Michaelia Cash (WA, Liberal Party) Share this | Link to this | Hansard source

My comments today relate to how an incompetent former state Labor government in Western Australia managed to effectively destroy an LNG export project that would have brought massive economic and social benefits to the people of Western Australia. I refer to what is known as the Inpex Browse Basin gas project—what was to be the development of an offshore gas recovery facility and an onshore gas-processing facility in the north-west of Western Australia. The project had an estimated construction value of about $23 billion, an economic life of 40 years and would have generated significant royalties to the Western Australian community and the wider Australian community over the life of the project.

Inpex’s Ichthys gas and condensate field comprises an estimated volume of 12.8 trillion cubic feet of natural gas and more than 500 million barrels of condensate and represents one of the biggest gas and condensate discoveries in waters off the Western Australian coast. Inpex was keen to develop its Ichthys gas and condensate reserves and indicated to the then Labor government that it wanted to transport the gas by subsea pipeline to the uninhabited Maret Islands, located approximately 200 kilometres south-east of the discovery area. Inpex estimated the project would employ about 2,000 construction personnel at the peak of construction and about 300 personnel on a permanent basis, following completion. The company made it clear to the then WA Labor government and other interested parties that it had to deliver its first shipment of LNG product by 2012. To achieve this it was necessary to begin the construction phase in early 2009.

In early 2007 the then WA Labor Minister for the Environment issued permits to Inpex for the clearing of vegetation and various other works on the Maret Islands. Notwithstanding the permission granted for Inpex to conduct investigation studies on the Maret Islands, a number of organisations worked to effectively frustrate the project. For instance, the Conservation Council of Western Australia, which opposed the project, demanded, in a media statement dated 6 February 2007, that the Minister for the Environment, Heritage and the Arts, Peter Garrett:

… use his powers to get INPEX and Total off the Maret Islands now, and … to engage in the new hub process.

And in a media statement dated 26 April 2007, the Kimberley Land Council stated it had:

… lodged an appeal with the Minister for the Environment in relation to a permit issued to gas development proponent Inpex to clear native vegetation on Maret Island.

Notwithstanding that the then WA Labor government was aware of the time lines that Inpex had to meet, in June 2007 the then Minister for State Development, Eric Ripper, was sufficiently panicked by the vociferous opponents of the project that he created a body known as the Northern Development Taskforce. This body was established to coordinate the issues relating to the selection and development of a suitable gas hub location, or locations, for the processing of the Browse Basin gas reserves.

I should indicate that I strongly believe there is a legitimate public interest in ensuring that proper consideration is given to balancing the economic development, wilderness, environmental, tourism and heritage values of the area, and these issues formed part of the terms of reference for the task force. However, the wider interests of the state, and indeed the people of Australia, should not be abrogated in favour of a vocal minority. Further, the public interest demands that there be both transparency and public accountability for the actions of those involved in the negotiation process.

As usual, the Labor media spin surrounding the task force creation, and its role, was premeditated and aimed at taking the pressure off the Labor government. It was designed, in part, to placate and appease the opponents of the Inpex project. Minister Ripper was keen to trumpet the terms of reference for the task force but failed to tell the people of Western Australia the special role he had planned for the Kimberley Land Council, including giving them a right of veto over the project. In particular, he failed to tell the people of my state that the then WA government intended to pay the Kimberley Land Council more than $7 million for their involvement and advice on a potential site for the project.

Given the publicly stated negative attitude and comments of the KLC in respect of this project, why then would Minister Ripper give the KLC a right of veto over the site chosen by the company to process one of the biggest gas discoveries off the WA coast? Why did the former Labor government of Western Australia abrogate its decision-making power to a publicly identified opponent of this huge gas project? Was this right of veto designed as a form of appeasement to the KLC, or was it intended to strengthen the KLC’s hand on the question of compensation from a perceived affluent and successful international oil and gas conglomerate?

Nobody, not even an incompetent state Labor government, could deny that the KLC had previously announced publicly to the world that they were vehemently opposed to the project being located on the Maret Islands, and they were unquestionably biased in their approach to finding a suitable processing site, despite the proper and legitimate interest in the project of the public at large. Given the KLC’s admitted actual bias, the people of Western Australia are entitled to ask why the state Labor government acted in such an underhand manner to ensure there was no semblance of equity or natural justice when it came to the KLC deciding the fate of the Inpex proposal as it related to my home state of Western Australia.

The real reason that Inpex was forced to move the site of its gas-processing plant from WA to Darwin was that both the WA Labor government and the KLC had a hidden agenda. That hidden agenda was all about pushing Inpex into a corner so that they would have to pay massive compensation, either in the form of direct monetary compensation or by giving the KLC an ongoing interest in the project, in return for the sanction by the KLC for Inpex to operate in the Kimberley. No wonder Inpex fled to the Northern Territory.

To indicate the purpose and intent of the KLC in their alleged negotiations for suitable gas hub sites in the vast Kimberley region, I refer to an article published in the Age newspaper on 10 September 2008, and the reported comments of the KLC executive director, Wayne Bergmann. The article states:

Kimberley Land Council executive director Wayne Bergmann said the indigenous people were seeking “multi billions” in compensation and a community development package.

And further on Mr Bergmann said:

A successful negotiation would mean “more than a one-off compensation deal. It will mean ongoing economic benefits and continuing control by traditional owners of how development will proceed.”

As senators would be aware, as a consequence of the incompetence of the WA Labor government and the extortionate demands of the KLC, Inpex abandoned its proposed use of the Maret Islands for Blaydin Point, Middle Arm, Darwin. The distance from the Ichthys gas field to the Maret Islands is only 200 kilometres, and the cost of a subsea pipeline is estimated at $200 million. The Blaydin Point processing plant will require an 850-kilometre subsea pipeline to be constructed, at a cost of $850 million, to deliver the same gas to Darwin. But those are the lengths Inpex is prepared to go to in order to get its project off the ground. The significant royalties and enormous economic and social benefits to Western Australia over the life of the project are now lost to Western Australia because of the incompetence of the former state Labor government.

Because of the loss of this project to Western Australia, it is clearly in the public interest and in the interest of accountability that the current state government publicly review the decisions made by the previous Labor government in respect of this project. Such a review could ensure that the greed of a few is not in future allowed to jeopardise the benefits that should have flowed to the wider Western Australian community. I hope that such a review will also provide an opportunity for Inpex to reconsider locating its onshore gas processing facilities back to the Kimberley region.

I am a strong supporter of the Inpex Browse gas processing plant being located in Western Australia. It is a project that will bring both revenue and royalties to the Western Australian government and will benefit the people of my state. However, any agreement by the Commonwealth to allow gas located off the Western Australian coast to be transported 850 kilometres to the Northern Territory for processing may set an undesirable precedent for future gas discoveries off the Western Australia coastline. Such a decision could have major economic and employment ramifications for my state.

I encourage and urge the current Western Australian Liberal government to work towards overcoming the disastrous bungling and mismanagement of the Inpex project by the former state Labor government and to seek to convince Inpex of the benefits of locating their onshore facilities at a suitable site in the Kimberley region of Western Australia.