Subjects: coal-fired power stations; energy policy

E&OE

TOM CONNELL:
Back though in Canberra first of all, because the Government is now talking to Asian investors to build a coal-fired power station, backed possibly by its five billion dollar Northern Australia fund, to try, they say, shore up energy security in the medium term. Resources Minister Matthew Canavan has told The Australian newspaper there is a high degree of interest from Asia to help develop a new power station in northern Queensland, arguing that finance from an infrastructure fund would be needed to get that project long term certainty. He joins us now in the studio. Thanks for your time Minister. If I can start on all of this as it stands right now, it's fair to say there's not the appetite in the private market to get this up and running.

MINISTER CANAVAN:
Well that's not my assessment Tom. I mean it is the case that for a number of years we've had excess supply of power in our system, because the Renewable Energy Target was bringing in renewable energy.

But obviously that is winding down now, and we are seeing large scale retirements - particularly of coal, but also gas-fired power stations. And over the summer, we've seen elevated prices for wholesale power. So there will be a need in the next decade to refurbish or replace some of our existing baseload power stock. We as a Government think we should be looking at all different options to get… (interrupted)

TOM CONNELL:
But right now, if you're talking about getting the Northern Australia Infrastructure (Facility) involved, it's public money, that means it's got to fill the gap where there's not enough private, at least now.

MINISTER CANAVAN:
Yeah look, I think there's going to be a need in the case of coal unfortunately, because the Labor and the Green Parties have gone off the fringe of the economic debate here. I mean, even Julia Gillard and Kevin Rudd saw coal being part of our energy mix for years. But last week Labor voted for a motion in the Senate saying our coal-fired power systems should all be shut down, we should move away from it. This is ridiculous. There are hundreds of coal fired power stations being built in our region. New ones with modern technology. They can make sure that we can keep prices low, keep the lights on and reliable and that we can get lower emissions as well with these newer technologies. Why wouldn't we look at those very technologies that are being built in our region, using our coal to fuel them?

TOM CONNELL:
How much money could we be talking from the five-billion-dollar fund?

MINISTER CANAVAN:
Well look that is not a matter for me directly, of course. But we’ve got a strong commitment to develop the North. We need to do more work yet to look at what sort of scale we would want to build, or what sort of demand there would be. There was a report a couple of years ago from GHD, a respected engineering firm, which showed that an 800 megawatt coal-fired power station would be commercially viable in the Galilee Basin to feed North Queensland. North Queensland businesses right now pay about double for their power prices than southern Queensland ones. That's a real issue that we need to try and tackle through building infrastructure in the North. That's what we're trying to do to develop the North.

SAMANTHA MAIDEN:
A couple of questions though about this. I mean first of all, what's the timeframe? Because we have these big announcements and it's going to solve the world, but then the power station can't be built until after the next election. So you're still going to the next election on a promise of something that's half built. I mean, when would people actually see any benefit out of it?

MINISTER CANAVAN:
Well I mean I reject the fact that we make big announcements in the North and don't do things. We're building 700 million dollars worth of roads right now. We've announced 200 million dollars worth of dams that are rolling out across Northern Australia. Now I think another step in developing the North agenda will be looking at the energy needs of the North. It's best and right to do one thing at a time. It will take time. It will take time. I mean from the conversations I've had, you'd be looking at sort of a three year horizon before power was being produced. These are big, large projects, but even more important why we should be planning and thinking about what we need to do now.

SAMANTHA MAIDEN:
And I get the argument from an energy security point of view, that we need to have diversified sources and all the rest of it. But if we have to tip in an absolutely huge amount of money, is there a business case, or the evidence, that it wouldn’t be better just to give people a rebate on their electricity bill? Like, what's the case for saying that this is the best way to spend the money?

MINISTER CANAVAN:
Well of course a rebate on your electricity bill is not going to necessarily guarantee supply. And what we need for the long term is a secure supply of power. Look, Governments right across the world and here have built infrastructure over time. I don't think we should be shy from saying that sometimes the Government's role is to invest in rail and roads and ports, and of course energy infrastructure as well. Almost all of the coal-fired power stations that exist in Australia were built by Governments, likewise for many of the gas power stations as well.

SAMANTHA MAIDEN:
What about privatision as well? Because your side of politics has championed this idea of privatisation of assets, including a whole range of energy assets. Now we're turning around and sort of turning back the clock. I mean, do you think it was a mistake to flog off some of those assets?

MINISTER CANAVAN:
No, not at all. But I do think there is a role for Government here. I mean, the Northern Australia Infrastructure Facility is specifically set up not to own assets. It doesn't invest in equity. It provides concessional and long term finance to help attract private sector investments. So I think we need to do is partner with the private sector, and that's what I'm doing in my discussions. But there is still of course a role for Government to set the basic framework and at times help assist over the long term to provide certainty for investments which are very large, and do have risks over a number of years and a number of electoral cycles.

TOM CONNELL:
The concern would be for some that the Government is left holding the baby on this, because you guarantee it with money. You might be talking about a power station, I don't know, with a 50 year time span. Do you really think we'll still have coal in 2070 for example?

MINISTER CANAVAN:
Well look, I can't make predictions 50 years hence, Tom. But I'm very confident that coal has a life over the decades to come in our world. Certainly that's the verdict of those that are investing in the industry in our region. This century, we've had a 60 percent increase in coal usage across the world. 60 percent. There’s never been such a…

TOM CONNELL:

Investment there is more about export though at the moment.

MINISTER CANAVAN:

Yeah, but obviously the coal is being used somewhere around the world. I actually think with the growth of India, potentially Africa in the future, we may see just as big increases in the decades to come.

TOM CONNELL:
We've got to there, but Resources Minister Matthew Canavan, thanks for your time today.

MINISTER CANAVAN:
Thanks Tom.