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Interview with the Bolt Report, Sky News

15 March 2017

Interviewer: 
Andrew Bolt

Subject: East Coast gas supply; energy security; returns to landowners, Renewable Energy Target

E&OE

ANDREW BOLT:

Resources Minister Matt Canavan was part of the Prime Minister's crisis talks today to stop the country from running out of gas for our own use. I spoke to him a short while ago.

Matt Canavan, thank you so much for your time. Now we're running out of gas for homes, for industry and for power generators, prices are soaring. What did you decide today to do about it?

MINISTER CANAVAN:

Well we met with gas producers today, Andrew. We actually have a lot of gas in Australia. We've never produced more gas, but of course we're also exporting a lot of gas now. We’re about to become the world's largest exporter of liquefied natural gas. So, what we spoke about with gas producers today is that of course it's very important to guarantee our own energy security. We're happy to be an exporter. We export a lot of energy to the rest of the world, but we do need energy for our own electricity production and for manufacturing jobs in this country. And over the last year or so, because we haven't been able to develop gas in many states and territories, we're getting shortages in some parts of the market. We're getting prices being paid or charged here that are at levels well above those on international markets, and so that can't continue, it's not tenable. And today gas producers made a number of commitments to us to guarantee that electricity, the gas for electricity, would be made available and that they would bring more domestic gas to market over the next year.

ANDREW BOLT:

But they wouldn't do that out of the kindness of their hearts, would they?

MINISTER CANAVAN:

Well look, the market should be allowed to work here. As I say, some of the prices here in Australia are much higher than those that are in Japan and Korea, so there is an economic opportunity for producers to sell domestically. There are some issues with contracts, so some of these companies have signed long term contracts. That's a commitment that some of them have given to us to go away and look at those. Some have already brought and announced gas to come to the domestic market. I've been talking with a lot of them in the last couple of weeks and they get that they need to ensure that our lights don't go out or that jobs aren't lost because of an insufficient amount of gas, when they're exporting record amounts.

ANDREW BOLT:

There's two things in what you said. One is that some of them concede the prices here are so high that they can make more money selling here but I presume that suggests that prices won't come down that much.

MINISTER CANAVAN:

Well we do think with more suppliers coming online, it will help matters, certainly from the elevated levels we have seen. However, long term, another thing we discussed today,  long term Andrew, we need to find and develop more areas of gas to bring gas prices down.

Victoria has a proud heritage of a strong manufacturing state. Part of the reason it has that is because it's close to the brown coal of the Latrobe Valley and the oil and gas in the Bass Strait. The Bass Strait is declining at the moment. You need to have new areas developed. If you don't, over time industry will go where the gas and the resources are. In my state of Queensland we're developing a lot of gas. In America of course, they're having a manufacturing renaissance. So, the decision of the Andrews Government to ban conventional gas that has been safely used for more than 100 years is just unbelievable and it's a huge economic risk to the future strength of the Victorian economy.

ANDREW BOLT:

I want to come to that risk, tease it out a bit more. But just going back to this, what guarantee do you actually have that prices are going to come down and that the gas will be supplied to our markets? This is just a gentlemen's agreement, isn't it?

MINISTER CANAVAN:

So, what we have decided today is we'll establish a taskforce that will be responsible now for an ongoing level of commitments and communication with the gas industry. The first commitment, as I said, will be that in areas or times where electricity providers need gas to fire up their plants that there'll be a process in place that they can request and demand that gas, similar to some mechanisms we already have in the electricity market. Secondly, we will receive from the industry their commitments to provide more gas domestically. And then the PM, as he has said, if we don't see that action being taken, if we don't see a change of behaviour and a more available gas situation domestically, well of course the Federal Government has certain powers to ensure that we do have enough energy resources in this country and we don't put at risk thousands of jobs.

ANDREW BOLT:

So that's really the big stick, isn't it, that’s forced them to the table. If they don't do something, lights do go out, you will be under such pressure, you won't be able to do anything except say listen, we are now going to seize or make sure that you don't send this proportion of gas overseas, which of course forces them to break contracts but on the other hand creates a sovereign risk here of why would you invest when the Government can seize your assets or at least direct them to somewhere else. This is the problem isn't it? It's a showdown where you've said they just have to do this or else it will be worse for them.

MINISTER CANAVAN:

Look maintaining energy security and job security, Andrew, is a paramount objective of any Federal Government worth its salt and we've of course brought issues of energy security to the forefront this year. We are mindful of the situation we are facing as a country and we will do whatever we can to maintain it. I mean, I would say on behalf of the industry and to give them their fair due, they recognise that too. They operate all around the world, many of these companies. Every country in the world wants to maintain and secure its own energy security. So they get the fact that they have to be contributors towards that security to operate in our country. It is our resources they're extracting and making money from and we're happy to be a strong exporter of energy resources. But we must, of course, maintain our own domestic energy security and our own job security for thousands of Australians that rely on it.

ANDREW BOLT:

So let me just figure out how it works. So we get South Australia going to black again, you get a Pelican Point gas generator that says listen we can't open, we can't run because we can't secure the gas supplies. What have you negotiated that changes that equation?

MINISTER CANAVAN:

Well we'll have to work out the precise mechanism, but there are already provisions in the electricity market regulations, Andrew, which allow for direction at different times and what we are seeking to do is extend that to gas markets as well, so that there can be a provision in times of stress where providers of electricity can request to the regulators that they would like an amount of gas. We have agreed to work to develop that mechanism before next summer so that it we can be in a position to help guarantee energy security particularly going into next summer, where we won't have the Hazelwood Power Station - nearly a quarter of Victoria's energy supplies.

ANDREW BOLT:

Now you mentioned fracking. Fracking is a method of gas extraction that's been banned in Victoria, so is in fact the conventional on-land gas exploration for some reason. Fracking's also severely restricted in New South Wales and for now banned in the Northern Territory. What have you done today to lift or to try to get the states to lift those bans?

MINISTER CANAVAN:

Well look, of course it's not the Federal Government's job. They are resources of the states and we can't directly make them do that. We have agreed to continue to push states to see sense, if you like. I have been working very closely with the Northern Territory Government, through their moratoria. They will finish the review by the end of the year and there's a lot of prospective gas in the Northern Territory and we spoke a little bit about that today.

Of course, the Victorian Government, only last week, successfully imposed their ban through the Victorian Parliament. I had been working with Wade Noonan, the relevant Minister, to try and at least carve out a pathway forward. I mean, look I get  Andrew, that fracking is not the flavour of the month and that Governments have to listen to the people on the ground. But to ban conventional gas as well just defies all sense. The Liberal and National parties did try and excise that out at the last minute. It wasn't successful. So look, we've just got to go back again and point it out. If Victoria wants jobs, if they want a manufacturing industry, you've got to have gas, you've got to have coal, you've got to have stuff that can power big machines and provide people the opportunity to make stuff. If they don't want that, well, you know, I'll take it up in Queensland. I'll have those jobs, thank you very much, where we are producing gas and a lot of coal-fired power.

ANDREW BOLT:

But isn't it the fact that there's no evidence to suggest that fracking is unsafe when it's properly regulated? Australia's chief scientist has said that. New South Wales' chief scientist has said that. There's been a report from the Victorian Government that says that. There is just - this is just a pure scaremongering exercise. Why don't politicians call it out?

MINISTER CANAVAN:

Well, Andrew, I agree with that except what I would say is that it is fair enough that people who own property and own their own land want to be able to get a fair return from the development of gas on their property…

ANDREW BOLT:

Different issue. Different issue…

MINISTER CANAVAN:

Yeah it is, it is, but it's still – that to me is the key barrier, Andrew. It's not – yes, you're right about the science, and you can tell people until you're blue in the face. I've met with many farmers, particularly in Queensland about this issue, that it is safe. But at the core of all of this is that if a landowner doesn't see a stake, they don't see a benefit in having a well on your property, well you know, why are you going to accept it? And put yourself in their shoes, I mean if someone's going to rock up and drill a few hundred metres under your house and put a big steel well next door…

ANDREW BOLT:

…Oh yeah I’d want more money too.

MINISTER CANAVAN:

…you know, you're not going to be thrilled about it and if you're going to accept it, you'd want something in return, like any investment or asset.  And that's what needs to happen. Look, I do welcome what the South Australian Government has done yesterday in saying that a percentage of royalties will be dedicated and reserved for landowners. That's the kind of stuff we need Andrew and the industry are going to themselves increase their calls for that. You know, they don't control that either, it's got to come from the State Governments but that's a positive step forward, and I think if landowners can see a financial benefit, they'll be more likely to listen to those scientific arguments you put.

ANDREW BOLT:

Now, we're also driving coal-fired generators out of business. Two in South Australia have gone, the giant Hazelwood plant in Victoria will go in a couple of weeks and that's through things like the Renewable Energy Targets, this mad idea that we can stop the world from warming by forcing more Australians to use these wind and solar power, that's got us into this strife. Can you explain to me why we still have a Renewable Energy Target when there is zero evidence it will actually make any difference to the world's temperature?

MINISTER CANAVAN:

Well, look, as you know Andrew, the Coalition Government did take steps to reduce that target when it became clear we wouldn't be able to reach the level it was which was over 40,000 gigawatt hours before we reduced it down to just over 30,000 gigawatt hours. That has made it a more realistic target. That was only done 18 months ago, so I think you can't go changing policies every day of the week. That doesn't help provide certainty …

ANDREW BOLT:

You should change this one because it's not helping and it is hurting.

MINISTER CANAVAN:

Well, look, I accept where you're coming from Andrew, and it's a reasonable position to put, but I think it's also reasonable to say that once you've made a decision and said you're going to stick to something, you should live up to your commitments. We said we'd make this change. We actually wanted to cut it by further but it's what we could get through the Senate, and so having made that deal, so to speak, you've got to honour your word and we've said to the industry and the energy market that that will stay in place now until 2020 when we'll look what we do post that date. I think with the coal-fired power …

ANDREW BOLT:

But Matt Canavan, wouldn't you - 2020, alright, to then. Wouldn't you seriously like to see it drop by then? Because it really doesn't do anything about the world's temperature and it's causing this amazing dislocation and this huge expensive thing; South Australia having to spend another $550 million that it doesn't have on more band aids. Wouldn't you like to see the Renewable Energy Target dropped or at least a discussion about it from 2020?

MINISTER CANAVAN:

Well, under the legislation at the moment, after 2020 it stays at that level and as I said, I think you've got to provide a level of certainty to people in the market and not go adjusting things every day of the week. What I am concerned about is to make sure that we do have enough thermal generation in our system. Again, South Australia has recognised the fact that they can't just rely on renewables. Finally, belatedly, they've realised they've got to have fossil fuels and they're going to go and invest a lot in gas. It may have been cheaper for them last year just to look at Northern and keep that open. They refused to, they celebrated the blowing up of the Playford Power Station and just recently they've started blowing up the Northern one.

And I think as you pointed out Andrew, they had people, and I knew and was involved in discussions in trying to keep that station open. Instead they're going to have to spend half a billion dollars and then try and have the gall to receive some kind of congratulations for it. I mean it's like someone coming in your home and breaking a vase or something and then replacing it and saying, you know, aren't you going to say thank you? These guys are responsible for this mess. It's a belated action but it just proves that in this country, we're going to need coal and gas and fossil fuels for a long time yet to guarantee energy security and affordability.

ANDREW BOLT:

Matt Canavan, thank you so much for your time.

MINISTER CANAVAN:

Thanks Andrew.