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Interview on Sky News PM Agenda

5 April 2017

Interviewer: 
David Speers

Subject: Rockhampton flooding, Dam-building, Northern Australia Infrastructure Facility, affordable electricity, Finkel Review

E&OE

DAVID SPEERS:

I want to go now to Rockhampton, where of course the floodwaters continue to rise, set to peak tomorrow at around nine metres, the Fitzroy River. We’ve been reporting on the situation there throughout the week with our reporter Danielle Robertson. Also in town is the federal Minister for Resources, Matt Canavan, a local, of course, in North Queensland.

Thank you very much for your time. Tell me what it’s like there right now – we’ll get you to put a bit of a reporter’s hat on if you can. Describe to us the situation, the scenes you’ve been witnessing there.

MINISTER CANAVAN:

Look, I’m happy to, David. I’ll send you the bill later. But people here, I think, are ready, they’re relaxed, but we also want it over and get on with the recovery as well. It is taking its sweet time to come here to Rockhampton. It’s a huge river system, the Fitzroy: it’s about the size of France, it’s the second-largest river catchment in our country after the Murray-Darling. There’s a lot of water coming from a lot of places. We’re about 8.5, just under 8.5 metres at the moment, and, as you say, we expect to peak around nine metres tomorrow, and that major flood level will probably stay in place for 48 hours.

There will be an impact here in Rockhampton but, for the vast majority of the city, it’s business as usual. We’re very fortunate that we now have a connection to the south through the Bruce Highway, thanks to an investment a couple of years ago, that will keep Rocky open, keep everybody here with access to the rest of the country, and keep North Queensland connected, too, to the rest of the country.

DAVID SPEERS:

Now, the community there, the houses, the businesses, are of course a big focus. What about the farmland around Rockhampton, Matt Canavan, what’s at stake here with this flood for them?

MINISTER CANAVAN:

Look, a lot of the areas close to Rockhampton have obviously had warning of the floodwaters: it‘s taken around a week, or it will take about a week once they get here, from the cyclone. So they can move cattle and other things up to higher ground. There has, however, been devastating impacts in some of those areas that were hit late last week without as much warning. The small towns of Clarke Creek and Lotus Creek got hit very hard and the scenes that have been described to me there are very reminiscent of the Grantham floods a few years ago, with people having five feet of water coming through their house with only 30 minutes’ or less warning. It’s a miracle that no-one was seriously injured or worse up there but we’re very thankful for that. There’s going to be a big recovery effort needed up around that way. 

DAVID SPEERS:

Is there more that can be done when you look at the situation there, from federal or state or local government to mitigate against these sort of floods, whether it’s levees or other construction work that could be done? I mean, you mention the Bruce Highway being kept open, which is great, but what more could be done here to prevent this sort of impact?

MINISTER CANAVAN: 

Well, as I say, this is a very large water catchment. There’s really only one major dam in the Fitzroy, the Fairbairn Dam near Emerald. We would of course like to build more dams on the Fitzroy. We have plans at the moment to build the Rookwood Weir, which would double agricultural production in this basin. It won’t have a flood mitigation impact itself, though, just being a weir, but there are other bigger dams that I’d like to look at down the track, like the Connors River Dam and the Nathan Dam, which could have a mitigatory impact, depending on the level of the dam at the time of a flood. You can’t stop big natural events like we saw with Tropical Cyclone Debbie and we’re always going to be vulnerable to that. Here in Rockhampton, there have been proposals for levees over the years and that debate will rekindle now, I’m sure, but it’s always of course a matter of the cost against the benefit. That’s something the community and the various levels of government will discuss again I’m sure.

DAVID SPEERS:

You are the Minister responsible for the Northern Australia Infrastructure fund. I mean, are the dams and the levees that you’re talking about there the sort of thing you could tap into that fund for?

MINISTER CANAVAN:

Yeah, look, it’s open for those investments, and we are talking to some investors that are interested in some of these projects. We’re also about to establish a specific fund for dams, announced during the last election, that we would have $2 billion in low-interest loans to build dams across Australia as well, but both of those facilities – the Northern Australia Infrastructure Facility or this new dams facility as well – could be used to build this kind of infrastructure. As I say, I think it’s a really important message for the rest of Australia that, where I’m standing here, in the second-largest water catchment in this country, only after the Murray-Darling, all this water you can see behind me – we’ve got about two Sydney Harbours a day going past us – wouldn’t it be great if we could capture more of that and grow food and create more jobs around our country?

DAVID SPEERS:

Well, it’s startling when you put it that way: two Sydney Harbours a day flowing behind you there down the Fitzroy. Can I take it that, having witnessed this, having seen what’s happened, there will be more urgency now to get that new dams fund going, or look at the Northern Infrastructure fund, and get some of this stuff built?

MINISTER CANAVAN: 

Well, look, I’d love to, David. We obviously need the State Government to be on board – and I’m not going to make it partisan while we’re in the middle of this event – but we need commitments from all levels of government to get on with this job. We’ve got the funds available at the Federal Government level, we’ve got the commitment, but we don’t issue water licences. It’s got to be something that’s driven by the State. But there’s a huge opportunity here where we are, all this water just demonstrates that opportunity in a very evocative way. But we’re going to get through this, as we always have here in Rockhampton, it’s just a matter now of helping those people recover who’ve had water through their homes, or in their backyards, as quick as we can.

DAVID SPEERS:

Away from the floods, let me ask you, Minister, in your portfolio space, you’re a strong advocate for coal-fired power – and I know we’ve been talking about this for a while now – we’ve seen the Prime Minister now announce not just the Snowy Hydro but, the other day, in the deal with Nick Xenophon – they’re looking at a gas pipeline from the Northern Territory down to South Australia. What is happening on coal? What is the Government doing when it comes to coal-fired power?

MINISTER CANAVAN:

Can I just say up front too, as the Minister for Resources, that these floods will have a big impact on the coal industry here in Central Queensland as well. It’s unlikely to be as big an impact as 2011. We’re expecting delays for around 11 million tonnes, whereas back then it was 26 million tonnes, and a lot of those delays, we hope, can be made up as mines stockpile and use spare capacity once the rail line gets up and going again.

But, yeah, on coal-fired power, David, look, more work is continuing there. We’ll have more to say on that. I think we absolutely as a country need to look at it as an option, given that we will have something like a fifth to a quarter of our electricity supply reaching the end of its natural life in the next decade. We can’t turn our back on a resource that we have abundant amounts of here, that is very cheap, and that the rest of the world – particularly in our region in the Asia-Pacific – are using to build the latest coal-fired power stations. So, we’ll have more to say on that, I’m sure, in the months ahead, because this is something we must turn our attention to if we want to keep power bills down for people and we want to keep businesses open who rely on having cheap and affordable energy to provide jobs.

DAVID SPEERS:

Alright, well let me just try and tease out a little detail from you there. There’ll be more to come in the next few months. Does that mean you are actively talking to investors about opening new coal-fired power plants in Australia?

MINISTER CANAVAN:

Yeah, look, I’ve been open, David, about that. We are talking to investors, to potential people who are interested…

DAVID SPEERS:

And who are they?

MINISTER CANAVAN:

Obviously, I’m not going to go into people’s commercial-in-confidence details but there is a lot of interest, both here and overseas. That’s something we’ve got to work through. Obviously, we need to create the right conditions for what are large-scale investments, so that’s something we are looking at closely …

DAVID SPEERS:

And what does that mean: “create the right conditions for that investment”. What does that entail?

MINISTER CANAVAN:

Well, because these will be large investments – building a power station of a significant size is a capital-intensive investment – there needs to be the certainty over a number of years to make returns. Now, at the moment, in the current electricity market, that certainty really only exists for renewable energy. That’s about the only investments we’re seeing at the moment, though we will of course need to attract gas-fired power investments and coal-fired power investments, in my view, to provide energy security to all Australians ...

DAVID SPEERS:

How do you do that?

MINISTER CANAVAN:

… and that requires us to get the conditions right in those circumstances as well.

Well, I think there’s lots of different ways you can do that. That‘s why we’re looking at it closely. A lot of the risks that investors tell me about, and others have publicly as well, go to Government policy, uncertainty about conditions, effectively sovereign risks. The only entity that can tackle those sovereign risks adequately is the sovereign itself, so there’s a role for Government there..

DAVID SPEERS:

But what’s your position?

MINISTER CANAVAN:

…and making sure that all those risks are shared properly between public and private …

DAVID SPEERS:

What’s your argument as to how you create that certainty? For someone who wants to invest in coal-fired power, how do you provide it?

MINISTER CANAVAN: 

Well, for a start, David, I think you’re going too far to say that I want to invest in coal-fired power.  What I want to do is have it considered as an option. What I want is cheap power prices for people. What I want is that pensioners can afford their air-conditioning bills over summer. What I want is not to lose jobs, like down at the Boyne Island smelter, just down at Gladstone, about an hour down the road. They’ve had to put off just over a hundred people because power prices in Queensland are too high at the moment. That’s what I want. How we get there then of course is the open question. I think we should consider coal as an option to do that. There’s lots of different ways we can do that and that’s what we’re working through properly at the moment, as you’d expect.

DAVID SPEERS:

Sure. I’m just wondering how, as the Minister, what your view is, how do you create the certainty that investors need. What’s your proposal?

MINISTER CANAVAN:

Well, it’s not so much just about me, David, of course. It needs to be a partnership with the private sector, of course, so that’s what we’re working through and having those discussions….

DAVID SPEERS:

But as a Government, how do you give the private sector the certainty, as you rightly say, that they need to make these big investments. What do you, as the Government, say to them? How do you create that certainty?

MINISTER CANAVAN:

Well, that’s what we want to hear from them and have a discussion obviously to hear how we can do that. There’s lots of different ways you could do that. We have, in the renewable energy space, particular targets and Government legislation to achieve that, but I obviously want the right solution, not the most immediate, and certainly not a knee-jerk reaction. I mean, there’s no doubt David, we should have done more to plan for things like the Hazelwood closure. I would say that it’s been a failure on largely State Governments who are responsible for managing the energy network. But, look, we’ll put up our hand and say look more should have been done. We are where we are now and so we’ve just got to put our heads down and bottoms up and come up with the best solutions for Australians. 

DAVID SPEERS:

Would something like a renewable energy target – maybe an energy security target, you know, a supply security target – be a good idea?

MINISTER CANAVAN: 

Look, you might know, David, we’ve got an energy security review ongoing, chaired by the Chief Scientist, Dr Alan Finkel. Obviously, we’ll be very keen to hear his recommendations in the coming months and that will be a key consideration for us. So, there’s a lot of work and analysis to get the decision right here, rather than jump out and say we want to X, Y and Z. I think the Government’s objectives are clear, the Prime Minister’s objectives are clear: we are focussed on doing what we can do provide cheap and affordable power to all Australians. Now, we’ve got to get this advice and make decisions on that but, certainly, in the context of the Finkel Review, there have been people talking about some kind of capacity payment, which does exist in Western Australia, in some other countries, in some regions of the United States. But, look, let’s see what Finkel comes up with and consider those options properly, so we make the right decisions.

DAVID SPEERS:

Resources Minister Matt Canavan, appreciate your time and do give our best to the locals there as they prepare for the peak of that flood tomorrow. Appreciate it.

MINISTER CANAVAN:

Thanks very much, David. Have a good day.