FRAN KELLY:

Matt Canavan, welcome to Insiders.

MATT CANAVAN:

Morning, Fran.

FRAN KELLY:

Minister, before we get to drought and your policy, did you ring any of your colleagues last week and canvas the idea of dumping Bridget McKenzie as deputy leader of the Nats?

MATT CANAVAN:

Absolutely not, Fran. In my view the last couple of weeks has seen the National Party at its finest. This is what our members do. They have a healthy disrespect for authority and a healthy respect for the views of their constituents. They come to Canberra and fight for them. That’s what my colleagues have been doing in the past two weeks, and I’m confident that very soon the Government will do more to help drought-affected farmers, to help our dairy industry. And when we do so, a lot of the acclaim and credit can go to those members who come to Canberra and do their jobs.

FRAN KELLY:

It’s interesting you say the Nats at their finest. I mean, we had this leak from the party room suggesting people were openly canvassing dumping the deputy leader, Bridget McKenzie, we had the leaking of the Nats’ 10-point drought plan. As I understand that wasn’t signed off to be released from within the party room. That’s your party operating at its finest?

MATT CANAVAN:

Well, all of those points you make, Fran, are all about the process, you know, they’re about the making of the sausage. I’m much more interested in how the sausage tastes at the end of the process. And, you know, sometimes the Nats might not be pretty, but we’re pretty effective and our members are pretty effective at voicing their concerns. The national conversation this past fortnight has been about the drought, and that’s a good place for us to be in because it means it’s driving an outcome, driving the conversation in a way that will help our constituents. I’ve got a great respect for all my colleagues and they certainly let their views be known when they come to Canberra, and it’s a good thing because it leads to action.

FRAN KELLY:

Okay. I’ll come to the making of the sausage in just a moment. But in terms of this week and there were tensions within the Nats, they were on public display, no one really trying to hide them. Do you have any plans to move to the Lower House yourself?

MATT CANAVAN:

No I don’t, Fran. I’m quite happy in the Senate. I represent a fantastic state in there and I’m very lucky to be here in central Queensland, in Rockhampton. I just love this place, it’s got so much going for it, and I’m just going to keep doing what I’m doing here. I’ve got a young family too, Fran. They’re my number one priority. I always say my job as a Senator and now a Minister, lucky enough, is important, but it pales into insignificance compared to my job as a dad, and a husband I should say, a husband too.

FRAN KELLY:

So, no leadership ambitions for you?

MATT CANAVAN:

Look, Fran, it’s not a matter of that. I’m happy where I am, and in terms of what I can contribute I think I’ve made a fair contribution from where I am and I’ll just keep trying to do what I do. And as I say often, it’s not the election win that I’m happy about a few months ago, what I’m happy about is that we’ve, through the election, been able to get more support across the divide for industries like the coal industry, to support jobs, to support development, to support dams. Look, everyone’s talking about dams now, everyone loves dams now. A lot of that’s down thanks to the campaigning of the Nationals Party and that’s what excites me.

FRAN KELLY:

Okay, so just to be clear, that’s not a no, to no leadership ambitions?

MATT CANAVAN:

Fran, I just want to keep making the best contribution I can over time.

FRAN KELLY:

Okay. Let’s go to the Nats’ 10-point plan for drought. It was leaked this week. The centrepiece is a $1.3 billion stimulus program for drought-affected communities, half of that would be federal money. Is that the kind of funding you’re expecting when the package is announced in the next couple of weeks?

MATT CANAVAN:

Look, Fran, I welcome all the suggestions and it’s not about a certain amount of funding. It is about what assistance we can provide people who are doing it really tough.

FRAN KELLY:

Well, your party room seems to think it’s about a certain amount of funding. They’ve got a figure on it: $10 million for each drought-affected electorate.

MATT CANAVAN:

Yeah, well, look I’m not going to start revealing conversations of our party room. But suffice to say the conversation was not about, or centred around, a total amount of money. It was centred around what we could do, and at the heart of the proposal that’s been put forward by Barnaby and others is about providing broader assistance for our community. This is not a drought that just affects farmers. Obviously they’re the front line of the impact, but there’s a flow-on affect to towns and communities, to parents who struggle to send their kids to school. And so there is - we’ve already provided assistance, hardship relief for people on-farm, but a lot of what Barnaby and others are talking about what else we can do through the community, not a certain amount of dollar value being spent.

FRAN KELLY:

Well, they are putting dollars on this community grants notion of $10 million each, as I said. There’s also talk of tax relief. Are you supportive, or are you backing or pushing for any kind of tax holiday for some of the small businesses?

MATT CANAVAN:

Look, Fran, I’m not the Drought Minister and I’m not going to come on here and start…

FRAN KELLY:

But you are around the Cabinet table.

MATT CANAVAN:

Yeah, of course, and those conversations are best held, frankly, among ourselves first too. All I can say is that we’re all in there fighting and advocating for greater assistance. The Government has done that. Over time we have increased our assistance. The terrible thing about drought is it does continue, you don’t know the end-point of it, and therefore the policy does have to evolve as the circumstances become more severe, as they have over the past few months in particular.

FRAN KELLY:

That’s the point the National Farmers Federation are making, isn’t it? More money will be welcome, no doubt about it. But how does it move us closer to any kind of national drought strategy?

MATT CANAVAN:

Well, again, Fran, I’ll let the NFF speak for itself but I don’t think you can, through drought, have a policy that is set at the start and doesn’t change through it, because the circumstances of the drought change. That’s what the Government has been doing by announcing a few months ago that we’re providing zero-interest loans for re-stocking for the first two years.

FRAN KELLY:

Sure.

MATT CANAVAN:

We’ve announced a supplement to people receiving a Farm Household Allowance, those who are doing it very tough. We’ve continued to increase our assistance in line with the severity of this drought, and we’ll continue to do that, I’m sure.

FRAN KELLY:

All right, the NFF would say that’s not a strategy. But it came up with its own six-point plan this week, which included money for exit packages, that’s money for assistance for farmers to leave the land. Earlier this month you told Alan Jones: We can’t always guarantee that every farm will be fine, that no tough decisions won’t have to be made. Is now the time for tough decisions?

MATT CANAVAN:

Well, look, Fran, farmers have already themselves, many, have had to make that. It’s terribly difficult. The Government’s focus is on providing them support and as much assistance as can be possible to ease…

FRAN KELLY:

So do you support exit packages?

MATT CANAVAN:

…the circumstances of those tough decisions. Look, I think we need to be careful about those. They haven’t always been successful in other industries. I’m much more interested in finding ways to keep Australians on the land, because I believe in our future as a farming community, farming economy, so I don’t want a rush to have people go to the exit. That’s not to say, Fran, I’m not trying to claim that every farmer in every place, every family stays there forever. Things obviously do shift and change, but I think the Government’s focus is very much on building our capability to grow things in our country, to become a stronger economy based on agriculture, and that’s our focus.

FRAN KELLY:

Okay. You are the Resources Minister, I assume you support the Government’s emissions reduction target of 26 to 28 per cent. So what’s your view then, this week, of the analysis from ANU suggesting we’ll reach our targets if renewable energy continues to grow at the current rapid rate, therefore allowing us to phase out black coal-fired power stations?

MATT CANAVAN:

Look, Fran, I haven’t looked at that report in detail. Your assumptions are right, I support the emissions reduction profile. In particular, though, on the issue of coal-fired power, I think we absolutely must maintain our competitiveness in energy and, in particular, the use of coal-fired power, because that’s what supports so much manufacturing jobs in our country. It’s not about the mining industry, I’m a big supporter of the mining industry, but our future health of coal mining is not that dependent on our use of coal here. We export more than 90 per cent of it.

But I do support a strong manufacturing industry, I do think we should be a country that continues to make things, to add value to our minerals and resources, and to do that we must use our energy resources too. And if those that want to shut down our coal-fired power are also saying let’s shut down our aluminium industry, let’s put thousands of people in manufacturing out of a job, and I don’t want to be a country that doesn’t have a strong manufacturing sector.

FRAN KELLY:

We’re not saying that. Let me talk to you, remind you of a speech from the CEO of Origin Energy, Frank Calabria, this week. He said that coal is the wrong technology to help firm the rise in renewables. Immediately he said that, you went on Twitter and said: I reckon we should do the opposite of what big energy companies say, because they’re a big reason why we’re in this mess. They’ve got no interest in ending a mess that they made lots of money out of, so let’s build coal.

Is that really what you reckon about energy policy? Just do the opposite of whatever it is that the big energy companies say?

MATT CANAVAN:

Fran, I’m pretty frank usually with my words. My sentiments were no different than the more diplomatically put by Rod Sims the other week as well, that there has been strategic behaviour in our market. I continue to be perplexed why in this debate we put so much, or some put so much, disproportionate share of weight on the views of dominant incumbent players within the energy market, as Origin is, when we wouldn’t do the same…

FRAN KELLY:

Well, partly because some of these energy companies…

MATT CANAVAN:

…we wouldn’t do the same with Coles and Woolworths. We wouldn’t say: what are your views on Aldi? to Mr Coles or Mrs Woolworths. That would be absurd. And likewise here, good luck to Origin, what I’m saying, Fran, very clearly, is that a thousand jobs just down south of here, an hour drive from where I am at Rockhampton in Gladstone, work in the aluminium sector. We’re one of the best aluminium producers in the world. If we turn our back on coal, you turn out the lights on aluminium. It’s as simple as that. There’s no ifs and buts about it. If we do not have coal-fired power in central Queensland we will not use our bauxite and value-add to it and create jobs here. What will happen is we’ll send those rocks overseas to China, we’ll send the coal overseas to China and they’ll make the aluminium and they’ll create the jobs. I don’t want to see that happen.

FRAN KELLY:

But Minister you’re talking as if coal is the only way to generate that power and the correct power, and that’s not true. I mean…

MATT CANAVAN:

No. Well, I’m happy to clear that up. I’m not saying that at all. I’ve always said we should have a mix of electricity sources. But in the case of aluminium, we’re not going to be able to produce that without a cheap baseload form of power, which, the only one we have here proximate to where the bauxite resources are. That’s just the geology and the geography of that industry that you can’t separate it from. But of course in other parts of the country and right across the electricity system we should have abundantly diverse forms of electricity supply, including renewables.

FRAN KELLY:

Abundantly diverse, but do you say including coal? Because the challenge of a huge rise of renewables in our grid is the need for more power that’s firming and flexible, and coal isn’t that according to Kerry Schott, the head of the Government’s Energy Security Board. She said recently: The thing about coal plants is, because they have to run all the time, they’re not flexible at ramping up or ramping down. They are dinosaurs in that sense for being complementary with renewable energy. Do you agree with that or do you think we should do the opposite of what Kerry Schott …

MATT CANAVAN:

Well, look, I’m not aware of the full context of Kerry’s quote, but…

FRAN KELLY:

You haven’t seen that?

MATT CANAVAN:

…the bigger issue here is that there’s too many people who just want to put a particular frame on the electricity system without thinking about how diverse and complicated it is. So yes, some parts of the system will need that firming power which a big, old, at least, baseload coal-fired power station won’t be very good at doing. But other parts of our network which have heavy manufacturing and a reliable source of power don’t really need the firming, they just need a cheap, reliable source of power for, say, our aluminium sector. So we can have different horses for different courses in the electricity system. That’s all I’m advocating for. Now, the modern coal-fired power stations can ramp up and down quite quickly, but we don’t have any of those here in Australia at the moment.

FRAN KELLY:

So how many of those, to support manufacturing as you’re talking about, how many of those do you think we should be building.

MATT CANAVAN:

Well look, Fran, we certainly need some. So here, I’m interested in particular problems, so that’s what I’ll take you through. We have seen in the last month or two Rio Tinto say: if we can’t have cheaper power they will shut aluminium smelters here in Australia. There’s one down the road here at Gladstone that relies on the Gladstone power station, that is scheduled to shut in about 10 years’ time, but Rio are potentially talking that it might be sooner than that unless we can deal with this problem. There’s the Tomago aluminium smelter in the Hunter Valley, another 1000 odd jobs, and that is supported largely by the Liddell coal-fired power station, which is due to shut, although it’s more complicated than that but I’m trying to simplify it. And in Victoria the Portland smelter, it was put at grave risk of closing down with the shutting of Hazelwood a few years ago, and that’s only being supported by very large subsidies at the moment by the Victorian Government. There’s questions as to how sustainable those are. So that’s just one sector. We’ve got copper refining, copper smelting as well. I want to support these industries, because I believe in jobs, the Nationals Party believe in workers, the Labor Party has long since deserted this space, and we’re just in there fighting for those industries.

FRAN KELLY:

All right, by that count that’s a number of new coal-fired power stations. Minister, thanks very much for joining us.

MATT CANAVAN:

Thanks, Fran, have a great day.