Subjects: new coal-fired power stations; Northern Australia Infrastructure Facility; energy security; sugar industry

E&OE

DAVID SPEERS:

Well in Victoria, where the Prime Minister was this morning, the Hazelwood coal-fired power station is about to shut down. It generates more than 20 per cent of the state's power. Some say it should be kept open, with government help, but there's no sign that's about to happen. The Federal Government is however looking at ways to encourage new coal-fired power plants to be built: the so-called high efficiency, low emission coal-fired power plants that aren't cheap but do emit far less than those old plants in the Latrobe Valley.

The strongest proponent of such a move within the Government is the Minister for Resources and the Minister for Northern Australia, Matt Canavan, who joins me now. Minister, thank you very much for joining us this afternoon.

MINISTER CANAVAN:

Thanks David.

DAVID SPEERS:

I just want to start on coal-fired power. You said today, I heard on radio, that a coal-fired power station in the Galilee Basin in Queensland would make a lot of sense. Now you are the Minister so let me ask you, will the Government be helping in any way to build a coal-fired power plant?

MINISTER CANAVAN:

Well it's got to stack up of course, David, what we simply believe is we should be open to investing in infrastructure that creates jobs. That's what governments do. We invest in ports, we invest in railway lines, we invest in other forms of energy to create jobs. And certainly in the past, the investments in coal-fired power that governments have done, right across Australia, but certainly in my area in Central Queensland, have created thousands of jobs. And if we want to keep those jobs, we'll need base load power going forward, and we know from studies that have been done that a coal-fired power station in the Galilee Basin does conceptually make some sense. But clearly we'll need more details before any decision is made. We should just be open to it.

I mean the Labor Party only a few years ago were open to coal. In Queensland a couple of years ago, they refused to sell the coal-fired power assets because they wanted to keep them in government's hands. So what's changed in the last few years, unfortunately, is the Labor Party have gone over to the Greens and while they're over there, they can't support jobs in our manufacturing sector.

DAVID SPEERS:

Okay. You said at the start of it that any coal-fired power plant has got to stack up financially. Now presumably if they did stack up financially, they'd be being built right now. Are you saying stack up financially with Government support?

MINISTER CANAVAN:

Well that would have been the same when governments in the past built - when Playford built their coal-fired power stations in South Australia, of course they would assess whether they stack up. Now, whether or not investors in the private sector will invest in some of these assets obviously depends on the risks of doing so. There is a large risk that governments will change policy in the future, be it for coal, or other technologies. Now that's typically why governments have got a role in infrastructure provision.

We've become a little bit scared of investing in infrastructure, at least when it comes to coal or gas. But governments have done this all the time for those very reasons - that they're long-lived assets, they go over a very long period of time. And there does need to be some security or certainty for the investors involved.

DAVID SPEERS:

Now - okay so you are the Minister responsible for the Northern Australia Infrastructure Facility. This is the $5 billion fund that's meant to be run at arm's length from the Government. It can be used for concessional loans for infrastructure. It can't get bank finance essentially. Can I ask how does it actually work? I mean are you able to tell us, how does it actually decide where it's going to invest? There doesn't seem to be a lot of transparency around how it makes decisions.

MINISTER CANAVAN:

So first of all, David, the Northern Australian Infrastructure Facility is set up under an Act of Parliament. It's in that Act. The objectives are to invest in economic infrastructure which provides opportunities for economic growth right across Northern Australia. But to be more specific, the Government's then given the NAIF Board, the Board that makes the decisions, a mandate under that Act to invest in infrastructure that has multiple users or can provide those wider economic benefits. They've taken proposals from now 100 different projects and are assessing those. They've been filtering those down.

DAVID SPEERS:

Do any of them include a coal-fired power plant, can you tell me?

MINISTER CANAVAN:

No they've confirmed that, no, that hasn't been brought forward at this stage to the Northern Australia Infrastructure Facility. They are looking at a number of renewable energy investments right now.

And they've got four and possibly a fifth (project) soon going into detail due diligence.

DAVID SPEERS:

But does this Board have to look at what the financial return would be to taxpayers in the same way that Clean Energy Finance Corporation does?

MINISTER CANAVAN:

Yes that's right. So under the mandate we expect that the NAIF looks to invest in things which might not be able to receive private sector investments for the whole amount of the project but can still be operated in a way that will make a return over the time for the Government. Now, of course what the Government brings to the table is we're a more patient investor, or can be, so we can wait longer than typically the private sector does and that of course given our finance, given the way we finance money, we can borrow at a lower rate and offer some of that concession to the investor.

DAVID SPEERS:

I was going to say, so they do have to look for the risk the particular project they're putting money into. Do they have to look at the environmental impact as well?

MINISTER CANAVAN:

So we've also stressed that any project that NAIF is going to invest in would have to meet other approvals by state, territory, local or federal government levels. So of course that would mean environmental approvals, though not only environmental approvals; the NAIF doesn't, if you like, run parallel exercises on those. We've got dedicated organisations that look at the environmental impact of different projects and we should all stick to our knitting of course, but NAIF is there to look at the financial aspects of a project and whether it stacks up from the Commonwealth Government sense and also in terms of developing Northern Australia.

DAVID SPEERS:

Okay but of the hundred projects it's looking at, none of them are coal-fired power plants. There's only been, to my knowledge, one company that's raised some interest in this - it's Clive Palmer's Waratah Coal. If there's Government support, they're keen to build one of these. Is that a good idea?

MINISTER CANAVAN:

Well look I don't know the specifics of Clive's proposal. It hasn't come across my desk. Obviously any partnership we make with an investor, we'd have to look at the record of that investor and the likelihood of getting returns. Now Clive hasn't had such a great run in the last few years, so I'm not going to prejudge him as the Minister responsible for the facility that may accept an application from Clive. To my knowledge, at least as late as last week, that has not been received at this stage.

DAVID SPEERS:

Alright I did ask your leader, Barnaby Joyce, about this last week. He laughed off the idea of helping Clive Palmer in any such way.

MINISTER CANAVAN:

Yeah I saw that, Speersie, he's not the Minister responsible for the NAIF though.

DAVID SPEERS:

No, you are. You are. Exactly. You're being a bit more agnostic on it. But does it surprise you there's no one who's put forward a proposal for a coal-fired power plant? If you think it's such a good idea, why isn't anyone putting an idea to the NAIF, as it's called?

MINISTER CANAVAN:

Well not particularly, David. I mean one of the problems I think has scared people off in this area is because until the Prime Minister gave support for it a couple of months ago, there just hasn't been a level of political support for this, which does frustrate me because we rely on coal for 70 per cent of our power on the eastern seaboard, where we are today. Other countries in our regions are building hundreds of these high efficiency, low emission coal-fired power plants with our coal but there hasn't been a level of political support there. Now that makes a big difference …

DAVID SPEERS:

Okay but you reckon that political signal from Malcolm Turnbull will influence the market?

MINISTER CANAVAN:

Well any government - if governments aren't going to support these project, typically private investors won't follow.

DAVID SPEERS:

Alright but it is still not the Government's decision on how to spend that $5 billion, is that correct?

MINISTER CANAVAN:

Well that's right. Each individual project has to go through this process.

DAVID SPEERS:

Alright but because the PM has signalled he thinks it's a good - well open to the idea and you obviously think it's a good idea, you think that will encourage the market at least to put forward proposals to this independent body?

MINISTER CANAVAN:

Well, I don't just think that David, I know that, because I have spoken to a number of people who are interested. They haven't put forward detailed proposals yet, but they are very interested. And a very important point for them as investors is if they've got the support of a government to give them security over a long period of time. I also have a role in terms of the NAIF. While I can't direct it on individual projects, I still have to approve any decision that they make at the end of the process. So we're also signalling to the market that I don't have a crusade against coal; I'll consider any project on its merits. Clearly, coal-fired power station investment is working in our region and across the world. I think there are a number of reasons why they could possibly work here, but we have to look at the details of every individual project and I'll wait and see that.

DAVID SPEERS:

Let me turn to gas-fired power, because the gas industry points out they have even lower emissions than even the new, cleaner coal-fired power plants that we're talking about here. They want access to the NAIF - the Northern Australia Infrastructure Facility - as well as the Clean Energy Finance Corporation money as well. What do you say to that, and what can you do to encourage more gas usage at the federal level?

MINISTER CANAVAN:

Look, I'd absolutely welcome investment from gas to the NAIF. Just keep in mind, as I said, the NAIF is already looking at a number of renewable energy investments, which I'm open to as well and have said so, and I'm open to submissions on gas. Of course, the restriction that we're seeing at the moment about gas is there’s simply not enough gas supply in the country to even feed the existing gas-fired power stations, let alone building new ones right now. Now, I think that's very unfortunate. We should be producing more of our electricity from gas; it should be a fuel which helps transition ourselves to a lower emission future, but with various state and territory governments putting bans or moratoriums on the exploration and extraction of gas that's just not possible. You can't have a gas-fired power station if you don't have the gas, and that's a real limiting factor right now.

DAVID SPEERS:

I mean, there hasn't been a lot of shift from the states, some moratoriums and bans. Why do you think that is? Has the industry, its supporters, not done enough to settle some of the community concerns there over fracking and offshore drilling?

MINISTER CANAVAN:

Well look, let me say upfront - and I've said this to the industry itself, David - I think the industry needs to do more to try and build support for these projects. I can understand the frustration of landowners. I know many in my part of Queensland that haven't been treated well by gas companies in the past. I recognise that things have changed more recently, but there's a big legacy from that experience, and that has undercut, undermined if you like, much of the political support for gas development.

So I understand the position that Victoria, that Northern Territory Governments are in. I just think we now need to work together as state governments, federal governments, industry and the communities to try and find a way forward here. There's a lot of wealth to be created by developing our gas resources, particularly at current prices of gas. And so if we could just sit down and make sure we share that wealth among everybody, including the landowners in the community - they're a very important part of it - then we might have a way forward. But if we all just retreat to our various legal rights and say, look, I've got the right to do this and the state government's got a right to do that, I'm really sceptical about whether we'll see a way forward because politically there's just not a lot of support out there for it.

DAVID SPEERS:

Do you support the idea of mandating a certain amount of gas to be used in Australia, rather than exporting as much as we do?

MINISTER CANAVAN:

Well I don't think that's a very good outcome, David. I mean, the basic idea is that you keep more of your resources here to boost domestic supplies, to lower the price potentially, but that doesn't work in any other market. I mean, we don't make sure that we have enough scotch fillet in the supermarket by telling famers they can't sell their beef or cattle to overseas markets, right? We let them sell to a wide range of markets, which gives them confidence to invest, which gives them a good return when they can get a good price. And we have plenty of steak, and it has gone up a bit in the last few years because the world price of beef has gone up, but there's not a shortage of cuts of steak in your local shops even though we export the vast majority of it overseas. Now, that should be no different with gas, because we have plenty of gas here.

We have plenty of gas resources here in this country. Yes, we are exporting a lot of it now, but that actually should help increase gas investment, increase gas supply, because it gives confidence to investors that they can make a return on those developments. Of course, if they're stopped from developing at all through these bans, well, the market doesn't work, and we're seeing the impacts of that.

DAVID SPEERS:

Final issue: Sugar. A big issue, of course, as you would know, there in North Queensland. Wilmar and QSL have finally reached some sort of in-principle agreement in the stand-off that's obviously been leaving so many thousands of canegrowers there stranded for so long, but longer term they still want a code of conduct for their industry. Where do you stand on that? Do you think it's a good idea?

MINISTER CANAVAN:

Well look, I think that's something that the Government is considering right now. It's a matter for Barnaby Joyce and his portfolio. There was a Senate inquiry a couple of years ago which recommended a code and now we've been clearly waiting to see how the state government goes. There was some legislation being put to the State Parliament only a couple of weeks ago, it's something we'll further consider.

Now, I certainly am of the view that if Wilmar couldn't have come back and made sure they were negotiating we should look to act, because this is too important an issue for our whole country. I mean, Wilmar is the biggest canegrower; the cane industry represents billions of exports every year, employs thousands of people, but 4000 farmers directly are exposed to the industry, and there needed to be an outcome to make sure that we have a vibrant sugar industry going forward. I welcome the in-principle agreement reached last week. I do think the pressure that Barnaby, the PM, the LNP in Queensland have brought to bear in the last couple of weeks has forced that outcome. We've still got to wait and see now whether they can turn an in-principle agreement into an actual agreement.

DAVID SPEERS:

Yeah, well, did it come up, can you tell me, in Cabinet today? My understanding was it was due to be discussed. Are you going to give us an insight as to …

MINISTER CANAVAN:

Yeah, nice try, you nearly got me at the end of an interview. But no, I'm not commenting on Cabinet discussion other than to say, David, of course this has been a key focus of the Government in the last couple of weeks, to try and deliver outcomes for Queensland farmers. It's a very important industry for our country as well, and I think we've somewhat succeeded. There's a bit to go and we still remain open to do what we can to protect and support Australian farmers.

DAVID SPEERS:

I know there were some- this was a really interesting story in The Australian today, actually. There was some frustration amongst Nationals that Pauline Hanson, when she was meeting with canegrowers, was able to pick up the phone to Malcolm Turnbull and pass the phone around, and this access she was able to get with the PM some Nats feel is hurting them. Do you share that frustration?

MINISTER CANAVAN:

Look, I mean, I think a lot of these things are just the cut and thrust of politics. What I share with the PM, and what I am concerned about, is outcomes, not about how we get them, and I think we have delivered an outcome on this issue. It was people like George Christensen who, yes, definitely caused me a bit of heartache over the last couple of weeks, but that's his job as a local member, to stand up for his electorate. He's done that and we've delivered outcomes, and that's what I'm here for. So you just try and do your best in this job, and I think by the efforts of mainly others, not myself, in the last couple of weeks we've been able to progress things.

DAVID SPEERS:

Alright. Matt Canavan, the Minister for Resources, the Minister for Northern Australia, appreciate your time this afternoon, thank you.

MINISTER CANAVAN:

Thanks, David. Cheers.