JEREMY FERNANDEZ:

I'm joined now from Rockhampton by the Minister for Resources and Northern Australia, Matt Canavan. Welcome to Lateline.

MINISTER CANAVAN:

Good to be here, Jeremy.

JEREMY FERNANDEZ:

We'll come back to this issue of fracking and the nation’s energy mix in just a moment, but you're joining us from the flood zone tonight and there's a feeling that the Fitzroy River may well have peaked. What's the feeling there about whether the worst is over?

MINISTER CANAVAN:

Well, we're going to, Jeremy, have a peak flood here for some days, probably a couple of days. I think everybody would just like it to get it over with so we can get on with the clean-up. The river here is just to my right and it's just under nine metres at the moment, flowing past quite strongly. If you see a croc behind me, Jeremy, just yell out, I might have to leg it quickly. As long as I beat your cameraman, Russel, I'll be right. But, look, we're used to floods here. This happens from time to time but we're a community that's still open. We have got a new bridge that keeps us connected to the rest of the world, that keeps Queensland open. It's so important that we've invested in that because sometimes when Rocky floods, when the Fitzroy River floods, Queensland can be split in two, but not this time thanks to the fact that we built the Yeppen Floodplain Bridge.

JEREMY FERNANDEZ:

How extensive is the damage, as you understand it so far, and how much stock, for instance, has been lost - cattle stock. There was also a substantial number of people who are not insured so they'll need to enter this long process of rebuilding that some charities are saying could last a couple of years.

MINISTER CANAVAN:

Look, there have been significant crop and stock losses, particularly associated with the immediate flooding and cyclone last week. Fortunately, a lot of the graziers around Rockhampton have had advance warnings, so they can often move stock to higher ground and safer areas. Likewise, here in Rockhampton, we’ve had time to prepare but we still expect just over 100 homes will have water through their house, and about a thousand will have water in their backyards and under their homes. So there will be a significant recovery effort to go through, and particularly for those people that lost significant crops last week and had the experience of five feet of water coming through in 30 minutes, I heard from one resident at Clarke Creek. It's been a devastating impact. There's big recovery to go but there's already Government assistance available and of course we'll be rolling that out further in the months to come.

JEREMY FERNANDEZ:

We've just seen this report and concerns about how gas fits into the nation's energy mix. How badly does the nation need this gas to set aside those concerns of cattle farmers, traditional owners and environmentalists?

MINISTER CANAVAN:

Well, look, Jeremy, as well as being the Resources Minister, I’m also Minister for Northern Australia. I see those gas resources in the Territory as the resources of the Territory and they're a great potential to grow the Northern Territory economy. Yes, we do need gas in southern markets. But the gas that is available in the Territory won't be a cheap option for southern markets because it costs a lot of money to transport gas long distances. What it really potentially bodes well for the Territory is a way and means to develop their own energy security, to potentially develop their own manufacturing industry. As your report said, they might have enough gas there for well over 100 years. So, over time, manufacturing and other jobs might come to the Territory if it’s developed. They're the opportunities Territorians have to, I think, grasp and run with. But, yes, it could also form a complement to the gas we might need across our nation but, in my view, we’ve got to look at gas reserves right across Australia. We’re a big country: you can’t just rely on one spot.

JEREMY FERNANDEZ:

As you know, this moratorium is in place because of those environmental concerns and there is an inquiry under way to determine exactly what the impact is going to be on the land. Is the Government considering alternatives at the moment? Something to sweeten the deal for the Northern Territory?

MINISTER CANAVAN:

Well, look, we've already offered an array of assistance to the Northern Territory Government, both before the change of Government last year and since. This is the fifth major report on unconventional gas in the Territory for six years. Our view at the Federal Government level is that there has been enough reports. It’s time to make decisions. We completely accept – your report, I think, Jeremy, may I say, was very fair and balanced – we’ve got to make sure we protect the environment and any development of gas in the Territory in a specific area would have to go through very robust environmental approvals. What we don’t agree with at the Federal Government level is this Territory-wide, State-wide blanket bans which don't really accord with the local circumstances that might exist. The Territory is a huge places and its water issues are very different.

JEREMY FERNANDEZ:

Shouldn't the landowners be allowed to have that final say, as the Nationals say in Victoria, for instance, where they give the landowners the final say on whether that takes place on their land?

MINISTER CANAVAN:

Look, it’s a State or Territory resource, the gas resources onshore. It’s not for the Federal Government to dictate how those resources are developed or regulated. But I do welcome, the Federal Government’s welcomed, the South Australian Government’s decision to reserve a share of royalties for landowners. I think that's a model we must look towards. I absolutely believe, and in my discussions with the gas industry stress, that they should not be going on to people's properties without their permission and they say to me that they don't do that, but it’s really up to States and Territories how they in detail regulate. What I'd like to do, as you said, we are more than willing to work with Territories and States to encourage gas development, to help develop the science. We have a program with the CSIRO that works closely with the Queensland Government and it's being rolled out with the New South Wales Government. We were hoping to roll out in the Territory but we’ll have to wait for this moratorium to end, and we're also investing $100 million across Northern Australia to research what exists below us, including the groundwater resources, which will be so crucial to any gas development in the Territory.

JEREMY FERNANDEZ:

In the meantime, you've told gas companies to sell more gas domestically. Are you still holding out the possibility of compelling them to reserve gas specifically for the domestic market?

MINISTER CANAVAN:

Look, the Prime Minister was very clear last month that we must develop our gas, and our energy resources, I should say, for our own nation's needs first, so what we’re focused on, the Government’s making sure that we have energy security for Australians, that we can keep people in a job and we can keep reasonable downward pressure on household bills. Normally, we're able to do that.

JEREMY FERNANDEZ:

Does that include compulsorily compelling the gas companies to keep gas for the domestic market?

MINISTER CANAVAN:

Well, we've said we'll keep all options on the table. The Federal Government, as I say, doesn't regulate the development of onshore gas but we do regulate exports. At various times in our history, the Australian Government or Australian governments – have restricted exports for our own energy needs. And we reserve those powers, Jeremy, as you would expect us to do, to ensure that any exports of our own natural resources are done so in the nation’s best interests. Now, we should have the ability to export and use gas for our own purposes. We export 90% of our coal and we don't have a problem maintaining energy security for coal-fired power plants. We should be able to do the same with gas but, where we’ve got unreasonable restrictions at the State and Territory level, that is inhibiting our ability to provide energy security and, unfortunately, when you start making some bad decisions, you’ve got to look at some outcomes or some other policy options which aren't necessarily the best.

JEREMY FERNANDEZ:

So, where is that threshold that the Government would decide to intervene, what is enough and what is not enough for the domestic market?

MINISTER CANAVAN:

Well, that’s something we are assessing at the moment with the gas industry. We have met with all elements of the supply chain in the last month as a Government. We met with manufacturers last week and heard that they believe already that the Government's intervention and discussions with the gas industry are making a difference. Last week, we saw both Shell and Origin put more gas on to the domestic market, including signing a contract with the second turbine at the Pelican Point gas-fired power station in Adelaide, a very important development for South Australia's energy security. And, today, QGC and Shell announced more gas supplies to Orica’s plant at Gladstone, just down the road from where I am at the moment, So, that will help keep jobs here. I would attest that we're already seeing a difference because the gas industry gets the fact that every nation in the world would ensure, and a good Government would make sure, that its resources are used for its own purposes and its own energy security first.

JEREMY FERNANDEZ:

Matt Canavan, thanks for joining us.

MINISTER CANAVAN:

Thanks, Jeremy.