Interview with Michelle Grattan of The Conversation
10 March 2020
Subject: Australia’s energy mix, nuclear power, Northern Australia, water management, the Nationals.
INTRODUCTION - MICHELLE GRATTAN: The upheaval in the Nationals a few weeks ago, which saw their resignation from Cabinet of Matt Canavan as part of the Barnaby Joyce unsuccessful leadership bid, delivered a massive promotion to Keith Pitt. In the reshuffle that followed, the Queenslander rose from the Backbench to Cabinet, taking Canavan's old portfolio of resources in Northern Australia and acquiring responsibility for water as well. These are hot areas in political terms. The future of coal is at the centre of the climate change debate and the Murray-Darling Basin has a competing and fractious set of stakeholders. Keith Pitt joins us today to talk about some of the issues in his new job.
MICHELLE GRATTAN: Keith Pitt, as Resources Minister, how do you see the long-term future of coal? Is it inevitable that demand for Australian coal will fall between now and 2050?
KEITH PITT: Well, I think there's still an opportunity for Australian resources. The International Energy Agency says that coal will still make up more than 20 per cent in terms of energy production right around the world. And we have something which is a premium product. Our coal is recognised as being high quality, low ash, low sulphur content, and markets want it. In fact, they demand a lot of our coal resources and are willing to pay a premium. So I think, yep, there's opportunities into the future.
MICHELLE GRATTAN: But do you think demand will hold for 30 years?
KEITH PITT: Well, I'm confident in our sector and I'm confident in the businesses that are invested in it. And I think we just need to look at what's happening in countries like Japan and others who are building high efficiency, low emissions coal-fired power plants. They're empowering them with Australian resources and I think that's great for our country.
MICHELLE GRATTAN: Now, at the moment, the Government is providing financing for a feasibility study for a new coal-fired power station in Queensland. Critics say it would never be able to attract private capital. Do you think it could attract capital, and do you think that we will see this project happen?
KEITH PITT: Well, I think there's a couple of points I want to make. The first one is we made an election commitment, which we are delivering on, and I don't think anyone listening to us right now should have any other expectation where we deliver on our commitments. Secondly, it's a feasibility study to determine whether it's feasible. As an engineer, it's something that, you know, I've looked at many, many times on different projects, and the purpose of the feasibility study is to determine whether you should build a particular piece of equipment, whether that is a power station or something else. So, I'm looking forward to seeing the results and then I'm sure decisions will be made after that.
MICHELLE GRATTAN: Do you think the Government would be willing to provide financial help in the form of underwriting if the feasibility study is positive?
KEITH PITT: Once again, our policy is to underwrite a number of generation projects around the country. Angus Taylor has announced a number of those: gas and pumped hydro and others. But once again, we have to wait to see what the results are of the feasibility study. That's why you pay individuals with experience and expertise to do those types of studies. And I think if we are truly technology agnostic, then all options are on the table.
MICHELLE GRATTAN: So if the study came out positive, it would have a very good prospect of getting government help, you believe?
KEITH PITT: Well, look, I think all projects which are positive in terms of the feasibility study will have a prospect regardless of what the fuel source is. But clearly, in Queensland, you have to work with the Queensland State Government. They own 70 per cent of the generators. They own all the transmission. In fact, they set the price for the domestic pricing, certainly. So, there's challenges there and that's just part of the federation. It's been ever thus.
MICHELLE GRATTAN: But you're saying that the challenges would be more at a state level than a federal level.
KEITH PITT: Well, that's certainly my view. But once again, I don't want to pre-empt the outcome of a report which hasn't yet been completed.
MICHELLE GRATTAN: Now, the Government will soon launch its technology roadmap for reducing emissions, and it emphasises that this is a strategy but it's decided not to embrace a target of carbon neutrality by 2050. Even so, do you think it's possible that Australia could achieve carbon neutrality by then, despite not formally embracing that target?
KEITH PITT: I think all things change over time. Regardless of what you’re in, longevity, it's difficult to achieve whether you're a business or an individual. So I think, into the future, there's certainly the potential for that. I'm looking forward to seeing what's in the technology roadmap just like everybody else. But once again, I'm a practical guy. I'm looking for outcomes that work. And what we need is a reliable and affordable electricity supply that is fundamental to Australian manufacturing, that's fundamental in terms of domestic uses; and where I come from, people just can't afford to pay more.
MICHELLE GRATTAN: Now, you've been, over the last few years, in and out of the junior frontbench a bit, but when you were a backbencher most recently, you were very vocal about the desirability of Australia developing nuclear energy. This is not the Government's policy, but looking to the long term, do you think eventually Australia will move down that route?
KEITH PITT: Well, I think we need to have an open mind. And the purpose of the discussion, in my former role as a committee member - and I wasn't even a voting member on the committee but I was certainly a supplementary member - was simply to have that conversation with the Australian people. So, look, I think that was effective. Ted O'Brien did a good job. The committee has made some recommendations to the shareholding minister, which is Angus Taylor, and Angus has to respond to those within a particular timeframe. So I think, once again, if we are truly technology agnostic, we need to look at all options and all activities. And as technology advances, well, we need to reassess exactly where those opportunities lie.
MICHELLE GRATTAN: So do you think attitudes to nuclear will change, will be more sympathetic as the years go on, and as it looks to be one way of cutting emissions?
KEITH PITT: Well, we know that it's practically a zero-emissions technology. We know that there's been changes recently around small modular reactors. And I've always kept an open mind. I mean, this is one of the things with a technical background. You look to things that work. But right now, there's a moratorium in this country. As the Prime Minister has said, it would require bipartisan support, legislative changes. But once again, I'm looking forward to Angus's response. He is the shareholding minister. But we need to look at opportunities wherever we find them.
MICHELLE GRATTAN: And what about public opinion? Do you think public opinion will change, say, over the next decade?
KEITH PITT: I think there's been some change over recent years. That's certainly the feedback we've got as part of that committee, particularly in the younger generations. They're certainly more concerned about other priorities and they're not as - how do I put this nicely, Michelle? They're not as concerned about what's happened in the past, with the older type nuclear technology, as some of their more senior members right across the country. But it's like all things: you can never get 100 per cent agreement. I mean, that's practically impossible. If you wait for perfect, you'll wait forever.
MICHELLE GRATTAN: Now, can we talk about Northern Australia? As Minister for Northern Australia, you have oversight of the Northern Australia Infrastructure Facility. Now, this has been somewhat slow to get into action, allocating only some 2 billion out of its available 5 billion. The fund is being reviewed now and I think the legislation finishes next year. The Government will have to make a decision about whether to extend the fund. Do you think it needs changes? Are they fundamental changes? And do you think it should or would be extended?
KEITH PITT: Well, I mean, when you have a review, I don't see much purpose if you don't make changes following a review, depending on what the outcomes are. But for me, the NAIF is incredibly important way to get capital into Northern Australia. And as you've rightly pointed out there's $3 billion sitting there that I want to get out the door. So in meeting with the NAIF, they're looking for more projects, they're looking for more opportunities, they’re willing to look at smaller scale projects, so anything from $1 million up. Now, we might have to make some adjustments in terms of how quickly they can assess those. But my view is very straightforward. This is $3 billion worth a capital that can drive jobs and help drive the Australian economy. I want to get it out the door into projects.
MICHELLE GRATTAN: Well, are you going to get this money out the door before the legislation sunsets?
KEITH PITT: Well, there's any number of projects currently being assessed and they're all at different stages. The NAIF, they've been doing a good job-
MICHELLE GRATTAN: Well not that good if it hasn't spent the money.
KEITH PITT: Yeah, but it's also difficult to assess some of these projects, you do need detail. Sometimes there's challenges around available finance to get that detail put together. You know, when you're putting up business cases, they can be expensive depending on the size of the project. So my view is quite straightforward. I'm looking for opportunities in Northern Australia. I'm looking for the delivery of the NAIF, I'm looking to streamline the processes wherever possible. And I think there are opportunities for us in the north and I want to make sure we deliver-
MICHELLE GRATTAN: What sort of projects are you talking about? What are you looking at now?
KEITH PITT: Well, the NAIF is looking at any number of projects.
MICHELLE GRATTAN: In what areas?
KEITH PITT: Well, some are transmission, some are looking at localised generation supplies. We've announced on pumped hydro at Kingston from memory. But, you know, whether it's an accommodation project or a manufacturing plant, to me as long as it provides jobs and does what the NAIF is supposed to, we need to look at it.
MICHELLE GRATTAN: So it will put its foot on the accelerator and it will look at some smaller projects?
KEITH PITT: I'll put the foot on the accelerator, Michelle, I think that's the intention, working very closely with the individuals in the NAIF. It is an independent body. I mean, I have a veto right. But certainly we can be out there selling availability of capital right across the country. And I've got an assistant minister now in Michelle Landry and that's one of her roles. I certainly want to make sure she's out on the road talking to everybody that has potential projects, particularly if they're advanced and how we can get those out on the ground and going.
MICHELLE GRATTAN: Well, let's turn to water which is a highly vexed area, the Murray-Darling Basin. It's always fraught and there are disputes between stakeholders, irrigators, environmentalists, as well as between the states. You've done a tour of this basin since becoming Minister for Water. What have been your impressions? Do you think the balance is right between water for the farmers, water for the environment, and what's been the feedback from communities?
KEITH PITT: Well, I think the feedback is - in the midst of the drought - it's very, very challenging. And you know, I get it. Desperate people do desperate things. And I think there's not much we can do about that side until we do get rain. But once again, we need to manage the Murray-Darling. There's been a commitment made to do that. It's always challenging working with the states. I mean, I'm not the first minister to have those challenges, I won't be the last. But the commitment I've given them both publicly and privately is I will work with them because I think it's in the national interest.
MICHELLE GRATTAN: What do you think about this balance between environmental water and irrigating water?
KEITH PITT: I'm always looking at opportunities. I think there's opportunities in the irrigation side for efficiencies. I think there's opportunities on the environmental side to ensure water efficiencies on that side of the ledger as well. But we do need to get the balance right that this is a national interest project. And I think one of the advantages I do have is I'm not from anywhere in the basin. I can't be accused of being influenced by my constituents and my decisions will be in the national interest. And I'm looking to work with the states to deliver what we said we would do.
MICHELLE GRATTAN: Well, you've got the Mick Keelty review coming up, right. And that potentially could open up fresh disputes between the states. How much change do you anticipate that will produce? And do you think the states really will arc up?
KEITH PITT: Well, I mean, I can't pre-empt the outcome. Mr Keelty is the interim independent inspector. But we've also got ACCC report which is coming up. They're looking at water trading, whether there's options there. But fundamentally I think people are consulted out. I'm not sure they need a lot more consultation. We just need to give them confidence, and to actually act. So you know, we've got states like New South Wales which are a little bit behind the game. I'm hopeful they'll come on board. And my view is quite straightforward. Even a partial improvement is an improvement. So we're looking to step forward on the plan.
MICHELLE GRATTAN: Well, just spell out something of the problem with New South Wales.
KEITH PITT: Well, we are waiting for water resource plans from New South Wales. We've had some discussions with them. I'm hopeful we'll make some progress. MinCo is coming up in a few weeks, and I'll certainly sit down with all of the water ministers and see what the challenges are. But one of the things I was shown was the Barmah Choke. You know, my engineering brain says, well, we need to do something about infrastructure down there, and that is about environmental efficiency. I don't see much point in flooding that area of the river with so much water the banks collapse. But at the same time, we need to meet all the requirements of the plan. So wherever we can add in infrastructure, whether it is in terms of efficiency for the environmental needs, whether that is for infrastructure for improving reliability of water for irrigation and business and communities, well, I think we need to look at them.
MICHELLE GRATTAN: Do you think that the irrigators are getting a fair deal?
KEITH PITT: Well it's challenging because the states basically all have a different set of rules in terms of how they trade and how they price their water and how it's provided. So it's a state-by-state basis, but once again, if there is a way that we can get the balance even better, I'm happy to look at it.
MICHELLE GRATTAN: And what about the long-term health of the river, because as we get climate change, the environment's going to be drier, there's going to be less water. So the environmentalists also have the strong case, surely?
KEITH PITT: Yeah, well, I think some good news first, and that's - I'm advised there's more than a thousand gigalitres have come past St George in recent days due to rains up in Queensland, and the forecast is pretty solid for this week. So I think that's good news, and I think that will be a relief for individuals. But it is challenging. I mean, it is a scarce resource. It is limited. We need to ensure that the application is balanced, and that's my job as the Federal Minister.
MICHELLE GRATTAN: And do you accept that climate change is making the problem worse?
KEITH PITT: Oh, it's certainly drier and there are times - I come from Queensland where fires, floods and droughts tend to be part of the everyday life unfortunately. So things are dry. There's no doubt about that. We need to manage a very scarce resource, and as I've said, if we can do something in the infrastructure piece which provides better reliability and efficiencies on either side of the ledger, well, I'm willing to look at those.
MICHELLE GRATTAN: Now you mentioned the ACCC inquiry into markets for tradeable water rights in the Basin. One issue seems to be that some farmers are selling their land but keeping their water rights as a sort of inheritance for their kids. Do you think that water and land should be married and that you should reform the system so that people can't separate it, so that you can't have a trading system that's separate from owning land?
KEITH PITT: Unfortunately, Michelle, I don't have a time machine. I mean, I can't go back and undo decisions that have been made. But I think we do need to ensure that the trading is fair. I know there's certainly suggestions around how that might be done in terms of zoning and other methods, but this is one of the reasons we have the ACCC report. So I look forward to the results, I look forward to what they recommend. And once again, I'm as concerned as anyone else. If people are playing the market to their own financial benefit rather than what the purpose of it is, well, they'll be caught and they'll be punished.
MICHELLE GRATTAN: But do you say that nothing can be done about the structure of the market?
KEITH PITT: Well, once again, I mean, it depends on the state and the location and whether it's high reliability or medium or in-between. It's an incredibly complex policy area. This is one of the reasons we've got the ACCC looking at it. So, once again, I don't want to pre-empt the outcome of their report, but I'll certainly look at it very closely.
MICHELLE GRATTAN: Now, one less publicised issue is the effect of the bushfires on water quality in basin, and the implications of this for wildlife and fish and so on. Is this an issue on the government's radar and what action can we expect?
KEITH PITT: It's certainly an issue we keep a very close eye on. Blackwater events- now, unfortunately when we've got a long period of drought, where the river and places are just simply not connected, that first in-flush you know, can be quite challenging. We acknowledge and recognise that the bushfires have probably increased that risk. So the MDBA is keeping a close watch on it. We've had a couple of events in recent weeks in bushfire areas where we've had rain, but once again, we work closely with the states, we implement a lot of their plans about trying to manage those challenges, whether that be through aerators or other methods. But it's a very, very large area so it's challenging, but I certainly acknowledge the challenges.
MICHELLE GRATTAN: And what about the fish kills; is more being done to prevent that in the future?
KEITH PITT: So, there's been a number of projects which have been supported, and that's certainly around - you know, aeration for those areas. Where there's other things that we can do, we're certainly looking at it. I know there's been discussions about replacing fingerlings and stock replacements. So those discussions are continuing, and we're working with the states to try and ensure that we minimise those risks.
MICHELLE GRATTAN: As we talk about these areas, I think a point that comes through is just the spread of your responsibilities of this portfolio, and I wonder about the difficulties of having to be across such a wide area, because of course Matt Canavan, your predecessor, didn't have water; he only had resources and Northern Australia. How do you feel about coping with such a heavy workload - not so much the workload, but a heavy set of areas?
KEITH PITT: Yeah. Well, I like to work, I think that's the first thing. I'm not a career politician, so I actually have a background before I came to this place. I'm an electrician by trade, I'm an engineer by profession, I've been involved in farming and consulting and a number of other businesses. And to be frank, that's been very, very helpful. I can sit down with a resource company, they don't have to explain to me what a floating platform looks like or a coal mine or an underground mine or a gas well. I've worked in those areas and those fields in heavy industry before. I've had my own farms. Irrigation is irrigation, I get it, and certainly across Northern Australia - there's been times in my previous career I should've had my mail diverted. I've spent that much time in the north. So I think that's really helpful. I've got a good understanding of the landscape and I've got a good team behind me, particularly inside the departments. And they're highly experienced and highly qualified, and they've been working in those fields for a long time. So my view: my job is to assess all of the information that I'm given, make decisions in the national interest, and work closely with the states and other stakeholders, and that's what I intend to do.
MICHELLE GRATTAN: How does the deeper mental structure work, because it includes environment, which is not your responsibility, as well as your own area.
KEITH PITT: Well, I work closely with Sussan Ley as the Environment Minister. Obviously, inside the department there's some machinery of government changes coming through. You know, those things happen just before Christmas. But the administrative orders are in place, we all know our responsibilities. I work closely with the secretaries and the dep secs. Once again, I mean, this is business as usual.
MICHELLE GRATTAN: Well, except that while the machinery of government can be set out formally, actually, usually changes take months and months and months to get into place. Are you finding that's the case or…?
KEITH PITT: They're having no trouble finding my desk with a great pile of briefs and things to do. So I think that part's working fairly well. And you know, it's been a challenging few weeks, but I enjoy it. I like working, I like having difficult things to deal with, and hopefully we'll get the right outcomes.
MICHELLE GRATTAN: Turning finally to the National Party. It's celebrating its centenary this year, but it remains in a pretty unhappy state, I think. Can you blame your supporters for being disillusioned with what's been happening, and for the state of the party generally?
KEITH PITT: Once again, as I said earlier, longevity is incredibly difficult to achieve. Just the fact that the party's been around for 100 years I think is a great achievement. But my view is the party room, regardless of who makes it up, they are the caretakers of the brand and the party. We always need to make sure we act in the interests of our constituents. That's what we do as Members of Parliament. And look, I certainly understand if there will be some out there who are disappointed, but I also know that there are any number out there that have come from the other side of politics and supported us in recent years, particularly at the last election. You only have to look at what's happened in Queensland and other locations where people like George Christensen and Michelle and others have had very large swings to them, because we've been standing up for working people. And you know, to be honest and very, very frank, that's something I'm proud of. I'm very happy to be standing up for working people because that's what we are. That's where we come from. And I think we'll continue to support them into the future.
MICHELLE GRATTAN: You're in the unique position of having been assistant minister to both Barnaby Joyce and Michael McCormack. Do you think that the tension in the Nationals is an issue of personalities, or is it an issue of policy? Or is it both?
KEITH PITT: Well, I think it could be any of those. But the reality is that the numbers have been tested three times for Mr McCormack, he's been successful three times, and that's done. We move on.
MICHELLE GRATTAN: But it's pretty unusual in the Nats to be testing the numbers.
KEITH PITT: Well, it is. There's no doubt about that. You only have to look at our history. But once again, we're a democratic party and we're proud of it, and any individual has the right to do that.
MICHELLE GRATTAN: Do you think that now for the next couple of years up till the election, it's stable - that there won't be further challenges?
KEITH PITT: No, there'll be no change.
MICHELLE GRATTAN: That's a very firm prediction.
KEITH PITT: Well, you've asked for my view. That's what it is.
MICHELLE GRATTAN: Keith Pitt, thank you very much for talking with us today. And that's all for today's podcast.