in the senate next July. That's not enough to guarantee safe passage of the new government's signature policies. Tony Abbott will need the support of at least six cross bench senators... Some of whom were elected on the weekend with just a tiny fraction of votes. The independent south Australian senator Nick Xenophon is now calling for reform. He told LateLine that he intends to introduce a bill to the new parliament within the first week. I spoke to him from Adelaide just a short time ago. Nick Xenophon, good of you to join us.

NICK XENOPHON, INDEPENDANT SENATOR: Hi, Emma.

EMMA ALBERICI: Can I start with the appointment of Steve Bracks to Consul General in New York. It was an appointment was that made in May of this year by Julia Gillard. What do you think of Julie Bishop's decision to revoke that decision?

NICK XENOPHON: Well, she's entitled to do that, that's what new governments do and these appointments are often seen as political appointments, it's a plum job. I think Steve Bracks would have done a good job as consul general in New York for Australia but the new government is entitled to do what they want and I'm sure there may be some recently retired Liberal politician that will get that job. Who knows?

EMMA ALBERICI: Well Amanda Vanstone was appointed in the same year as the 2007 election. She was appointed as ambassador to Italy and it was an appointment that was honoured by the Labor Government when it took office in that same year just a few months after her appointment. How do you think this is different?

NICK XENOPHON: Well, it's a new government, they're entitled to do that. I think that the former government was gracious to honour Amanda Vanstone's appointment. This Government is entitled to do what they've done. I would have thought that a safer option, the more magnanimous option, would have been to simply allow Steve Bracks to take up his position. I think Steve Bracks would have done a very competent job but that was Julie Bishop's call and if she gets criticised for it that's part of the robust public debate surrounding these sorts of appointments.

EMMA ALBERICI: George Brandis suggested that he wasn't qualified for the position, do you share that view?

NICK XENOPHON: I think Steve Bracks, whether you agreed or disagreed with him, was a competent premier of Victoria, a capable man who I think could have represented Australia's interests quite well. But that's the new Government's call and that's it, I guess. But I think there will be a contrast drawn, comparison drawn in terms of what the former Labor Government did in relation to Amanda Vanstone and I would have thought they should have let this appointment slide.

EMMA ALBERICI: If we take a look at the election result, it seems there will be up to seven minor party senators in the 44th Parliament. How do you feel about the addition of these new recruits, some of whom won with less than 2,000 votes or 0.2 per cent of the national count?

NICK XENOPHON: Well, I think the point needs to be made that they were elected fairly and squarely under our current system but that begs the question whether our system needs to change. Emma, when I was first elected to the SA Parliament on a no pokies platform Azzan Independent back in 1997 I was elected with just under three per cent of the vote and thanks to preference flows I got to the quota of 8.3 per cent in the SA Legislative Council. I remember in my first year or two there I was treated with a bit of derision from some of my colleagues. One of them would make "ching ching" poker machine noises every time I walked past him. But I will be working very courteously and respectfully with these colleagues and I'm happy to share with them whatever knowledge may be useful to them in order that their time in the Senate can be productive and useful.

EMMA ALBERICI: But you made the point there that it was they were fairly and squarely elected under the current system. Do you suggest the current system needs some kind of reform?

NICK XENOPHON: Well, it does and that's why when the new Parliament resumes, whether it's in late October or November, I will be putting up a bill after having extensive discussions, consulting with Emeritus Professor Detch about what we should do. And I think the fairest approach to take away the power of the parties, major or minor, in terms of these labyrinth and sometimes bizarre preference deals is to have optional preferential voting below the line only. Let's put historically in perspective. It's only been since the mid 1980s that we've had above the line voting. That is something that's only existed for the last 30 years. It's because there were a lot of informal votes below the line with an increasing number of candidates for the Senate leading up to the mid 1980s. I think the best way to resolve this issue, to take away the power of the backroom operators in the major and minor parties and the micro parties, is to go to optional preferential voting so that if there are six senators up for election as is normally the case, to vote for the Senator you have to vote at least one to six but if you want to go to 110 you can do that. It's not just about micro parties. In my home State of SA you have a situation where my running mate will miss out on a Senate seat because I'm up to 1.8 quotas on a primary vote because the ALP, for a bizarre and I think spiteful reason, have preferenced the Liberal Party ahead of my running mate who is firmly from the political centre.

EMMA ALBERICI: Spiteful?

NICK XENOPHON: Oh yes, I think so. I think so. There's no other way to put it.

EMMA ALBERICI: What was the motivation?

NICK XENOPHON: Well, I don't know. You need to ... I think you need to ask the ALP why they did that because the excuses they've given have been quite vacuous but that's our system. I mean they need to explain, the ALP needs to explain to their voters why they were happier to have a Family First or a Liberal senator in there ahead of someone firmly from the political centre on my ticket.

EMMA ALBERICI: You'd have a fair idea, surely, of what was motivating nah that?

NICK XENOPHON: Well, who knows? I don't want to ascribe improper motives. I'm just saying for some reason I think part of it is that the major parties or the ALP may have been terrified of having two SA Independents working together for the interests of SA because after all, the Senate is meant to be the State's house. But if you go to an optional preferential system you take that away. You take away the power of the backroom operators these bizarre preference deals and you give the power back to the voter and that's why we need to have a debate about that and that's why I'll be introducing a bill once Parliament resumes that will, I hope, trigger the requisite Senate inquiry or the joint parliamentary standing committee on electoral matters inquiry so that we can look at this thoroughly once and for all.

EMMA ALBERICI: Now in 2007 you campaigned to ratify Kyoto. Six years later do you still consider climate change a top priority issue?

NICK XENOPHON: Climate change is an important issue and while I'm loathe to quote Rupert Murdoch I think his line give the planet the benefit of the doubt still resonates for many people. It's how you do it. Let's put this in perspective. Both major parties have the same goal, to have a five per cent reduction on greenhouse gases by 2020 based on 2000 levels. How do you best achieve it? I think that's what the public policy debate ought to be about. We've had a very narrow, confined debate on both sides and with the Greens in relation to this and I think there are better ways of achieving that reduction in a cost effective way, better than what the former government came up with, a scheme full of uncertainty and there are better ways than what's being proposed by the new government with its direct action approach.

EMMA ALBERICI: Well what is the better way, in your view?

NICK XENOPHON: I think the better way is they need to have a close look at the frontier economic scheme that was proposed that was jointly commissioned by both myself and Malcolm Turnbull when he was Opposition Leader on behalf of the Coalition several years ago. That would be a scheme that would involve less revenue churn; significant certainty and I think you could modify the direct action scheme in a way that would achieve those environmental goals. But also in terms of the bigger picture, in terms of electricity prices, I think we also need to have a debate and a thorough look at the current electricity market rules, the powers of the electricity regulator and the national electricity market generally because I think that power companies are making too much money, in some cases at the expense of consumers and small and medium businesses and we haven't really had that forensic look. The debate so far has been quite simplistic and narrowly confined and I think we need to look at all those issues in order to do the right thing by the environment and also the right thing by consumers.

EMMA ALBERICI: Can you give us a brief understanding of how the frontier scheme would work?

NICK XENOPHON: Well the frontier scheme basically works of setting intensity levels so you have a baseline of intensity levels and if you are above that baseline there's a penalty involved. If there's a baseline there's a credit.

EMMA ALBERICI: Isn't that like a cap and trade system?

NICK XENOPHON: Well it's a modified version of that and the modelling was done by the same modellers who did Treasury's modelling for the Government's emission trading scheme so it was robustly analysed and thoroughly scrutinised. Basically that scheme would involve much less revenue churn because the Government's scheme, the former Government's scheme, rather, involved enormous revenue churn when you churn billions of dollars you waste many hundreds of millions of dollars and there are all sorts of bizarre outcomes in the former Government's scheme where brown coal generators got enormous levels of compensation that in hindsight, as frontier economics warned, were unwarranted.

EMMA ALBERICI: Do you believe the Coalition has a mandate to both repeal the carbon tax and introduce direct action?

NICK XENOPHON: Well, the issue of mandate is you need to get it through both houses of Parliament. The fact is Australians vote differently. They get two votes. On Election Day every Australian vote was given two ballot papers, one for the House of Representatives and another for the Senate and they voted differently for the Senate. There's a different outcome in the Senate. I think that with a bit of good will and good faith you can work with the Government to modify the direct action scheme to have the integral aspects of the frontier scheme, something that the Coalition looked at very closely several years ago to achieve a good environmental outcome without the revenue churn and without the waste that we've seen with the former Government's scheme.

EMMA ALBERICI: Have you had conversations with Malcolm Turnbull or anyone else in the Coalition about this that would give you some comfort that this could be on the table?

NICK XENOPHON: Look, I've put in a call to Greg Hunt but not that long ago and I'm still the dust is still settling from last Saturday but I'm looking forward to working with Greg Hunt and talking to my cross bench colleagues about the best way forward. I just want to get a pragmatic solution to this issue in a way that will give certainty to the renewable energy sector in a way that will, particularly in base load renewables such as geothermal, and I think it can be done. I'm optimistic that this can be worked through in a way that maximises the environmental benefit while minimising the economic cost.

EMMA ALBERICI: And finally are you prepared to barter your vote in order to see some kind of pokies reform finally through this Parliament?

NICK XENOPHON: I will always, always push very hard on the issue of poker machine reform. I'm disappointed with the new government's approach to poker machine reform. They want to wind back some, I think, minimalist reforms of the previous government. I will be resisting that and I hope my cross bench colleagues will as well. In my first speech in the Senate, a bit over five years ago, I see the problem with horse trading is that sometimes you end up with a donkey or even worse, you make an ass of yourself.

EMMA ALBERICI: But in the end you didn't manage to get virtually any poker machine reform through in your first term?

NICK XENOPHON: Well, not through lack of trying, not through lack of trying, Emma. Andrew Wilkie was given a written undertaking by Julia Gillard that there would be mandatory precommitment, even though the better option and this is not Andrew Wilkie's fault. Our first port of call was to have $1 maximum bets with $120 hourly losses as Recommended by the Productivity Commission. I will be renewing that. Poker machine won't go away and it's an issue because there are hundreds of thousands of Australians whose lives have been ruined by poker machines and it demands action.

EMMA ALBERICI: I thank you for your time tonight.

NICK XENOPHON: Thanks, Emma.