Nick Minchin (SA, Liberal Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

On behalf of the coalition, can I indicate our support for the Uranium Royalty (Northern Territory) Bill 2008. This bill will establish a uniform royalty regime for any future uranium project in the Northern Territory. The royalty regime of 18 per cent of net receipts will bring uranium into line with the mining of other minerals in the Northern Territory. On behalf of the coalition, I thank the secretariat of the Senate Economics Legislation Committee for their work in conducting the inquiry into this bill. I thank Senator Eggleston, as the deputy chair of the committee, for his remarks as provided in his additional comments to the report.

The changes proposed here have come about from a process that was commenced by the former coalition government, under the then Minister for Industry, Tourism and Resources, Ian Macfarlane. Australia is, as many know, the world’s second biggest producer of uranium. Our industry generated $658 million in export revenue in 2006-07 and provided over 800 jobs, mainly in remote parts of Australia. The Australian Uranium Association estimates that production of Australian uranium could increase from around the current level of 10,000 tonnes per year to 30,000 to 40,000 tonnes per year in 2030. The coalition in government recognised the economic benefits from uranium mining and understood that our uranium exports contribute to a reduction in global greenhouse gas emissions through use in nuclear power generation.

Worldwide adoption of clean energy generation and the role of nuclear power as a cleaner alternative, combined with Australia’s low-cost reserves, means there is enormous potential for growth of our uranium mining industry—a fact that the coalition consistently recognised and supported but that, regrettably, was always opposed by the Labor Party, who held onto their antiquated three-mines policy way beyond its use-by date.

In late 2005, the then coalition resources minister, Ian Macfarlane, announced the development of a Uranium Industry Framework in recognition of Australia’s low-cost uranium resources. The framework was a project to identify opportunities for and impediments to the further development of uranium mining in Australia, with the aim of reducing impediments to exploration, mining and the export of Australian uranium. The framework was to also look at ensuring a consistent and efficient regulatory regime and promote community understanding of the economic benefits of a safe, secure and responsible uranium mining industry in Australia. In 2006, the framework’s steering committee presented a report containing 20 recommendations to support and develop uranium mining in Australia. The steering committee’s report stated:

The application of royalty arrangements for uranium development in the Northern Territory on a project-by-project basis is a major source of uncertainty and therefore a deterrent to further investment in the sector. New entrants to the industry are unsure about their potential royalty liabilities, and current arrangements mean that multi-product uranium mines would be subject to the Northern Territory Government’s profit-based royalty and the royalty regime imposed by the Australian Government. This leads to administrative complexity and could result in tax-driven investment decisions. These problems could be avoided by the consistent application of a more sustainable uranium royalty regime in the Northern Territory which balances the needs of Indigenous communities, the mining sector and government.

Recommendation 13 of the report stated:

The Australian Government should establish, in consultation with stakeholders, a royalty framework for the uranium industry in the Northern Territory.

In January 2007, Ian Macfarlane announced the formation of an implementation group to work through the framework recommendations. That of course was interrupted by the 2007 election. But I am pleased that this bill gives effect to the NT royalty recommendation of that framework.

As I said, the coalition welcome this bill and the implementation of the recommendations of the framework because we have a consistent and longstanding commitment to responsible, environmentally sensitive and effectively regulated uranium mining in this country. There are of course some areas in Australia that should not be subject to uranium mining. One was advertised yesterday on the front page of the Australian: the Arkaroola Wilderness Sanctuary in the state of South Australia. It is one such area which many could not imagine could ever be subject to uranium mining. But there are many other areas in Australia where uranium mining can occur safely and with minimal environmental consequences.

This bill implements a recommendation of the Uranium Industry Framework and signifies that on some level Labor may be seeing sense on uranium and its potential benefits to the economy in Australia. In its submission and evidence to the Senate inquiry, the Australian Uranium Association highlighted a 2008 report by Deloitte Insight Economics that was prepared for the association. This report found that there would be significant economic benefits to the Northern Territory through to 2030 with an expansion of uranium mining, including $405 million more in investment and a $2.3 billion higher gross Territory product. The association advised the Senate committee that the Northern Territory has about 13 per cent of Australia’s uranium.

Unlike Labor, which as I said only abandoned its three-mines policy prior to the last election, and has a Queensland Premier and cabinet ministers still opposed to any expansion of uranium mining in this country, the coalition believe that investment in uranium mining should be encouraged and appropriate regulation put in place to ensure it is safe, efficient and of course environmentally sensitive. The coalition have always had a consistent policy in support of uranium mining—as long as it is conducted according to a very strict regulatory regime, one that was originally put in place in this country by the Fraser government back in the late 1970s. That is why we are pleased that this bill will give effect to a recommendation of the Uranium Industry Framework.

Currently, royalty regimes in relation to uranium in the Northern Territory—as I mentioned in quoting the steering committee report—are negotiated on a project-by-project basis. The Ranger mine has a 5.5 per cent ad valorem royalty. This bill will apply the existing profits based mineral royalty regime under the Mineral Royalty Act 1982 to new projects on Aboriginal land and non-Aboriginal land, meaning that all minerals in the Northern Territory will be under the same regime. I note that the committee gave significant consideration to the issue of an ad valorem versus a profit based royalty regime, particularly in terms of the moneys that would flow to Indigenous communities for mines on Indigenous land under each royalty scheme. Officers from the Department of Resources, Energy and Tourism stated in evidence to the Senate economics committee:

… we consider that a profits based royalty charge is more economically efficient in that it does not of itself act to distort investment decisions …

They also said:

A profits based regime can also result in greater returns to the community, particularly during periods of higher profits.

I note that coalition senators on the committee concluded that there would be no real difference in the royalties paid to Indigenous communities with a profit based system and therefore indicated their support for this proposal after consideration of all evidence presented, but particularly the evidence from the Northern Land Council on this issue. The department also highlighted the administrative improvements that would result from the bill and the reduced complexity for all involved in the mining sector in the Northern Territory, particularly, as highlighted in the committee report, in relation to polymetallic mines.

As a South Australian senator and a former resources minister myself I am encouraged by this bill and the fact that the Labor Party has brought this forward, and I confirm coalition support for its provisions.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

I rise to add my remarks to the debate on the Uranium Royalty (Northern Territory) Bill 2008. It would be no surprise to anyone in this chamber that the Australian Greens oppose uranium mining as an industry, because it poses unacceptable environmental and health risks and provides the essential ingredient of nuclear weapons. I have just spent the weekend in South Australia at the Australian Nuclear Free Alliance meeting. This is an organisation that has existed since about 1997. It is led by some very senior traditional Aboriginal people from right around the country, for whom uranium mining and nuclear waste dumping is not a matter of theory or political opinion but a matter of lived experience.

Most Australians have a healthy if distant scepticism for uranium mining, but for the people gathered in Quorn at the weekend these are matters of community life and death. At this point I pay my respects to the elders past and present who have led this campaign, often at great personal cost, and the campaigners from around the country, who are now into their third generation, who have stepped up against this industry since the fireballs of British nuclear weapons testing first lit up Central Australia.

I have a comment in response to Senator Minchin’s comments—and I am sure we will hear similar sentiments from the government when the minister debates this issue—that somehow it is possible to undertake responsible environmentally sensitive uranium mining. I certainly appreciate Senator Minchin’s sentiments as they apply to Arkaroola, a magical part of the country, and I do not understand why those sentiments could not be extended to a place like Kakadu National Park, our most important World Heritage area, or indeed regional Western Australia, my home state, which is under threat of uranium mining at multiple locations. I think Arkaroola is precious, Kakadu is precious, Kokotha country is precious and Wongi country is precious, and there is no place for uranium mining anywhere on this ancient continent. I do not think it is possible to mine this mineral in a way which is respectful of country or culture or that mouthing the words ‘world's best practice’ in some way justifies the massive intergenerational harm that this form of mining guarantees. For this reason, I will be circulating a second reading amendment which simply states that the bill should allow for the orderly phasing-out of this toxic and obsolete industry. No fiddling around the edges is going to make this industry all right.

To move to the substantive provisions of this bill, if uranium mining is to occur—and we know that it is and that there is a huge bipartisan push at the moment for this industry to expand across Australia—the Greens do not believe that a for-profit royalty model is the best one on offer. The Standing Committee on Economics report tabled today does not make a convincing case for this model at all. The case that was made through this exercise is that royalties per se are not benefiting Aboriginal people, not just in the uranium mining sector but right across the board, and that the system is essentially failing. The case was very convincingly made that this government has been captured by the uranium mining industry and that all this bill is really is an answer to the uranium industry’s wish list for a simpler, more streamlined way of getting this material out of the ground, from marginal deposits if necessary. I will get to the detail of that in a moment. As we said in our dissenting report, regulatory capture is an entirely appropriate description to use in this case, when observing the actions of this government and the previous government becoming the nuclear industry’s tooth fairy, granting the wishes of the uranium industry framework, which on the day it was set up and to this day is an unrepresentative and industry dominated creation of the former Howard government, to which the Rudd government has now sadly become beholden.

The bill seeks to fast-track and remove barriers to the uranium mining industry. It prioritises industry imperatives—and it has been quite upfront about that—industry access, industry certainty, industry administrative ease and industry profits over other criteria, such as Aboriginal community development, environmental protection and sustainable regional economies. Royalty calculations for other minerals in the Northern Territory are using the for-profit system, and the key argument that has been advanced in the report of the committee and in the drafting of the bill is that we may as well bring uranium in line with other minerals and make sure that the system up there is streamlined. I note at this point that that is not the system that predominates in the other big mining states, Western Australia and Queensland. It is simply not a robust argument when it has been proven to be not working for Aboriginal people in the Northern Territory. It has not even worked very well for the Territory government. If the Xstrata example, about which we had a considerable amount of evidence during our hearings in Darwin, is anything to go by, then this is not a robust system for calculating mining royalties. Creative bookkeeping, in the concealment of profits in this case, resulted in the Northern Territory government receiving no royalties at all from the McArthur River operations for over a decade. In fact, it would not have received any royalties except that Xstrata was simply seeking to expand that mine to an open-cut operation. The case shows how difficult it really is to extract information required to calculate profits generated by the mining industry, which is compounded by the lack of transparency arising from commercial-in-confidence and other corporate secrecy provisions, which even FOI laws were unable to penetrate in the Xstrata McArthur River case. In my view, the committee was far too easily satisfied by assurances from the industry and government that potential for manipulation would be minimal and that rigorous assessment processes are in place ‘when in fact there is no such thing’. There have been very recent cases to prove the point that private profits can be maximised when royalty payments are minimised.

The fact of the matter is that uranium is unique. It is not like other minerals and these are not like other mines. The radiation from uranium mining and the daughter isotopes that are produced when uranium is unearthed are uniquely hazardous, persistent and indiscriminate, damaging our most precious legacy, the core human blueprint stored in our DNA and passed on to future generations. We know now that radionuclides with very long half-lives are cumulatively loaded into the environment and are resulting right now in ongoing impacts on health as well as long-term damage to the human gene pool. Given these unique health and environmental risks, uranium mining not only requires special regulatory and environmental requirements if it is to proceed at all but also requires case-by-case decisions. The health risks posed by proximity of residents and workers to radon gas emissions, for example, vary according to the location of the mine. Positioning of tailings dumps in relation to water sources is also unique in each instance and requires individual treatment. Therefore, negotiations and royalty systems should be tailored to the particular circumstance. I suggest at this point that that should apply right across the board and not just to uranium mining.

Facts were presented to the committee that neither royalty system is actually delivering significant or long-term benefits to Aboriginal people in the Northern Territory. We were told that the December 2008 report of the Native Title Payments Working Group—and this is an industry group with very serious industry representation—said:

... while hundreds of agreements exist between traditional owners and industry, there are only about one dozen agreements that provide substantial benefits to Aboriginal people and Torres Strait Islanders and exhibit principles embodying best practice ...

That is around a dozen out of several hundred agreements. This is a system that has failed and is failing today, and this bill will do nothing if not entrench that system further. We have not heard a word from the government yet about how the system that is supposed to be bringing development benefits to Aboriginal communities in the Territory is failing so catastrophically and we have seen no sign of reform. There is certainty no sign in the bill that is before us today. The Australian Greens are convinced by the evidence presented by this working group’s recommendations for a review to examine the extent to which Aboriginal people are benefiting from mining royalties. We will be pursuing such an inquiry and it is a disgrace that the government did not get onto the front foot to do so itself.

Not only is the royalty system in the Territory failing to deliver benefits, the current approval system under the Land Rights Act operating in the Territory forces Aboriginal people to consent to mining if they consent to exploration, and that has been quite seriously doing people over. The mining industry comes in and says, ‘We’re just going to have a little bit of a look around and see if there is anything out there.’ You give consent to that and before you know it, you have given consent to mining operations. Of course this failure to consent to exploration can often result in the project progressing regardless, while cutting traditional owners out of the possibility of receiving compensation in the form of royalties, and this reinforces the disadvantage that we see today.

It is from this disempowered and marginal position that the government and the opposition seem to believe that Aboriginal people will be able to negotiate additional payments and benefits to fix all of the shortcomings of the royalty system. There is a ‘She’ll be right’ attitude within the system, but the situation clearly is not all right. It is an unacceptable way to address the gap that people will experience when they have given up their land and allowed water quality on their country to be compromised. And of course they will not be receiving payments when the market is down. This allows companies to forestall paying royalties to the Territory and Commonwealth taxpayer and to Aboriginal peoples during the nonprofitable start-up years and also the long periods when site remediation, replenishment of equipment or capital items will see no profits coming in.

Rather than acknowledging the systemic failure, the committee has instead recommended that uranium agreements be simply folded into an already dysfunctional profit based system largely on the grounds that this would remove a barrier to mining development, particularly for marginal uranium developments, and provide administrative consistency that ‘would be easier and involve less paperwork for business’. That’s great! While people are living in disgusting poverty in the Northern Territory, at least we are easing the paperwork burden on business.

This committee has allowed the government to encourage marginal outfits to use the profit based system to gamble the start-up of uranium mines, hoping for eventual profits. In the case of uranium mining—in any operation really but in uranium mining in particular—with its uniquely toxic and long-lasting waste streams, this is a pretty deadly gamble for the people who are right up close to it. If these companies go broke well before their deposits have been mined out—and uranium is a notoriously volatile and difficult industry in which to get a project up—the government and local communities will be left to deal with the mess. In fact the government seems to think it a good idea to encourage the development of more marginally economic projects. This is entirely reckless, very unpopular and out of step with community concerns, and it is certainly well out of the way of Labor’s supposed policies of the world’s best practice. I therefore move the second reading amendment on sheet 5908:

At the end of the motion, add:

‘but the Senate calls on the government to provide for the orderly phasing-out of uranium mining in the Territory”.

This second reading amendment calls for the orderly phasing out of uranium mining in the Territory—not world’s best practice, not fiddling around the edges or marginal improvements. This is an industry that deserves to be phased out as rapidly as possible. Should this amendment fail, and I will not hold my hopes up too high, I would like to briefly foreshadow a number of amendments that we will be moving, which the Greens believe will at least improve the process that has been put forward by the government and clearly has opposition support. Our first amendment seeks to insert a standard recognised by the government fo             r the Ranger mine in the Northern Territory. If the words ‘world’s best practice’ mean anything at all in this debate, it would mean a mine operating in Kakadu National Park certainly within the ecological boundaries of the World Heritage area, with its own Commonwealth department, the Supervising Scientist looking over its shoulder, with a commitment to return mine tailings and wastes into the mine void when operations are concluded and with a commitment by the mining company to ensure that those tailings are physically isolated from the environment for at least 10,000 years.

That is not a stricture that we would place on gold tailings or nickel tailings; that is something that is unique to uranium mining. I do not know of any other case in the world where a uranium mine has had a requirement placed on it that the tailings should be isolated from the environment for 10,000 years. God only knows how the company plans on achieving that but at least those requirements are there. Of course those requirements should apply to any company seeking to operate a uranium mine in Australia if that is indeed what we would consider world’s best practice. The same duty of care should relate overall.

In order to implement a 10,000-year monitoring program, which takes us back roughly to the establishment of agriculture—and these are the time lines that we need to be considering in proposals for uranium mines—a dedicated royalty stream will need to be quarantined over and above environmental bonds and so on that the companies may or may not be required to put aside. That is the subject of another amendment.

The resources and mandate of the Office of the Supervising Scientist should be expanded from only monitoring the Ranger uranium mine to providing oversight of all uranium mines in the Northern Territory. We know that they do have some role. They are called in on a case-by-case basis to consider uranium operations elsewhere including in South Australia. This should be mandatory and there are amendments here providing for that.

Finally, to minimise the possibilities of another Xstrata happening, the Greens believe that the NT government should receive support from the Commonwealth to review the figures provided by mining corporations to the Northern Territory government. I am certainly hoping for support from the National Party in this instance. Senator Joyce, who attended the committee hearings in Darwin, spoke out quite forcefully in this regard. The Australian Greens have moved to put those concerns and ours into legislative form, and that is what this amendment is about. It simply will not hurt to have the full weight of the Commonwealth in a double-checking of what mining companies are up to. In fact I think it will be well worth the expense for the Commonwealth to validate the claims made by mining companies so that we know the profits are not being hidden by the sort of behaviour that Xstrata was getting up to in the NT. I will leave it there. I will return to speak to the amendments at the committee stage when they are moved.

Don Farrell (SA, Australian Labor Party) Share this | Link to this | Hansard source

The background of the Uranium Royalty (Northern Territory) Bill 2008 was thoroughly canvassed in the report on that bill by the Senate Economics Legislation Committee. I have read that report and, with respect, agree with the analysis of the evidence presented and the recommendation of the majority that the bill be passed in its current form. This legislation is vital to the uranium industry in the Northern Territory. The Northern Territory holds, as Senator Minchin just indicated, 13 per cent of Australia’s uranium deposits. These resources are significant and they need to be carefully managed by the government to ensure that the uranium mining is done safely, efficiently and profitably.

As a South Australian senator I take particular interest in the mining industry because of its importance to my home state. Olympic Dam is located in South Australia’s far north and is the largest uranium mine in the world. The Beverley mine is also in operation and is the second largest uranium mine in Australia. The Honeymoon and Four Mile uranium mines will also begin commercial production in the future, which will further grow South Australia’s reputation as a reliable uranium exporter.

South Australia’s rise as a mining state did not happen overnight; it was the result of the South Australian government identifying mining as a priority in its strategic plan and proactively setting up a policy and regulatory framework to encourage mining investment. The South Australian example demonstrates how government policy can play a leading role in the development of mining industries. It is important for the government to clearly state its commitment to mining, to acknowledge the many benefits of mining and to put in place consistent and responsible laws governing the operation of mines to ensure that they are safe and provide a benefit to both the community and investors.

This legislation simplifies uranium mining in the Northern Territory. It does so by mirroring the Northern Territory’s Mineral Royalty Act 1982. The Northern Territory government will administer the legislation on behalf of the Commonwealth. The bill also provides some consistency to the royalty scheme so that mines that produce different minerals will need to adhere to just one taxation scheme, which will provide more certainty for investors. Polymetallic mining operations will benefit the most from these changes because they will be operating under a consistent set of rules rather than having to negotiate multiple regulatory systems. It will allow these mines to focus on mining and not on the complexities of the Northern Territory and Commonwealth legal systems.

Australia has the world’s largest supply of uranium. In a submission to the Senate Standing Committee on Economics the Executive Director of the Australian Uranium Association, Mr Michael Angwin, predicted that production of uranium would increase from the current level of 10,000 tonnes per year to 30,000 or 40,000 tonnes per year by the year 2030 as a result of rising world demand for energy. While I acknowledge that the global financial crisis has put the brakes on world economic growth for the moment, the demand for energy is predicted to continue to increase substantially. Asia is catching up with the industrialised world and its economic progress will significantly increase demand for Australia’s energy resources. Australia has the world’s largest supply of uranium at a time when world demand for energy is expected to increase exponentially. This will present many opportunities for Australia. As a nation we should develop the situation by laying the foundation for the world’s best practice when it comes to uranium mining.

The Australian Labor Party has been cautious in the past when it has come to the mining of uranium, and rightly so. It is a hazardous material and needs to be managed carefully so that it can be used responsibly for the benefit of the world. I understand that the coalition are supporting the government’s bill, as Senator Minchin indicated, but of course they have taken the opportunity to attack Labor’s record on uranium mining as being inconsistent. These accusations are untrue. When it comes to mining uranium, it is critical that the appropriate safeguards are put in place. The opposition points to the Hawke government’s three-mine policy and the current Labor government’s refusal to export uranium to India because they have not signed the nuclear nonproliferation treaty as evidence that Labor is not committed to Australia’s uranium industry. I can point not only to this legislation but also to the expansion of uranium mining in my home state of South Australia to prove that these critics are wrong.

The opposition accuse the government of being cautious when it comes to exporting uranium, and they might have a point. When it comes to uranium, mistakes can prove to be very costly. Labor’s policy is unapologetically pro-exporting of uranium but this issue requires the government to show leadership and overcome legitimate concerns in the community about the export of uranium. Many people in the community—and I am sure that the Greens would proudly claim to be amongst them—are opposed to uranium mining under any circumstances. If it were up to them, Australia’s mining export industry would be banned and the substantial wealth generated from these mining operations would be lost. Of course, that would be the practical effect of Senator Ludlam’s first amendment. They keep an eagle eye on Australia’s uranium industry, scanning for even the slightest adverse consequence from mining uranium to use to bolster their cause.

The Australian government is showing not just the people of Australia but also the world that it is committed to setting the world’s best practice standard when it comes to successfully exporting uranium. The fact that the Liberals complain that the government is not going far enough and that the Greens complain it has gone too far is just more evidence that the Labor Party occupies the middle ground on this issue. We support the legislation and oppose the amendments of Senator Ludlam.

Debate interrupted.