Christopher Back (WA, Liberal Party) Share this | Hansard source

Yes.

Leave granted.

Let me give you the figures. This is the company that, apparently, is so shocking in its occupational health and safety that in 2013, it recorded some 20 million days free of a single day away from work. When you look at that graph, as I have invited people around the chamber to do, you will see the construction industry has the highest rate, about 1.8 to two days per 200,000. Coming right down the graph, you will find oil and gas generally down around 0.2 and less. The Chevon company is less than 0.1 days per 200,000 hours worked. I do not mind a decent debate, but I will not stand by and watch the high repute of companies such as this one being trashed when this information is clearly available to anybody who wants to see it. It has six times the safety rate of others in equivalent industries. But the news gets better.

The Gorgon project has awarded more than 500 contracts to Australian companies and spent more than $27 billion already on Australian goods and services, principally of course in Western Australia. The flow-on effect: 270 Pilbara based organisations benefiting from the Gorgon project; and in Perth, 10,000 jobs as well as more jobs in the Pilbara. To date, 30,000 have completed the project induction course during construction. These are very, very fine figures. Allegations and challenges have been made about cost overruns—yes, $37 billion, I think, up to $54 billion and a delay in the completion time. Given it is the biggest oil and gas project, I think, ever undertaken, you would expect to see some of these factors.

I asked why the maritime union and the Senate colleagues are not supporting projects of such a scale and such a nature. I could go on at length about the training programs, about the training undertaken in occupational health and safety, but of course all of that information is there to be seen. When one reflects on the figures and on the contribution of this particular company and this project not only to the West Australian economy but to the Australian economy, one can only ask why would they be levelling these allegations?

Mr Martin Ferguson, once a highly respected minister in the Labor government, made the observation that, industry wide, the LNG industry in 2011-12 earnt $12 billion in export revenue and put $30 billion into the Australian economy. It paid $8 billion in tax. There are $200 billion in new projects underway and there are 100,000 jobs in this economy as a result of oil and gas activity. By 2020, if we can keep the big players in the game and if we can remain or become competitive again, the opportunity is there for Australia to be earning annually in excess of some $12 billion in tax revenues.

This evening is not the time for me to expand on where the risks and the problems associated with our offshore oil and gas industry are, except to say we are rushing towards non-competitiveness. Already our costs to deliver gas into the Japanese market are some 30 per cent higher than some of our competitors, including Canada and Mozambique. But I will talk about that in greater detail when the time permits.

This evening I want to extend my comments on the oil and gas industry, because it goes to the competitiveness of the Western Australian economy. It goes to competitiveness, the industry's value to the Australian economy, and what is being held back and why. When I came into this place in 2009, in my first speech in the Senate I made the observation that the Western Australian community was getting 87c back for each dollar of GST contributed and that was costing the Western Australian economy some $300 million a year. That 87c went down to 57c by 2011. Today, for each dollar that Western Australia generates, we are getting back 37.6c. That is costing the Western Australian economy some $3.7 billion per annum. This is the top performing state. Can you imagine that in a relay race you would penalise—put heavy boots on—your fastest runner? That is exactly what is happening in this state at the moment.

In the GST component, Western Australia is contributing some $20 billion to the other states and territories. Where is it going? Queensland receives $600 million—$1,475 per person. South Australia receives $746 million—over $4,000 per person annually. Tasmania receives $500 million—$7,600 per person. Even the ACT receives $140 million that is coming out of Western Australia's pockets. And the Northern Territory receives some $1.73 billion—about $10,000 per person. Time does not permit me, this evening, to go fully into the background of the whole question of GST distribution. Senator Scullion should certainly not think for one minute that Western Australia is in any way trying to deprive the Northern Territory. But what has happened since the GST has come in is that where once the Commonwealth supported the Northern Territory and the ACT, that has now shifted. Most of the contribution from the four larger states' GST contributions now goes to the territories, particularly to the Northern Territory. The states are now funding the Northern Territory. No-one is suggesting the Northern Territory does not need these funds, but we need to consider the origin of those funds.

People say that traditionally Western Australia was favoured in the Grants Commission process. The Grants Commission process came about after 1933, when the Western Australian community voted during a referendum at an election to secede. The Grants Commission came into existence and—let me make this point very strongly—the equalisation process took place in Western Australia's favour to compensate for unfair tariff protection, which existed in the larger and manufacturing states. It was never a subsidy; it was compensation. It was compensation for the high tariffs that then existed in the manufacturing states.

We all know what the impact of tariffs is. That has been discovered now. The impact of tariffs is to remove competitiveness. Industries are no longer encouraged to compete internationally because they are receiving protection. I would also remind colleagues that, while we heard the other day of the efforts of the then Menzies government and documentation signed by the grandfather of Prime Minister Abe of Japan, it was the David Brand-Charles Court team in Western Australia in the 1960s that had to fight Canberra, tooth and nail, to open up the iron ore export industry.

Today we take it for granted. Today we take for granted the value of more than a million tonnes a day that is exported out of our northern port of Port Hedland. In the 1960s, Brand and Court had to fight tooth and nail to establish that industry with Japanese investment. Of course, we know the history. With respect to the North West Shelf, the Alcoa company agreed to take gas on a take-or-pay basis. The Western Australian government, led by Sir Charles Court, took the risk of a take-or-pay arrangement when there was no gas available in the south.

So, with respect to the circumstances that existed around GST, the very strong point that I want to make is this. Along with other factors in the formula, there should be an inclusion of a capacity, in each of the states and territories, to earn revenue. The performance of a state or territory against that pre-set goal for revenue should determine, in some way, the contribution that that state or territory receives. GST distribution must be on a per capita basis up to a certain level beyond which there is a reserve fund from which the government, under a formula—be it through the Grants Commission or whatever replaces it—can make those allocations to states and territories that require it.

But when you get to a circumstance in which Western Australia has deteriorated from 87c to 37c, surely anybody can see, in the analogy of the relay team, that the team will not do well if the best performer is being held back. That is the circumstance we find ourselves in now. In fact, the state Treasurer and Premier have made the observation that that 37c is at risk, as iron ore prices today went down to below $80 a tonne. That is $43 a tonne less than the Western Australian Treasury's estimate for iron ore prices.

That impact is massive. For each dollar below the forecast figure, you can look at $50 million of lost revenue. This must have an impact on the Western Australian, and therefore the Australian, economy. Again, time does not permit me to go further this evening, except to say that we have a circumstance now, as a result of imbalance, where the federal government is earning 80 per cent of the revenue and expending about 50 per cent of the national expenditure. On the other hand, the states are earning 15 per cent of the revenue and are responsible for somewhere around just under 50 per cent—the balance being made from local governments.

This federation is in somewhat of a quandary. I come back to the point I made at the beginning of this contribution. If we are not going to have leg from this Australian parliament, leg from the senators in it, leg from those in the Senate who are representatives of the states, if we are not going to have a circumstance in which we parliamentarians support the sorts of industries that create wealth then we are in a very, very unfortunate circumstance.