Dean Smith (WA, Liberal Party) Share this | Link to this | Hansard source

The relationship between Australia and Japan is our closest and most mature in Asia, so it's fundamentally important for our shared strategic and economic interests that we continue to strengthen and improve that relationship. This relationship is underpinned by a shared commitment to democracy, human rights and the rule of law, as well as common approaches to international security.

Australia's stability in the business and investment environments makes us a critical supplier of minerals and energy, as well as high-quality food products, to Japan. In 2015-16, Japan was Australia's largest trading partner and second-largest export market. Japan was also Australia's second-largest inbound direct foreign investor in 2015. Two-way trade between Australia and Japan is now worth over $60 billion. Japan has fewer natural resources and, as such, the Japanese economy faces significant challenges, especially in its energy policy. To address these challenges, the Japanese government is encouraging firms to secure stable energy and commodity supplies through increased investment in overseas natural resources. Australia is, of course, a major beneficiary of this investment.

In August, I—along with my WA Liberal colleague the member for Durack, Melissa Price, and other coalition MPs and senators—was delighted to welcome to parliament Mr Hitoshi Okawa from INPEX; ACIL Allen's executive director, John Nicolaou; and the Chief Executive of the Australian Chamber of Commerce and Industry, Mr James Pearson, to discuss how the Japanese-owned INPEX LNG project will benefit the economies of Western Australia and the Northern Territory.

Located 220 kilometres off the northern Western Australian coastline, the project represents something quite remarkable: the largest discovery of hydrocarbon liquids in Australia in the last 40 years. It also represents the largest Japanese investment ever made in Australia, valued at US$34 billion, which is more than $43 billion in Australian terms. The INPEX LNG project is currently in construction and is ranked among the most significant oil and gas projects in the world. The project is effectively three megaprojects rolled into one, involving some of the largest offshore facilities in the industry, a state-of-the-art onshore processing facility and an 890-kilometre pipeline. The project will be operational for at least 40 years and will generate more than $195 billion in exports for Australia, which will be greater than the total exports from Tasmania in 2015-16 and greater than all Australian total wheat exports in the period 2014-15.

At peak production, the economic output is forecast to be $4½ billion per annum, before slowly reducing to a low of $1.4 billion by 2050, in line with the lower levels of production expected towards the end of the project's life. The project is expected to double the Northern Territory's exports, injecting $118 billion, or 15 per cent, into the economy between 2012 and 2050. My home state of Western Australia is likely to see a $75 billion boost to our economy over the same period. This will provide a boost in real incomes in WA of $34 billion, with the Territorians also expected to see a boost in real incomes of $14 billion.

Real incomes across the rest of Australia are expected to be boosted by $43 billion as a result of the flow-on impact from higher taxation payments. This includes an estimated $73 billion in taxation revenue to respective governments at $1.9 billion per year. At peak production, annual taxation receipts generated from the project are estimated to rise to $3½ billion. The biggest source of taxation payments from the project will be through the form of company taxation, which is forecast to rise rapidly to $2.1 billion during peak production. The project is estimated to generate $20 million in payroll taxation to Western Australia and $5 million to the Northern Territory. GST collections are estimated at an average of $269 million per annum, of which 78 per cent will be collected in WA and the remaining 22 per cent in the Northern Territory. Of course, if the draft recommendations from the Productivity Commission review into horizontal fiscal equalisation are given their head, those GST collections and revenues back to Western Australia will be significantly larger. One can only hope.

Once operational, the local workforce will see significant growth, with 600 jobs created on average per annum over 40 years in the Northern Territory and 1,100 jobs created on average per annum in the same period to support activities in Perth, the Kimberley and offshore. Broome, in the far north of my home state of Western Australia, is an important supply hub for the Ichthys LNG Project's offshore works, including workforce helicopter transfers and logistics support. During the current phase, project vessels are expected to make up to seven visits per week to the port of Broome for service and supplies. A dedicated INPEX Toll Mermaid logistics base has been established close to the port of Broome to support the project’s drilling program. INPEX has contracted Bristow Helicopters to move its offshore workers between Broome and the gas field, where two rigs are drilling 20 production wells, and more than 30,000 tonnes of equipment is being installed on the seabed. Eventually, up to 100 workers may be transported to the field each day, with the same number travelling back to Broome on return flights.

The project is also providing significant social, cultural and economic benefits to many local Kimberley communities, with INPEX providing support in areas such as arts and culture, youth, Aboriginal and Torres Strait Islander initiatives and education. In April 2009, INPEX signed an agreement with the local Aboriginal corporation for the long-term management of the local airport, which is located on the Dampier Peninsula, 185 kilometres north of Broome. As part of INPEX's commitment to supporting sustainable Indigenous economic development, this agreement provides the community with a dedicated sustainable income stream, together with training and employment opportunities. The agreement guarantees access to the airport for emergency evacuation from the Browse Basin fields, greatly improving safety for offshore rig workers. This is particularly important during natural disasters like cyclones. In partnership with the Western Australia government, INPEX undertook a major upgrade of the airport, including resealing the airstrip, expanding fuel facilities and installing shelters and an automated weather station. These upgrades will also benefit other users of the airport, including the community, the Royal Flying Doctor Service, tourism operators, private users and other Browse Basin oil and gas operators. For the local Indigenous community, this project provides real options for managing their own future and ensuring the continuation of Indigenous community services.

The INPEX LNG project is a great bright light for the economies of both Western Australia and the Northern Territory, and we wish them the greatest of success.