Coal Seam Gas Royal Commission

It is great to rise on this topic. I suppose one of the good things about being new here is that you do not know what is going on half the time, and I got caught short there a little bit, getting called up. Another is that it was not that long ago that I was out in the real world, so to speak, and involved in real-world issues rather than just talking about real-world issues.

Just before I came to the Senate, I worked for a beef company, and in that beef company we actually negotiated coal seam gas licences and we were negotiating with a coal seam gas company about some water use. I want to just say a little bit about my experiences doing that, because a lot of this debate is driven by things that come second or third hand to people. We cannot really understand what people's experiences are. Both in that role—in a business role—and in this role in the Senate, I have been to see both the coal seam gas companies and farmers impacted by coal seam gas, but we cannot put ourselves in people's shoes.

My experience with the coal seam gas industry is not a completely positive one, but it is not a completely negative one either. First of all, there are, of course, protections in the laws of Queensland—and all states—that regulate the coal seam gas industry. The industry has obligations to make good and to try to come to an agreement with landowners before they operate. In this case, an agreement was made between the beef company and the coal seam gas company for 24 wells. While it was not an outcome that was particularly attractive to the beef company, it was done on a voluntary basis.

I have to say that the most difficult thing in negotiating on these issues is the pure imbalance that exists between the rights of landowners and the rights of the coal seam gas companies. That is what makes it difficult in this environment. If it were simply a business deal where you negotiate an agreement to sell oranges or buy apples, you could see a situation where people walk away with mutual benefit. When you come to most business deals, unless you have mutual benefit, you will walk away from the table and there will be no deal. But in this case you do not have that situation, because, at least in Queensland, the law prescribes that if you do not reach an agreement after 40 business days—sorry, I think it was increased to 50 business days in the last few years—you have to let the company on your land, and a court will determine what the rate of compensation would be.

Earlier in the debate, Senator Williams mentioned that both AGL, which I think he mentioned, and Santos have assured him that they will not go onto people's lands without their approval, and that is what they tell me too, but the reality is that, when a farmer or landowner sits down and thinks, 'Should I take this to court and oppose this coming onto my property?' they do not have a lot of leverage, because the clock is ticking: after 50 business days, they get to come on the land. So normally it is in the landowners' best interests to reach an agreement within that 50-day window so they do not have to go to court and pay legal fees and they can get something rather than maybe nothing.

That imbalance makes it difficult. It tilts the balance towards those that want to extract gas and against those that may have other priorities and issues. I think a lot of the heat and issues that exist in this debate could be resolved if we simply gave landowners more of a say on what happens on their land. We on this side of politics believe in private property rights. We believe that people should have a say in what happens to the property that they own. In this instance, there are people who have bought land and maybe passed that down through generations. They should have a right to have a decent say about what happens on their property. That right is not inviolable. It is not a fundamental human right in the sense that it cannot ever be abrogated by the state. Even if you live in the city, sometimes you might have to sell your house if the government wants to put a road through it. Sometimes there is a public good where you have to have your property compulsorily acquired, but that should be the exception, and there should be exceptional circumstances when it happens. I am not quite sure these circumstances exist in this case.

As Senator Williams said earlier, we actually had a system in this country where the mineral rights were owned by the landowners. A lot of people on the other side of the debate will say it is a state resource; the state owns it, and the state should have the right to regulate it and benefit from it. That has actually not always been the case. It has been the case for a much shorter time than people realise. In the case of New South Wales, it was actually Neville Wran that took landowners' rights away from them in the Coal Acquisition Act 1981. That is about the same time I was born. The Coal Acquisition Act 1981 took the rights to own the coal, to say what happened to that coal and to benefit from that coal away from farmers and landowners and vested them in the state to sell to mining companies and to extract royalties from. That decision happened with no compensation to landowners—none at all. It was simply a bill of parliament. Later on, the Greiner government was elected, and it instituted a process to give some compensation to landowners, because it was a huge issue in regional New South Wales, as you can imagine.

In Queensland it happened a lot earlier: it happened in 1915. I cannot remember the name of the act, but I remember getting it from the Queensland parliament. It was a two-page act, and it basically just said that all petroleum and gas previously vested in private hands is now vested in the Crown. That was it—done. Those rights were taken away from them with no compensation and no remuneration. We are nearly 100 years on from that. I suppose this year we are 100 years on from that act in Queensland, so we have had a century of government ownership and control over petroleum and gas resources. I recognise that we are not going to go back to the pre-1915 situation, where landowners actually owned the petroleum and gas. Unfortunately, that ship has sailed, but I do think we can rebalance the rights that exist, and I do think that would help this issue.

And why do I think that? It is because we have very similar issues here in coal seam gas to those that exist in the shale gas industry in the United States. Sometimes they are conflated. They are actually different technologies and access different parts of the watertable, but they have very similar issues, and they are very different from typical mining operations.

Underground or open cut coal mining will typically come in and buy the properties that are directly affected. They will just buy them up, and the people that get bought out usually laugh all the way to the bank. I know the former member for New England sold some of his property to Whitehaven Coal and made a substantial profit of probably three times, some reports suggest, the average market value for that land at the time that was going. That is a great deal if you can get it, and fantastic for those people.

But coal seam gas and shale gas are very different because the companies do not buy the land. They just want an easement or an access to the land to drill some wells and maintain 24/7 access to the property for safety and for their industrial needs. That means that there has to be an ongoing relationship between the company and the landowner. That creates tension, and that creates issues. There is no one-off transaction. It is difficult for a coal seam gas company or a shale gas company to pay royalties to the state and overcompensate the landowners because they deal with hundreds of landowners not just a few. We have a situation where it is hard to take the politics out of this issue. It is hard to resolve the appropriate property rights of landowners and our desire to develop our resources and create jobs in regional areas.

In the United States, they have a very different system. In most states in the United States the farmers still own the gas. They still own the shale gas. They still own the oil. They are developing their industry at a great speed, and much faster than us. They are restarting and rebooting their economy, based on cheap energy and large scales of cheap gas that are close to their areas of industrial development. That the US is now back on track, so to speak, is a great thing for the world economy because it is helping prop us all up at the moment. Their unemployment rate is lower than ours now, and their economic growth is high.

A lot of that is to do with the fact that they have cheap gas and cheap power and they are developing. I do not think we should be surprised that, when we allow people to make money from something, they will sign up. When we allow people to negotiate a good price for access to their land, they will sign up and they will develop their property. It is something that should be at the core, on this side of politics, of what we believe in. We believe in that. We believe that, through the private negotiation of rights and services and provision of goods, we will have more wealth created in the economy, and that is what is happening in the United States.

A couple of years ago I was talking to an Australian BHP executive. BHP have a lot of shale gas licences in the United States. He was in a suburb of Louisiana where there was a shale gas hub terminal in the middle of the suburb with houses all around, just like a suburb in Australia. All these pipes were going under houses, and, of course, as an Australian, he said to the Yanks, 'Well, how did you achieve this? If we'd tried this in Australia we'd have no hope.' The Americans said, 'Well, actually, the suburb next door is not happy with us because the gas price has fallen and we're not gonna go in to that suburb now.'

All those houses around that area, all those moms and dads in suburban homes, not farms, were getting a cheque. They were getting a cheque from the gas company because they owned the gas under their house. It was just a backyard with a clothes line and normal barbecue out the back. They own the gas under their land, so they have the right to get a cheque from it. They all supported it, and that is boosting their economy now. But we do not have that situation here.

We have a system where the state owns the gas. It is a communist outcome. It is a communist situation where the state owns the resource. It is a national resource, and it is exactly what the Labor Party like. It is not what we want; it is what they want. They want a communist outcome. And what are we getting? We are getting a communist solution to a communist situation. We are getting no production. We are getting lines of industrial companies, like breadlines in the Soviet Union, waiting and lining up for gas because we cannot get cheap gas for our industry. We should not be surprised. It did not work in Russia, guys. It does not work in Korea. It does not work in Cuba, and it does not work in our gas industry here in Australia, surprise, surprise.

I do applaud the Greens. Normally I associate the Greens with communism.

Senator O'Sullivan: Steady!

Sorry, Senator O'Sullivan. It is the second time this week I have given some credit to the Greens. You will have to watch me. I think they typically like the communist outcomes where the state owns the means of production and we all regulate what people do and say and earn in our lives.

Senator Kim Carr: You are in the National Party, remember.

Yes, that is right, and sometimes we are a little bit socialist too, Senator Carr, that is true—sometimes, but not in this situation. I applaud the Greens because they are calling for more rights for landowners, and I think that is a good thing, and so do the Victorian Nationals as well. They have adopted a policy since the state election of ensuring that landowners have the right to say no to coal seam gas extraction on their property, and I applaud that. It is a good policy. It is something we should see more around the country, and I will put on record that I support that.

What I do not support in coming to this particular motion we are debating today is in section (b) of that motion, which calls on the government to do certain things, and presumably that means the Commonwealth government. I think we should act with great caution and trepidation in making laws in this place to cover the whole country on an issue which is well within, and very clearly defined within, the remit of the state government under our Constitution. They are tackling a very difficult issue. It is a wicked issue. It is hard to balance the needs of the state government for revenue and royalties, the regional areas for development and, obviously, the landowners for their property rights.

We certainly do not have a mortgage in this place on good policy. I think we have seen many examples in the last decade where the Commonwealth government has tried to come in and say, 'We know the best way. We know what we should do,' and we have ended up creating a lot more problems than were there to start with. There is plenty of opportunity for state governments and state politicians and state election campaigns to deal with these issues, and if there are members of the Senate here that feel so passionately about this issue, they should have gotten elected to a state parliament. They should have stood for a state parliament in a state seat and be progressing those issues in the appropriate place.

That does not stop us, of course, from expressing support or opposition to certain state policies, as I have done here today, but it should be the responsibility of the Commonwealth executive government to deal with this. I particularly think the Commonwealth government could potentially have a role in establishing a royal commission, which is item (b)(ii), but, I did listen to Senator Lazarus's contribution earlier and, while I am, like Senator Williams, very concerned about some of the evidence he produced, I have been to these areas—to Tara, to Miles and to Chinchilla—and I am not sure that the evidence is quite there yet to support a royal commission into these issues.

We had a Senate inquiry only a few years ago—Senator McKenzie mentioned that earlier. While some of that evidence was also presented to that committee we did not make a recommendation for a royal commission. Most of the recommendations from that report dealt particularly with environmental issues that arise with this industry and made sure that the Commonwealth government had appropriate regulatory and oversight arrangements in place to deal with those issues. I thought those recommendations were largely on the mark. While they were not adopted in specific form by the then Labor-Greens government, they did lead to the establishment of the Independent Expert Scientific Committee on Coal Seam Gas and a water trigger under the EPBC Act.

So, that has led to greater oversight for the environmental concerns. As Senator McKenzie said before, no party actually called for a complete blanket ban on coal seam gas in that inquiry, including the Greens, who wrote additional comments. The National Party also made some additional comments through Senator Fiona Nash and then Senator Barnaby Joyce—they were the only party to actually recommend that greater returns go back to the landowners. The recommendation they made said that maybe one per cent should go back from the wellhead revenue to landowners. That was a very moderate recommendation.

We have looked into this issue. The Commonwealth government has increased its regulations. It has a system set up now for additional research and evaluation of coal seam gas applications. I do not actually think that since then—since we established the water trigger—that any coal seam gas extraction projects have been approved. I might be wrong on that, but I do not believe so. We have three projects approved in Queensland and I believe all of those were done in late 2010, before the water trigger came into place. There is another project seeking approval at the moment in the Scenic Rim area of Queensland, but it has not been approved, and there are some others in New South Wales as well. So I do not see the need at this stage for any larger consideration of this issue by the Commonwealth government. It seems that we have increased our oversight and regulation.

It is appropriate that while I have spent my time mainly talking on the issues for landowners and property rights—as you would expect me to do as a National Party senator—I do not shy away from the fact that there are very large environmental issues here. The water resource is a public good and we have a public responsibility to ensure that it is not damaged. That is why we have the Environmental Protection and Biodiversity Conservation Act and that is why the state governments have their own environmental laws.

I just want to finish on the point that sometimes I feel that the Greens are great supporters of the Environmental Protection and Biodiversity Conservation Act—it is supported by all parties in this Senate—but that often they do not want to support the decisions of the umpire under that act. It is one thing to support the provisions of the act but when a decision comes under that act—like to approve coal seam gas projects or to approve projects in the Galilee Basin—that does not agree with what they like then they want to take it to the courts and disagree with it. If you want to pick an umpire—if you want to play a game of footy and you pick someone to decide on the rules—you do not then disagree with the decisions that are made because of those rules.

Senator Waters: We didn't pick—

We have passed this law; and the law delegates responsibility to the minister, Senator Waters, and the Greens signed up to that. The Greens have signed up to that—they have signed up to the minister having the responsibility to make those—

Senator Waters: No. we didn't!

But you have not opposed it—you have amended it many times, Senator Waters, but the minister has the responsibility. You voted for the water trigger, and the water trigger creates the ministerial delegation of power to do that. We should support the umpire in this case. There is a ream of environmental regulation and oversight that occurs in this country. These projects go through enormous amounts of checks and balances before they are approved, and we are very lucky to live in a country like that.

As I said, I do not believe there is a need for any greater action from the Commonwealth government at this stage, but I do support efforts at a state level to give more property rights to landowners.

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