FRAN KELLY: 

The global energy giant BP surprised everyone yesterday really when it announced it’s going to scrap its $1.4 billion oil and gas drilling program in the Great Australian Bight off the coast of South Australia. Yet another blow to the economy of South Australia, the State Treasurer Tom Koutsantonis hitting out at BP, claiming its withdrawal from the Bight would cause, quote, tremendous damage to its international reputation.

In a statement, BP says its decision was a commercial one. It said the project could, quote, no longer compete with other investment options in its portfolio. But environmental groups have been campaigning heavily against drilling in the Bight. Senator Matt Canavan is the Minister for Resources and Northern Australia. He joins me in our Parliament House studios. Minister, good morning. Welcome to Breakfast.

MINISTER CANAVAN:

Morning Fran. Great to be here.

FRAN KELLY:

BP says this decision was a completely commercial one. The South Australian Treasurer says there’s been little change in the macro conditions for oil and gas in the past 18 months. Why do you think BP abandoned plans to drill?

MINISTER CANAVAN:

Well look it is their commercial decision. It’s not my money I would be spending, but I am bitterly disappointed in the decision. BP gained access to some of our resources, or at least in terms of being able to proceed with exploration plans, by making commitments, by making almost half a billion dollars of commitments to do work in these areas. They are walking away from that work. I would expect them to make good some of those commitments in other ways and I’ll be very interested in discussing with them, in coming days, what those plans might be.

FRAN KELLY:

And when you say, make good those commitments, what do you mean?

MINISTER CANAVAN:

Well what happens is, companies come to us and say they’d like to have access to a particular part of our offshore acreage, and they make commitments to do work, to explore, and help prove up that resource if you like. It’s our resource; it’s the people’s resource.

FRAN KELLY:

So in the Bight?

MINISTER CANAVAN:

Not just – this is across all our offshore territories. So that’s what underpinned the billions of dollars of investment that we have attracted to the North West Shelf and the Browse Basin and of course the Great Australian Bight is a prospective area, not a developed area at this stage and it is disappointing that BP are walking away from these commitments. But look, it is a commercial decision, the oil price has more than halved since they originally made these commitments so it is perhaps understandable but that doesn’t minimise the need for me to talk to BP about how this might be made good and what other areas we could seek to explore, either in Australia or of course, Tom would want something in South Australia and I completely understand that and we’ll be very interested to hear what BP have to say.

FRAN KELLY:

So if it’s a commercial decision, as BP says, environment groups say it’s actually because of environmental pressure, they have been campaigning very heavily against any approving of BP’s plans for drilling in the Bight, do you think the environmental pressure had anything to do with this?

MINISTER CANAVAN:

Well I can only take BP’s word, I do think it’s the ugly side of green activism that yesterday the decision was made which impacts around 25 businesses in Ceduna, in and around Ceduna in South Australia. We think up to 100 workers will be impacted, those workers I’m sure went to bed last night a little restless and not sure about their futures but we had other people in this country popping the champagne corks and celebrating that fact …

FRAN KELLY:

[Interrupts] Which is not unknown I suppose, I mean there’s always you know, different views about mining and where to mine.

MINISTER CANAVAN:

Look there is but what does frustrate me is sometimes those people, those workers in these industries who tend to be fairly quite reticent types of people aren’t the ones on the radio or in the media telling their stories. Yesterday, in my patch up in central Queensland we had a coal mine re-open in Collinsville, 200 people now will be re-employed, so great news for Collinsville, a shot in the arm for central Queensland, just what it needs but it just shows how important the resources sector is and how people’s livelihoods live or die on decisions that are made on resources and world prices.

FRAN KELLY:

We have spoken to some of the environmental activists on the radio, you’re completely right about that but Peter Owen from the Wilderness Society in South Australia a couple of weeks ago told us it’s time to recognise that drilling in very deep waters like the Bight in such a harsh and wild environment is not safe or environmentally responsible. Did you have any concerns, particularly since we've seen with, you know, when BP had another very high profile drilling process went wrong, the damage that can cause for the oceans?

MINISTER CANAVAN:

Ah, look - well ...

FRAN KELLY:

And the environments and economic cost.

MINISTER CANAVAN:

We have a very stringent and detailed regulatory environment to deal with issues like that. We don't walk away from that. There are of course ...

FRAN KELLY:

[Interrupts] No, but things can go wrong, and we still have the Deepwater ...

MINISTER CANAVAN:

There are of course risks in any type of development, be it construction in cities, be it agricultural developments and of course in the resources sector, and we have a very stringent regulatory environment for oil and gas regulation. We have drilled more than 3000 wells across our offshore areas in the past few decades, with a world class safety and environmental record, and we have strengthened the environmental approvals process in the last few years through the creation of NOPSEMA. They were going through a very rigorous process with BP, it was taking some time.

FRAN KELLY:

They were getting knocked back three times I think?

MINISTER CANAVAN:

Oh well, ah, yeah, they were up to their third submission, and to me that showed the rigour of what NOPSEMA were doing. I was happy to take their advice - they're an arm's length body to government. I would trust the experts in that regulator more than some of these campaigners, which let's face it are ideologically opposed to fossil fuel development. It's not necessarily about the particular environmental issues for them.

FRAN KELLY:

Okay, so just before we leave this issue, what is the future for oil and gas development in this greenfields basin in the Bight, in your view?

MINISTER CANAVAN:

Well, there are other licences, permits that are out there at the moment. We - and the advice I received is that this potentially could be a very prospective area for our country, and in an environment where we import something like 80 per cent of our oil now, it is important to look for these types of resources. Obviously there is still a lot of uncertainty about the area, but we still remain confident of its long term prospectivity, and I'll be talking to some of those other companies about their plans in the coming days.

FRAN KELLY:

It's five to seven on Breakfast, our guest is the Federal Resources Minister Matt Canavan. Do you share the concerns of some over the petroleum resource rent tax, the PRRT, and the fact that it seems - according to one estimate - just five per cent of oil and gas projects operating in this country at the moment are paying royalties for offshore projects. Are we being taken for mugs? Does that tax need to be redesigned?

MINISTER CANAVAN:

Well, this is a tax that was expanded only a few years ago, expanded with the support of the Labor and Green parties to come onshore. It was previously a tax only applied to offshore petroleum developments. It came to onshore developments particularly to capture the large unconventional gas developments that have expanded ...

FRAN KELLY:

[Talks over] It doesn't seem to be catching much at all at the moment.

MINISTER CANAVAN:

... and it - and well it's a profits based tax, and what happens of course is that resource developments take large, upfront costs - particularly some of these LNG developments - large capital, and that takes some time before profits are realised, and because the profit based tax, before the Federal Government will take a share of it, but this tax has delivered billions to the Federal Government over a number of decades. And of course it has underpinned the development of a massive industry in this country. So we've got to be very careful about making any changes, particularly after people have massive investments. We've got to attract this investment to our country.

FRAN KELLY:

Talking about investments, you're also the Minister for Northern Australia, and last night you had a progress report on implementing the white paper on developing the top end. Six billion dollars in infrastructure investments - when are we going to see those projects roll out?

MINISTER CANAVAN:

Well they're rolling out right now. We've made more than half a billion dollars of commitments to specific roads and dams in the last year, and some of those roads are starting to roll out now, and some of the dams will be started in the next year I hope too.

FRAN KELLY:

And just finally, Minister, the issue of marriage equality has been causing tensions within the Parliament and between the parties. Labor will now try to force a vote in the Parliament on this substantive issue once it votes down the plebiscite. The plebiscite will not get the numbers in the Senate; it seems almost certain. Many in the Coalition party room - and I think you're one of them - are against a vote, a parliamentary vote, and are against marriage equality. Why not allow the vote ahead? Does that mean you know you don't have the numbers, you'd lose the vote?

MINISTER CANAVAN:

Well the first thing to say here is the stubbornness of the Labor Party is probably going to deny those people who want to change the Marriage Act any attempt to do that. We went to the policy last election with a plebiscite. Our party has had a policy position in favour of no change to the Marriage Act. I do not see why we would break faith with the people that support us and our supporters. I understand the Labor Party's position; I understand people have a different position to my own. But the art of politics is compromise. The Labor Party have been incredibly stubborn on this issue, and that approach is probably going to mean we're in limbo for a number of years yet.

FRAN KELLY:

So Malcolm Turnbull doesn't have a choice? Can't move to plan B?

MINISTER CANAVAN:

Well it's not a matter of the Prime Minister having a choice. He's took a policy to the election, and I think most people expect we implement the policies that we take to an election when we win it.

FRAN KELLY:

Minister, thank you very much for joining us.

MINISTER CANAVAN:

Thanks, thanks Fran.

FRAN KELLY:

Matt Canavan, Senator Matt Canavan is the Federal Minister for Resources and Northern Australia.

(ENDS)