Media conference - Investment in the Galilee Basin
28 April 2017
Subject: Westpac’s decision not to invest in new coal basins, Australian domestic gas security, developing Northern Australia, Northern Australia Infrastructure Facility
Today I want to make some comments on Westpac’s decision not to lend to coal mines in new basins, new coal basins in Australia. This decision is a decision against the interests of Queensland, against the interests of developing Northern Australia and it demonstrates that Westpac have, in this decision, turned their back on Queenslanders and the development of Queensland.
We have an enormous opportunity in the Galilee Basin, an enormous opportunity as a country and as a state to develop the third major coal basin in Australia. We haven’t developed a coal basin for 50 years, nearly 50 years, in Australia. The last one was the Bowen Basin here in Central Queensland.
The Galilee Basin alone could generate 16,000 jobs, they are the jobs figures submitted by six coal mines that have received approval by the Queensland Government and those job figures are modelled on their environmental impact statements.
The coal mining sector today employs 44,000 people in Australia. So this increase of 16,000 jobs demonstrates the massive increase in wealth we could see from the development of the Galilee Basin. Coal remains our second biggest export and it seems nonsensical that an Australian bank, a bank that purports to be a proud Australian, would turn its back on our second biggest export as a nation, and the nearly 50,000 Australians that work in that industry.
Apparently, under this decision that Westpac have made, a mine in the Hunter Valley in New South Wales will be good, a mine in North Queensland, in the Galilee, will be bad. I can only conclude from this decision by Westpac, that they are seeking to revert back to their original name, as the Bank of New South Wales because they are turning their back on Queensland as a result of this decision.
Now can I say that the other aspect of this decision is that it will be completely ineffective at the goals it is seeking to achieve. Westpac say they are making this decision to try and tackle climate change, yet the coal in the Galilee Basin is 60 per cent better, it has an energy content of 60 per cent greater than the coal in India which it will displace by the development of this basin. And if we want to tackle climate change, if we want to reduce carbon emissions – and the Government has a commitment to do that, and help the world do that, it’s a global problem – we can’t just look at Australia. To reduce emissions around the world, our coal industry has an important part to play in producing and supplying high quality, high energy content coal to the rest of the world to displace those mines in other countries with much lower energy content and much higher carbon emissions.
And that is not just me saying that, or the Australian Government saying that. The Queensland Supreme Court themselves made this very point in dismissing a green activist claim against the Adani mine, that if we don’t develop our own resources it will just be displaced. India will still use coal, they will still expand their coal-fired power production sector, it will just come from sources that are lower quality than here in Australia.
The other aspect of this, is that fortunately this decision will not impact the Adani project at all because Adani has never asked Westpac for a loan, to my knowledge. And so it’s a little strange that a bank would pre-emptively rule out supporting a customer that doesn’t even exist, that hasn’t even asked for a loan. But I am still disappointed about this decision because it affects the Galilee. And my interest here in this issue is not so much the Adani project itself, as much as I welcome their interest and their investment, it is the development of the Galilee Basin. That is the opportunity for our nation, and that is the opportunity that Westpac are turning their back on here today.
Finally, it’s very disappointing to me that Westpac have made this decision with what I can attest to be almost zero consultation with the people of North Queensland. I spoke to the CEO of Westpac this morning, and it didn’t seem to me clear that they had spoken to basically anybody in North Queensland about this decision, despite the fact that this is the most important project for North Queensland, despite the fact that unemployment remains just below 11 per cent in Townsville and that we need job-creating opportunities like this project in this state.
Westpac have also turned their back on the Indigenous peoples of Queensland by this decision, because this mine, the Galilee Basin, is supported by the Wangan and Jagalingou peoples. They met last year and voted on the mine. They voted on the mine 294 to 1 in support of it, yet that’s not good enough for Westpac. They’re more interested in listening to the noisy activists in Sydney than the job-hungry people of North Queensland, including the Indigenous people of North Queensland.
So I am very disappointed in this decision. This decision’s been made. But may I suggest those Queenslanders who are seeking a home loan or a long-term bank deposit or some such in the next few months might want to back a bank that is backing the interests of Queenslanders.
Just on yesterday’s announcement, if you do use this power to restrict exports, will there be taxpayers that have to compensate the gas companies?
We are confident in the decision we’ve made that it is robust from a legal standpoint. Our decision has been made under longstanding provisions in the Customs Act 1911 that gives the Commonwealth Government the power to licence exports, not just over gas but over a range of commodities. We still do licence the export of uranium and we have in the past licenced the exports of coal, iron ore and other commodities. So we’re confident that that particular suggestion won’t arise.
As to the question, can you rule out taxpayer compensation to gas companies?
That is not, the Government has no plans to make any compensation to gas companies. Indeed, our view is that by licencing exports, ensuring that Australian prices fairly reflect international prices, there won’t be a negative impact on the gas industry because prices are high here at the moment and so it makes sense to sell more gas domestically in Australia than to other countries where gas prices are lower.
Do you have specific figures of how much the prices will fall for wholesale yet?
At the moment, wholesale prices in Australia are roughly around $2 a gigajoule – or about 10-20 per cent – higher than what we’ve seen in North Asian markets. And can I just preface all of these figures with the fact that we don’t have good insights into the overall market position. The prices that are publicly available are a small portion of the trades that occur. But based on those prices we would expect to see by this decision more supply to come in to the market, downward pressure to apply to gas prices because of that, and prices to get down to that level, that I said was 10-20 per cent lower at the moment in terms of gas prices.
Now I did say, we don’t have a lot of detailed or accurate information on gas prices. A lot of the information is incidental and anecdotal. And that is why as part of our gas security plan we have tasked the ACCC with getting more insights into contracts that gas companies have, giving that information to Government, and that intelligence will better inform our decisions on the operation of our proposed Australian Domestic Gas Security Mechanism.
In saying that, do you know what difference people will see in their household bills?
On the household side, most households would not have seen the large impact of the increase in the wholesale gas prices in the last couple of years because it takes time for gas prices to flow through to household contracts. Again that’s different from the industry impacts where we were yesterday, companies like Incitec Pivot more directly contract gas from the wholesale market.
On the household side, the ACCC estimate that for every $2 a gigajoule that the gas prices increase, that Victorian households will pay 11 per cent more in their gas bills, and New South Wales households 5 per cent more. The long-term impact of not acting on gas prices are in that range. But as I say, right now those issues haven’t flown through directly to household gas prices, but that’s why we’re acting now. We only received a report from the Australian Energy Market Operator in March, about six weeks ago. We met with gas producers a week after that to discuss these matters and within six weeks we’ve acted to establish a licencing system which will make sure we bring downward pressure on gas prices and ensure that Australian households are not exposed to this situation where we are the largest gas exporter, but our prices are some of the highest in the world.
Does the Westpac decision suggest the activists are starting to win the propaganda war?
No, I don’t think it is. As I say, the ridiculousness of this decision, the Python-esque element of all of this is that Adani itself hasn’t asked Westpac for a loan. It seems to me that some corporations are unfortunately today are wimps in regard to standing up to these activists. You know a few people angrily appear at a dinner that Westpac held and they apparently change the world. And do so without even speaking to people that they’re going to affect potentially by this decision.
But I am confident that the development of the Galilee Basin makes sense in terms of the world’s energy needs. There is enormous demand for coal from India, it’s why we’ve got companies like Adani interested in developing that resource, it’s why we’ve got five other mines with approval that are interested in developing the Galilee Basin. And commercial projects will find finance. I mean, with all due respect to Westpac, they’re a small financier in terms of the world, and there are lots of other people around the world that want to finance wealth-creating projects that are going to make money.
And from everything I’ve seen the development of the Galilee Basin makes sense, providing that the world can continue to grow and India can continue to achieve its targets to electrify its country and provide electricity to 300 million people in India who currently don’t have access to any electricity.
That’s what we need to happen, to develop our resources and grow our industry, we need strong economic growth in our region. That’s how we developed in the last 50 years. Let’s hope that continues in India and other countries in our Asian region.
What did the CEO tell you?
I’m not going to go into private discussions, except I expressed my displeasure to Mr Hartzer as I have to you ladies and gentlemen here this morning. I only found out about the decision late last night and again I think it would be better for Westpac to consult more widely with the North Queensland people, perhaps with a Minister who lives in North Queensland would have made some sense. But I’m not the important person here, the important ones here are the people of North Queensland who are looking for a job, the Indigenous people of North Queensland who support this project and also want the jobs and opportunities that will come from it, and the businesses right across Australia that stand to benefit from building a rail line, from having jobs in administration, and legal and financial.
These kind of projects create an ecosystem that touches so many parts of our nation. Here in Brisbane, so many jobs in this city, so many jobs, rely on the mines of the Bowen Basin that have led companies as diverse as Anglo American, Peabody and others to base their Australian operations here in Queensland because of the Bowen Basin development.
What’s your view on the battle between Adani and Aurizon over the rail line?
Obviously there has to be a discussion and collaboration there to build the rail line. I’d say these issue are largely ones for the Queensland Government to negotiate land use planning and co-operation on rail corridors. The Queensland Government a few years ago established two rail corridors from the Galilee Basin with the intention of ensuring we don’t get a Pilbara situation in Central Queensland where there are rail lines criss-crossing our state through productive cattle country. That decision to me makes sense, although it’s one for the Queensland Government.
All I’d say is from our perspective, the Australian Government perspective, as I’ve said before, I’m happy to consider investment in the Galilee Basin, I’m happy for the Northern Australia Infrastructure Facility to look at that as a nation-building initiative. But what I’d expect to see, with the Federal Government wanting to open the Galilee Basin, is that the rail line’s open access that other mines can use it and that we can by building, connecting up a new coal basin in our country, create wealth, not just in one individual project but right across the board, that’s what we’d like to see. To see that obviously we do need to see that co-operation with Aurizon, but the detailed matters for that are matters for the Co-ordinator General and the Queensland Government.
Would you prefer to see (inaudible)
I will leave those details to the Northern Australia Infrastructure Facility. We have given them a clear mandate, that mandate does not seek to discriminate between Australian or foreign companies. I’m interested in the opportunities that exist for North Queenslanders, and Northern Australians more generally from the NAIF. That’s our priority, that’s our objective. The objective under the NAIF Act is to provide a platform for economic growth and population growth in Northern Australia. So that’s what I want to see happen. I’ll leave the NAIF to make the detailed decisions on whether it’s best for that to go through a rail line in the Galilee at all, and then the more specific question of who might build that et cetera.
Would you encourage existing Westpac customers to switch?
I would encourage Queenslanders in particular, but all Australians with an interest in developing our nation, in developing the north, to back those financial institutions that do back those priorities.
These are Australian banks, I’m proud of our financial sector, they’ve seen through the global financial crisis, they run successful businesses. But when they make decisions like this without even consulting people that are potentially affected by it, it does beggar belief how they can continue to call themselves Australian.
That’s why in my view maybe Westpac do want to revert to just being the Bank of New South Wales. Good luck to them, but we’ll find other ways of developing our state and funding our priorities.