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ECONOMICS LEGISLATION COMMITTEE
RESOURCES, ENERGY AND TOURISM PORTFOLIO
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ECONOMICS LEGISLATION COMMITTEE
Department of Resources, Energy and Tourism
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ECONOMICS LEGISLATION COMMITTEE
(Senate-Wednesday, 20 October 2010)
INNOVATION, INDUSTRY, SCIENCE AND RESEARCH PORTFOLIO
Australian Nuclear Science and Technology Organisation
Office of the Chief Scientist
Commonwealth Scientific and Industrial Research Organisation
Australian Research Council
Department of Innovation, Industry, Science and Research
- Australian Nuclear Science and Technology Organisation
- RESOURCES, ENERGY AND TOURISM PORTFOLIO
Australian Prudential Regulation Authority
Department of the Treasury
Mr Di Giorgio
Australian Bureau of Statistics
- Australian Prudential Regulation Authority
- INNOVATION, INDUSTRY, SCIENCE AND RESEARCH PORTFOLIO
Content WindowECONOMICS LEGISLATION COMMITTEE - 20/10/2010 - RESOURCES, ENERGY AND TOURISM PORTFOLIO
Senators in attendance:
Senator Sherry, Minister Assisting on Deregulation, Minister for Small Business, Minister Assisting the Minister for Tourism
Mr Drew Clarke, Secretary
Mr Martin Hoffman, Deputy Secretary
Ms Jo-Ann Rose, Chief Financial Officer, Corporate Services
Mr Robert Towner, General Manager, Corporate Services
Ms Nicola Morris, Chief Legal Counsel, Corporate Services
Ms Tania Constable, Head of Resources Division
Mr Chris Stamford, General Manager, Minerals Branch
Mr Michael Sheldrick, General Manager, Fuels and Uranium Branch
Mr Martin Squire, General Manager, Offshore Resources Branch
Mr Demus King, Acting General Manager, International, Resources Development and Taxation Branch
Mr Bruce Wilson, General Manager, Policy Transition Group
Mr Peter Livingston, Acting General Manager, Offshore Petroleum Regulatory Reform
Ms Kristina Anastasi, Manager, Montara Response Team
Mr Patrick Davoren, Manager, Radioactive Waste Section, Fuels and Uranium Branch
Mr Richard Niven, Manager, Transport Fuels Section, Fuels and Uranium Branch
Ms Nicole Hinton, Manager, Uranium Industry and Nuclear Section, Fuels and Uranium Branch
Mr Brendan Morling, Head of Division
Dr Gino Grassia, General Manager, Energy Security Branch
Dr Chris Locke, General Manager, National Energy Market Branch
Ms Louise Vickery, Acting General Manager, Industrial Energy Efficiency Branch
Mr Rick Miles, Manager, Asia Pacific Partnership Secretariat, Environment Branch
Ms Lisa Di Paolo, Acting Manager, Renewable Energy Section, Environment Branch
Ms Margaret Sewell, Head of Division and Chief Executive Officer, Australian Centre for Renewable Energy
Mr John Karas, Acting General Manager, Low Emissions Coal and CO2 Storage Branch
Ms Sarah Clough, Deputy Chief Executive Officer, Australian Centre for Renewable Energy
Mr Gary James, Acting General Manager, Energy Futures Branch
Ms Jane Madden, Head of Tourism Division
Ms Kathy Harman, General Manager, Industry Development Branch
Ms Helen Cox, General Manager, Market Competitiveness Branch
Mr Vic Dobos, General Manager, National Tourism Policy Branch
Mr Wayne Calder, General Manager, Tourism Research Australia
Dr Chris Pigram, Chief Executive Officer
Dr Clinton Foster, Chief, Petroleum and Marine Division
Dr James Johnson, Chief, Offshore Energy and Minerals Division
Dr Barry Drummond, Group Leader, Earth Monitoring Group
Ms Nicole Pearson, General Manager, Corporate Branch
Mr Geoff McMurray, Chief Financial Officer
Mr Andrew McEvoy, Managing Director
Ms Rachel Crowley, General Manager, Corporate Communications
Mr Grant Le Loux, Executive General Manager, Corporate
CHAIR (Senator Hurley) —I declare open this public hearing of the Senate Economics Legislation Committee. The Senate has referred to the committee the particulars of proposed expenditure for 2010-11 and related documents for the Innovation, Industry, Science and Research, Resources, Energy and Tourism, and Treasury portfolios. The committee has set Monday, 25 October as the date by which senators are to submit written questions on notice and has set Friday, 10 December 2010 as the day by which answers to questions on notice are to be returned.
Under standing order 26 the committee must take all evidence in public session. This includes answers to questions on notice. Officers and senators are familiar with the rules of the Senate governing estimates hearings. If you need assistance, the secretariat has copies of the rules. I particularly draw the attention of witnesses to an order of the Senate of 13 May 2009 specifying the process by which a claim of public interest immunity should be raised and which I now incorporate in Hansard.
I welcome Senator Sherry, representing the Minister for Resources and Energy, and officers of the department. Minister, is there an opening statement?
Mr Clarke —I have no opening statement, thank you, Chair.
CHAIR —We will go straight to questions then. Senator Brandis.
Senator BRANDIS —In the Sydney Morning Herald newspaper on 15 October this year, that is a few days ago, your minister, Mr Ferguson, was quoted in direct speech as telling a Queensland Resources Council function in Brisbane—and the context is addressing the minerals resource rent tax and in particular the rebating of state royalties:
The government’s position on this issue is clear—royalty rates that applied or changes to royalty rates that were scheduled to apply in the future, as at 2 May 2010, will be credited ... Any increases outside these parameters will be a matter between miners and state and territory governments.
Mr Clarke, is that the government’s position?
Mr Clarke —I have nothing to add in terms of the government’s position to what my minister has stated.
Senator BRANDIS —May we take it then that the quote I read you in direct speech, attributed to the minister, states the government’s position as you understand it?
Mr Clarke —Correct.
Senator BRANDIS —In this morning’s Australian newspaper on page 1 in a story by Matt Chambers, a term of the heads of agreement between the Commonwealth and BHP, Rio Tinto and Xstrata is quoted. That term provides that ‘all state and territory royalties will be creditable against the resources tax liability’. Is that an accurate expression of a term of the heads of agreement?
Mr Clarke —Yes, I believe it is.
Senator BRANDIS —Mr Clarke, there appears to be an inconsistency between that term of the heads of agreement and the minister’s statement insofar as the minister’s statement appears to say that the tax credits available in respect of state and territory royalties would apply as the state and territory royalties stood or had been announced as at 2 May 2010—that is, as you would be aware, the date on which the resources super profits tax was first announced by Mr Rudd’s government—and the term from the heads of agreement, which imposes no such limitation on the capacity of taxpayers paying the minerals resource rent tax to claim a credit in respect of future state and territory royalties or state and territory royalties as they may be varied in the future. Which is it, Mr Clarke? Is it the case that under the existing arrangements with the three big companies all future movements in state and territory royalties will be able to be claimed as a credit or will it only be the state and territory royalties as they applied on or had been announced as at 2 May 2010?
Mr Clarke —That question will be one addressed by the policy transition group, co-chaired by Minister Ferguson and Mr Argus, duly reporting to the government, and a decision will be made in due course. I cannot tell you what the answer is today. That is an issue that is clearly alive in front of the PTG and is the subject of intensive consultation and debate.
Senator BRANDIS —You acknowledge that there is an inconsistency between those two positions. Either it takes into account future movements in the level of state and territory royalties or it does not.
Mr Clarke —Well, I acknowledge that they are not the same positions.
Senator BRANDIS —Right. So they are inconsistent positions. The heads of agreement says one thing. Minister Ferguson has said another thing.
Mr Clarke —No, I do not accept that. I have acknowledged the two positions when you summarise them as—
Senator BRANDIS —No, I am not summarising them. I am reading you quotes in direct speech which at each instance you have confirmed.
Mr Clarke —Yes.
Senator BRANDIS —And you have also agreed with me they are inconsistent.
Mr Clarke —Well, the question of which will be the policy outcome is a live issue today and will be addressed by the PTG, and the government will make its decision on the final position after receiving the report of the policy transition group.
Senator BRANDIS —I would have thought that the companies dealing with the government in good faith when they signed the heads of agreement were entitled to expect that the government would honour those terms. You have now told us that this is still a matter of live consideration and no final decision has been made.
Mr Clarke —And you have quoted to me the government’s position on the—
Senator BRANDIS —I have quoted to you two positions—one, the heads of agreement position and, two, Mr Ferguson’s position, which you have acknowledged to be inconsistent.
Mr Clarke —I am referring to the most recent statement by my minister, which I acknowledge is an accurate representation of his remarks—
Senator BRANDIS —So the story by Mr Chambers in this morning’s Australian that the government is proposing to walk away from that key provision of the heads of agreement would appear to be accurate?
Mr Clarke —I have answered the question. The issue is a matter of consideration. What the final position will be I do not know.
Senator BRANDIS —But isn’t a deal a deal? The government did a deal with these three mining companies for better or for worse when it signed the heads of agreement announced by the Prime Minister on 2 July. Might I remind you, Mr Clarke, that in her press conference with your minister standing by her side the Prime Minister said:
Last night we sat down to settle the final agreement, and I can now announce we’ve reached agreement on the basic structure of minerals taxation for the future.
She went on to state:
I’m delighted that last night we were able to sign a Heads of Agreement with some of our major mining companies.
One of the terms of that heads of agreement, Mr Clarke, you have told us, was the term quoted in this morning’s Australian newspaper, but you have also told us that that is still a matter that is up for discussion. The government is walking away from this agreement, isn’t it, Senator Sherry?
Senator Sherry —I do not accept that we are walking away from the agreement. As has been indicated by Mr Clarke, the policy transition group headed by my colleague Minister Ferguson, together with Mr Argus, are discussing all of these issues and they will report back to the government by the end of the year.
Senator BRANDIS —Senator Sherry, when the Prime Minister also at her press conference of 2 July announced that the heads of agreement had been signed—and, to remind you of her words again, ‘an agreement had been reached’—she announced the establishment of this policy transition group and said that its purpose would be—to use her words again—‘to consult with industry and advise the government on implementation of the new mineral resources rent tax and the petroleum resources rent tax’. It is one thing to have a policy transition group to consult in relation to implementation issues; it is quite a different thing to say, as you appear now to be saying, Minister, that this policy transition group does not consider itself bound by the terms of the heads of agreement. Does the policy transition group consider itself to be bound by the terms of the heads of agreement, or are the terms of the heads of agreement themselves up for grabs in the policy transition group process?
Senator Sherry —I think where there is a difference prima facie, as there appears to be—I would accept there appears to be a difference prima facie—it is appropriate that the policy transition group led by Mr Argus and Mr Ferguson should discuss these issues.
Senator BRANDIS —Senator Sherry, the only reason there is a difference is that, in Brisbane on 14 October, the minister made an announcement at variance with one of the core terms of the heads of agreement. It is your government that created the difference through the words of your own minister.
Senator Sherry —I am not sure that I can add anything beyond what has been said.
Senator BRANDIS —Perhaps you cannot.
Senator Sherry —Where there has been a differing view, as there is—prima facie there is a differing view—it will be the task of the policy transition group to consult on this matter.
Senator BRANDIS —There is now a differing view because, as Mr Clarke has told us, the government’s position, as lately articulated by the minister, is at variance with the government’s position agreed to in the heads of agreement, which was signed on the evening of 1 July. That is right, isn’t it?
Senator Sherry —I have already acknowledged that, and you have made the point. But that is part and parcel of the role of the policy transition group.
Senator BRANDIS —If that is the case, Minister, are you telling us that the policy transition group is at liberty to reopen any one of the terms of the heads of agreement? Is that what you consider its legitimate role to be?
Mr Clarke —I think a more accurate interpretation would be that the policy transition group’s job is to interpret the heads of agreement in its terms of reference and provide advice to the government on its implementation. The question of the treatment of state royalties in existence at the time of the original announcement and any that may arise post that announcement is clearly a live issue, a relevant consideration, and the PTG will, I am sure, report on it.
Senator BRANDIS —It is clearly, Mr Clarke, with respect, an important issue to be considered in the design of this tax. But the outlines of the design of the tax were settled, the Prime Minister told us at a press conference on 2 July, by the heads of agreement and this issue was dealt with. It was dealt with in the term that I quoted to you and that you have affirmed. The term I quoted to you imposed no limitation on the capacity of the taxpayers to claim the tax credit in respect of state and territory royalties if those royalties varied in the future.
Mr Clarke —I fear we are going down a track of me repeating myself in terms of my capacity to respond to you.
Senator BRANDIS —I am trying to draw you out, Mr Clarke. I am not criticising you.
Mr Clarke —No, I appreciate that.
Senator BRANDIS —I am not saying you are not being responsive, but this is a terribly important matter and I want to make sure we give it a thorough canvass here.
Mr Clarke —I appreciate that, Senator. I am acknowledging, I hope directly, that there is a disagreement on this important matter. The origin of the disagreement, which your questioning of me has not to date emphasised, is of course that the original agreement to which you referred—back on 2 May when the RSPT was originally announced—did have this qualification about the effective date of rebating of royalties.
Senator BRANDIS —Except that the 2 May position was an announcement, wasn’t it?
Mr Clarke —Yes.
Senator BRANDIS —Not an agreement.
Mr Clarke —Sorry, an announcement, yes.
Senator BRANDIS —There was not a 2 May heads of agreement. There was only a heads of agreement announced on 2 July—
Mr Clarke —Correct.
Senator BRANDIS —and that dealt with the matter in a way different from, as you rightly say, the RSPT announcement did. Now, would you acknowledge that the minister is back where the government was on 2 May—that is, that future variations in the level of state and territory royalties will not be covered by the tax offset or the tax credit provisions?
Mr Clarke —I acknowledge that the interpretation of the heads of agreement that the minister has stated as his position going into the consultation is the interpretation the government announced on 2 May.
—It has been pointed out to me that, in the same story in the Sydney Morning Herald that I quoted to you before, the minister said that this issue is outside the jurisdiction of the policy transition group. He says that any increases outside these parameters will be a matter between miners and state and territory governments. So he has really foreclosed the position, hasn’t he?
Mr Clarke —No. I believe that he has stated his interpretation, his understanding, of the position going in. Contrary to that assertion, I believe that the matter is one for consultation, consideration, reporting and subsequently decision.
Senator BRANDIS —This is a very grave matter, Mr Clarke, because three of the biggest companies in the world thought they had a deal with the Australian government and one of the terms of that deal was the treatment of future variations in state and territory royalties in a particular way so as to enable them to claim the tax credit. Now the minister has said that that is not part of the deal as we interpret it, and we are back to where we were on 2 May. Only the existing state and territory royalty regime counts for these purposes and, as the minister said, ‘Any increases outside these parameters will be a matter between miners and state and territory governments.’ That is the government’s position, is it?
Mr Clarke —I do not regard it as extraordinary that the next level of implementation detail of the heads of agreement is proving contentious and that there are different interpretations on it. The very purpose of the policy transition group was to identify all of the issues in turning the heads of agreement into actual tax legislation, and that is the process that is currently happening.
Senator BRANDIS —You keep saying it is an implementation issue, but I keep reminding you that this had been agreed in the term of the heads of agreement that you have confirmed. How is it an implementation issue whether or not future variations in state and territory royalties will or will not be taken into account for the purposes of the tax offset? How can that be an implementation issue? It is a fundamental term of this agreement, isn’t it?
Mr Clarke —I have given you my answer.
Senator BRANDIS —Perhaps that is what you feel bound to say. Mr Clarke, you are familiar, I guess, with the provisions of section 51(ii) and section 99 of the Constitution which respectively prohibit discriminatory taxation and prohibit preferential treatment of states for revenue purposes?
Mr Clarke —Yes.
Senator BRANDIS —Are you aware that Treasury took advice from the Australian Government Solicitor in relation to the possible implications of those constitutional provisions for the RSPT?
Mr Clarke —Yes.
Senator BRANDIS —Did your department take advice as well?
Mr Clarke —No, I do not believe we did.
Senator BRANDIS —Were you copied that advice by Treasury?
Mr Clarke —I will ask my colleague to respond to that.
Mr Wilson —At the time, no. RET was not copied that advice, nor have we seen it or been provided it. The only copy of that advice we have seen is the excerpt that was released under freedom of information that has been posted on the West Australian newspaper website.
Senator BRANDIS —Let me give you a copy of it.
Mr Clarke —We have a copy of the FOI version.
Senator BRANDIS —I just want to make sure we are going from the same document, so let me give you a copy. I will provide copies to members of the committee. This is, as you rightly anticipate, the FOI extract. It was provided in response to a request by Dr Parker, a Treasury officer, under cover of a letter of transmittal of 1 October. For ease of reference, let me take you through the document. You will see the first two pages of the document I have put before you is a minute, and it has been confirmed at the Attorney-General’s estimates that that was a Treasury minute. There are two attachments. Attachment A is not part of the Treasury’s document but is extracts from the Australian Government Solicitor’s advice, and that is in a sans serif typeface. The second attachment, which is the last part of the bundle I have given you, attachment B, is headed ‘How the tax would operate’, and that is a document generated in Treasury. So the Australian Government Solicitor’s advice is on pages 3 to 7 of the bundle of documents that I have put in front of you. Are you now familiar with that advice?
Mr Clarke —I have read the advice.
Senator BRANDIS —You haven’t?
Mr Clarke —I have.
Senator BRANDIS —You have. So you are familiar with it?
Mr Clarke —Yes.
Senator BRANDIS —When did your department first become aware of the existence of that advice?
Mr Wilson —It would have been Monday morning, when I read the articles in the paper referring to the freedom of information release.
Senator BRANDIS —Mr Clarke, would there have been another officer of your department who would have been familiar with the advice at an earlier time?
Mr Clarke —I do not believe so.
Senator BRANDIS —When did the—
Mr Clarke —Senator, acknowledging the tenor of your question, I am not surprised by that. This is—
Senator BRANDIS —Just follow my questions, Mr Clarke, if you would be so good. Mr Wilson, when did the policy transition group have its first meeting?
Mr Wilson —I believe that was on 20 September.
Senator BRANDIS —How many meetings have there been between 20 September and Monday of this week?
Mr Wilson —Meetings of the group proper?
Senator BRANDIS —Yes.
Mr Wilson —They have had the one formal meeting and then there have been a series of consultations in Perth and Brisbane since then.
Senator BRANDIS —Roughly how many consultations?
Mr Wilson —Four days worth.
Senator BRANDIS —So you have had one plenary meeting, if we can call it that, and four days of consultations between 20 September and last Monday, the day before yesterday.
Mr Wilson —There has also been interim phone contact between members since then.
Senator BRANDIS —We have now learned that those consultations were held in ignorance of this advice; is that right?
Mr Wilson —The PTG was not aware of this advice.
Senator BRANDIS —But we have just heard Mr Clarke and the minister at the table tell us that the rebatability of future variations in state and territory royalties is an implementation issue and we know that the policy transition group is the body, as the Prime Minister announced, responsible for implementation. Those propositions are correct, aren’t they?
Mr Wilson —That is correct.
Senator BRANDIS —I find it almost beyond belief, particularly for a tax measure of this magnitude, that the body charged by the government with implementation should have conducted its consultations so far in ignorance of the fact that another department of the government—that is, Treasury—had been provided with advice on this very topic which raised questions about the constitutional validity of the tax itself for that reason. I suppose, as Mr Jones would say on Q&A, you can take that as a comment. You are aware, I suppose, if you have read the advice, that the author of the advice—and we have not established a date yet—does raise serious questions as to whether or not the RSPT is constitutionally valid or whether, because of the potentially different liability contingent on different state and territory royalty regimes, it might fly in the face of the constitutional prohibitions in section 51(ii) and section 99. May we take it that you are aware of that, having read the advice? May we take it as well that you would be aware that the author of the advice thinks the issue would be more serious if the level at which a tax offset is claimable were capped or fixed on a certain date than if that were not the case? I take you to paragraphs 59, 60, 61 and 62.
Mr Clarke —Senator, so far your questions on this matter have related to process, and we have responded frankly. You are now asking us questions about legal interpretation and we are not the department that can respond to these questions.
Senator BRANDIS —I am not asking you about legal interpretation; I am merely asking you whether you are aware that the substance of the advice is to that effect.
Mr Clarke —We have told you when we received the advice and we have read the advice. We note that it is not definitive advice. We note that there is qualified language in there, but we are not competent to prosecute the legal argument. We do not write tax law. That is a matter for the Treasury and the tax office on advice from the Government Solicitor.
Senator BRANDIS —You do not have to be a lawyer, though, to understand this conclusion. Let me quote to you paragraph 66 of the Australian Government Solicitor’s opinion. The author stated:
For this reason, we consider there is a risk that a court would find that the law discriminated between states for the purposes of section 51(ii) and was therefore outside the scope of the taxation power. It follows that it would also be possible to argue that, to the extent that the law in effect permitted a mining operator to receive a more favourable tax treatment in one state over another, it constitutes a preference for section 99 purposes.
Mr Clarke, as I said, you do not have to be a lawyer to understand that the author of this advice is saying that there is, to use his or her word, a ‘risk’ that this tax is unconstitutional for at least one if not two reasons.
Mr Clarke —Senator, you are inviting me to give an interpretation of legal advice that I am not competent or responsible to do.
Senator BRANDIS —I am not saying you are a lawyer, Mr Clarke. I am saying that a reasonably intelligent layman, which I am sure you are—
Mr Clarke —I read it at face value.
CHAIR —Senator Brandis, I think you are asking Mr Clarke to give an opinion, and it is an opinion that he says is not within his competency.
Senator BRANDIS —No, I am not asking him to give an opinion, as a matter of fact.
CHAIR —I think it is very close to that.
Senator Sherry —You are, Senator. With due respect you are, and Mr Clarke has indicated that Treasury, Tax Design and Attorney-General’s are the areas to probe these issues. It is not the resources area that has responsibility in respect of these matters that you are raising. You are asking for a view and it is not properly the remit of this area.
Senator BRANDIS —Senator Sherry, let me rephrase my question to meet your objection. You have read this document, haven’t you, Mr Clarke?
Mr Clarke —I have.
Senator BRANDIS —When you read it, did you form a view that it looked as if there might be a constitutional problem according to the—
Senator Sherry —Senator!
Senator BRANDIS —No, let me finish my question.
Senator Sherry —Senator, you are asking the same question.
Senator BRANDIS —Did you form a view as to what the effect of this document was? Did you form a view?
CHAIR —Senator Brandis, if I could intervene, I think ‘form a view’ is as close to asking for an opinion, in my view, as we can get. Again, I would say that you are asking a public servant for an opinion.
Mr Clarke —The view I formed is that the drafting of this legislation will require very careful attention. I have seen advice of this nature in areas where I do have responsibility many times over the years as a bureaucrat. You ask for a legal opinion on the design of turning policy into law. You get cautious advice from the AGS. You go back and debate the advice. You get further advice. You work through a process and eventually you present a law to the parliament. So my reaction was: this is yet another typical case of complex issues needing to be dealt with carefully by competent lawyers.
Senator BRANDIS —Given what you have just told us about your experience in dealing with legal advice, I do not feel that I am embarrassing you at all in putting it to you that you read that there is a risk that this might be unconstitutional, and you do not have to be a lawyer to know that the Australian Government Solicitor was advising Treasury that there was a risk it might be unconstitutional.
Mr Clarke —I cannot respond to that. That is an observation, with respect.
Senator BRANDIS —Mr Clarke and Mr Wilson, when you became aware through a newspaper that Treasury had obtained this advice from the Australian Government Solicitor at some yet to be identified time in the past—but presumably before the RSPT had been replaced by the MRRT, on 2 July—and had not told you about it, what did you think? What was your reaction?
Mr Clarke —My reaction was that of course they had got legal advice on the design of how to turn policy into tax law. That is their job. It goes to my earlier intervention when you were developing this line of questioning. I am not surprised. It is their job to get this advice and it will be dealt with in the normal, proper legal and drafting process.
Senator PRATT —Senator Brandis, you are asking the wrong department this line of questioning and you have been indulged for quite some time.
Senator BRANDIS —I will ask my own questions, thanks.
Senator Sherry —Senator, it is your right to ask your own questions of the right department. We have made that point a couple of times.
Senator BRANDIS —All of my questions will be confined to this department, Senator Sherry. Let me reassure you.
Senator Sherry —The drafting of the legislation is within the remit of both A-G’s and Treasury; it is not within the resources area. That point has been made very clear.
Senator BRANDIS —But, Minister, as you have been at pains to say, and as Mr Clarke and Mr Wilson have both told the committee, yours is the department concerned with implementation issues.
Mr Clarke —No; sorry, Senator—that is not correct.
Senator BRANDIS —Well, you said the policy transition group, which Mr Wilson convenes, is the implementation body.
Mr Clarke —The policy transition group is not my department. It is a body chaired jointly by Minister Ferguson and Mr Argus. It is staffed by officers from Treasury, my department and the tax office.
Senator BRANDIS —That is fine. I think I knew that, Mr Clarke. So your department forms part of the policy transition group and the secretary of the policy transition group, Mr Wilson, appears here in your estimates. So I think I am entitled to ask questions of his policy transition group.
Mr Clarke —Indeed. I was correcting the assertion that the PTG was my department.
Senator BRANDIS —Mr Clarke, you become aware, and the officers of your department concerned in the policy transition group become aware, through a newspaper story that Treasury had obtained advice some time ago that there was a risk that the RSPT was unconstitutional. You become aware of that for the first time on Monday. You told me a moment ago that you were not surprised that the Treasury had obtained such advice. I am sure that is true. Were you surprised that you had not been told about it?
Mr Clarke —Not especially.
Senator BRANDIS —The policy transition group, under the auspices of Mr Wilson over here, has been seeking to come to terms with what you have characterised as an implementation issue—that is, the effect on the tax offset of future variations in state and territory royalties. You have had four days of close consultations, one plenary meeting and lots of informal discussions, and now, for the first time, you have become aware that another department of the government has said, ‘For this very reason this RSPT is at risk of being unconstitutional.’
Mr Clarke —Senator, I do not believe the inference behind the question you have just put to me is reasonable. My take on what is happening is that there is a policy statement on which legal advice has been obtained. You are looking at a single piece of advice relevant to this and, as is of course your prerogative—
Senator BRANDIS —That is the advice that has been produced by the government.
Mr Clarke —We do not know the entire story on this. We are not at—
Senator BRANDIS —Obviously you do not know anything about it. You would have had to read the Western Australian newspapers to find out about it.
Senator Sherry —Let him finish, Senator Brandis.
Mr Clarke —That is not fair, Senator Brandis. That is not where I was going. The policy transition group is turning the heads of agreement into the next level of detail. After that has been considered by government, it will be turned into legislation and the legal and constitutional issues around the legislation will be addressed by the relevant department, which, as Mr Sherry said, is not mine. So the fact that legal advice is being sought and legal matters are being addressed in another department is exactly as I would expect.
Senator BRANDIS —Let me put it to you in summary form. It amounts to this: the minister made a statement on 14 October which you have told us represents the policy of the government and which you have described as an implementation issue—correct?
Mr Clarke —It represents the policy of the government going into the implementation task.
Senator BRANDIS —And it is an implementation issue.
Mr Clarke —Yes.
Senator BRANDIS —Right. You learned on Monday that Treasury had advice on this very issue—whether the future movements in state and territory royalties might mean that the tax was at risk of being struck down as unconstitutional—and you learned of that fact for the first time on Monday, did you not?
Mr Clarke —Yes.
Senator BRANDIS —Meanwhile, since the policy transition group was first convened on 20 September, the policy transition group had been dealing with that, among other issues, had it not?
Mr Clarke —It had been dealing with the policy aspects of it—correct.
Senator BRANDIS —Of that issue.
Mr Clarke —Yes.
Senator BRANDIS —All right.
Mr Clarke —The policy aspects, not the legal aspects.
Senator BRANDIS —I heard you the first time; thank you. Did you contact Treasury and ask for a copy of the advice?
Mr Clarke —No, I did not.
Senator BRANDIS —Has anyone in your department done so?
Mr Wilson —Senator, the secretariat made an inquiry to Treasury as to whether we could get a copy of that advice, yes.
Senator BRANDIS —When was that inquiry made, please?
Mr Wilson —That was made yesterday.
Senator BRANDIS —Yesterday—has it been responded to yet?
Mr Wilson —Yes.
Senator BRANDIS —And what was the response, please?
Mr Wilson —The response was that there was concern about releasing the actual advice, because the AGS believes that this is protected by client-lawyer privilege.
Senator BRANDIS —That was waived when Treasury produced it under freedom of information.
Mr Wilson —We then got a copy of the information that was provided under freedom of information.
Senator BRANDIS —So do I understand you to be saying that Treasury declined to provide you with a copy of the advice?
Mr Wilson —Treasury took it on notice and gave us an initial view, considered the position and then released to us the information that had been provided under freedom of information.
Senator BRANDIS —So Treasury has not provided you with a complete copy of the advice?
Mr Wilson —I do not know what Treasury holds.
Senator BRANDIS —Mr Wilson—
Mr Clarke —Senator, may I interrupt?
Senator BRANDIS —I just want to know whether you have been given the advice or not.
Mr Clarke —And Mr Wilson has answered the question. The inference, though, that you are driving at is that this is somehow an extraordinary event, and I have already said on a number of occasions that the PTG is not responsible for the drafting of the legislation.
Senator BRANDIS —I am merely interested in establishing the facts.
Senator PRATT —Mr Clarke’s advice is entirely consistent with this document.
Senator BRANDIS —Mr Wilson, are you the person who made the inquiry of Treasury?
Mr Wilson —We have Treasury officers in the secretariat who went back to Treasury.
Senator BRANDIS —I see. You will see from the document that I have put before you—that is, that part of it that extracts the AGS advice—that, for a start, it is described as an extract in the title. You will see that it extracts paragraphs 6 to 8—because there are numbered paragraphs—21 through to 24 and 50 through to 72. So it is plain from the face of the document that this is not the complete advice; there are some parts that have not been given to you. You requested the advice and you were supplied with those portions of the advice that had been published in response to the FOI inquiry but not the rest of it. Is that what it amounts to?
Mr Wilson —That is a fact, Senator, yes.
Senator BRANDIS —Okay. Have you protested to Treasury that, particularly since the policy transition group is seized with this issue, it would be a good idea for you to be furnished with the whole of the advice, given that the redacted parts may be relevant to this issue?
Mr Wilson —Just to go back on a point made by Mr Clarke, it is actually quite common for departments that get legal advice not to release that advice because of the—
Senator BRANDIS —To other departments?
Mr Wilson —Yes, that is not uncommon because of the client-lawyer issue.
Senator BRANDIS —I understand that.
Mr Wilson —The PTG secretariat has received this extract. We are reviewing it and looking at it, considering it against the terms of reference in our task, and we will see whether or not we think we require further information. We are yet to make that consideration. We are currently looking at it.
Senator BRANDIS —So have you not yet made a decision whether or not to seek the balance of this advice from Treasury?
Mr Wilson —That is correct.
Senator BRANDIS —You would be aware, if you have read the advice, that the advice also refers to an opinion by the Solicitor-General, Mr Gageler, on these constitutional issues. Have you asked for that?
Mr Wilson —No, Senator.
Senator BRANDIS —Treasury and your department are among the Commonwealth departments comprising the policy transition group.
Mr Clarke —Secretariat.
Senator BRANDIS —Policy transition secretariat. I am sorry; you correct me, Mr Clarke. Yet it seems that the left hand does not know what the right hand is doing. The Treasury officers who form part of the secretariat know what the government’s legal advice is in relation to the constitutionality of the RSPT and you knew nothing of it before Tuesday, or at least Monday when you saw the West Australian website, and even now you know that there is more legal advice which you have not been provided with. I just do not understand how you can do your job, having been blindsided by this—
Mr Clarke —Their job is not to draft legislation. Their job is to translate the heads of agreement—the policy—into a design which others will then turn into legislation.
Senator BRANDIS —But surely when you are told that there is, to use the word of the author of the advice, a ‘risk’ and that this provision in relation to rebating or crediting state royalties is unconstitutional, that is an important matter for you.
Mr Clarke —And I have said that in my experience in turning policy into legislation it is not unusual to get qualified advice of this nature at the early stage of the process and the matter will be dealt with in the drafting.
Senator BRANDIS —I will tell you what, Mr Clarke: the Treasury are coming before this estimates committee later on. I will ask them if they would be good enough to give you a copy of the advice they have obtained from the Australian Government Solicitor. Mr Clarke, although the AGS advice was directed to the RSPT and not the MRRT, in relation to this design feature—that is, the availability of a tax credit or offset in respect of state and territory royalties—the MRRT, at least as described by Minister Ferguson on 14 October in the statement I have read to you, and the RSPT were identical, were they not?
Mr Clarke —I am not confident to give you a direct answer to that question. I am not trying to avoid the issue.
Senator BRANDIS —Are you aware of any material difference between that aspect of the design feature of the two tax proposals?
Mr Clarke —The royalty rebate element, other than the matter that we have previously canvassed of course—
Senator BRANDIS —Well, including the matter we have previously canvassed.
Mr Clarke —Well, incorporating it. No, I am not aware.
Senator BRANDIS —Okay, thank you. Will you bear with me for a moment.
Senator PRATT —Mr Clarke, in answering Senator Brandis’s questions, you have just said that it is not unusual to get qualified advice of this nature that has one opinion and then solutions, that is then worked through until it reaches the legislative stage.
I appreciate it is not actually your job to have opinions about such legislation. I am just pointing to the fact that the document that Senator Brandis has provided actually points to such solutions. I think it is on page 7. So this document is entirely consistent with what you have said, which is that advice is provided, responses are made and then it is worked through until it reaches a legislative stage.
Mr Clarke —Indeed, I also note that in the covering minute, which we understand to be Treasury’s advice over the top of the AGS advice, it notes, ‘Options are available in order to avoid this risk.’
Senator PRATT —Okay. So it would be possible to ‘revise the proposal to avoid the risk that the law could be held to be invalid on section 51(ii) or section 99 grounds. Specifically, as noted above, we do not consider that there would be a risk that the law would be invalid if it did not include a cap on the refund credit which discriminated between the states.’ That is just one example of that.
Mr Clarke —It is an example and I would imagine it is not beyond the wit of constitutional lawyers to find other ways of addressing the problem. As I observed earlier, I regard this as a normal part of the legislative design process.
Senator PRATT —Thank you, Mr Clarke.
Senator BRANDIS —Mr Clarke, or perhaps Minister Sherry is the appropriate person to ask this question of: when, if at all, does the government intend to release the heads of agreement?
Senator Sherry —I would have to take that on notice and ask Minister Ferguson.
Senator BRANDIS —Why have the heads of agreement not been released?
Senator Sherry —I think in answering your first question I have obviously answered the second one.
Senator BRANDIS —No, we know they have not been released. You have taken on notice the question of when they will be released, if at all. Now I am asking why they have not been released so far.
Senator Sherry —Again, I will have to take that on notice.
Senator BRANDIS —You do not know?
Senator Sherry —No, I do not.
Senator BRANDIS —Aren’t you involved in the discussions in relation to this, Senator Sherry?
Senator Sherry —No.
Senator BRANDIS —You are not?
Senator Sherry —Not at all.
Senator BRANDIS —Mr Clarke, did your department provide any input or data for Treasury’s modelling of either the RSPT or the MRRT?
Mr Clarke —Will you allow me a moment to confer?
Senator BRANDIS —Yes, sure.
Mr Clarke —Senator, we provided data in regard to the offshore oil and gas industry as it relates to the now PRRT, and that advice would also have been in play and provided during the development of the RSPT. So my answer is, in part, yes we did provide some advice but it was limited to the operation of the petroleum taxation regime and that sector.
Senator BRANDIS —Okay. And that is it? And that is the only category of advice you provided?
Mr Clarke —In regard to the modelling question—and that is the precise terms of your question—that is my understanding.
Senator BRANDIS —All right. Thank you. Has your department analysed the modelling used by Treasury to forecast revenue from the MRRT?
Mr Clarke —No, Senator. That is not our job.
Senator BRANDIS —And I take it, therefore, not for the RSPT either?
Mr Clarke —Correct.
Senator BRANDIS —Are you familiar with the price and volume assumptions used by Treasury in its modelling for either the RSPT or the MRRT?
Mr Clarke —No, I do not have a close and intimate knowledge of the factors that have been used in those modellings on those two variables.
Senator BRANDIS —Those are the key variables, aren’t they? If we are going to work out how much revenue is going to be generated by this tax—
Mr Clarke —They are two of the key variables, yes—the design of the tax being the obvious other one.
Senator BRANDIS —I am sorry; let me express myself a little more precisely. They are the two key quantitative variables. There will be qualitative variables as well, I assume.
Mr Clarke —They are the two key externalities to the design of the tax, yes.
Senator BRANDIS —All right. Thank you. Has your advice been sought or the advice of any officer of your department been sought by Treasury in relation to those assumptions—that is, the price and volume assumptions?
Mr Clarke —Bear with me one moment again, Senator.
Ms Constable —In the context of the modelling, we provide policy advice on the petroleum resource rent tax as it relates to the offshore oil and gas industry. The officers who assist in the policy development in relation to the PRRT have provided information to Treasury and within the PTG. We have those staff situated in the PTG and have provided some volume information as it relates to offshore oil and gas.
Senator BRANDIS —All right. But, presumably, that can only be for comparative purposes or to show the way a particular model might work. It does not bear directly on the price or volume assumptions for minerals, does it?
Ms Constable —That is correct.
Senator BRANDIS —Because we know, Mr Clarke, that the Treasury model must have depended, among other things, upon assumptions about, respectively, price and volume.
Mr Clarke —They are critical inputs.
Senator BRANDIS —So the data must have come to Treasury from somewhere. It did not come from your department; is that right?
Mr Clarke —Correct, other than volume with regard to offshore oil and gas.
Senator BRANDIS —But, other than oil and gas, which is a different matter, the data in relation to minerals did not come from your department.
Mr Clarke —Correct.
Senator Sherry —If I could just add to an earlier answer, apparently the heads of agreement have been tabled and they are available on the website. I have just been informed.
Senator BRANDIS —Thank you. Are you aware, Mr Clarke—I think we know that the MRRT framework was developed by the government in cooperation with Rio Tinto, BHP Billiton and Xstrata. I do not think that is controversial.
Mr Clarke —I am aware that they were the three companies that were consulted with in the development of that heads of agreement, yes.
Senator BRANDIS —Are you aware that those companies provided price and volume assumptions to the government?
Mr Clarke —I do not have intimate knowledge of what the information flow between those two parties was.
Senator BRANDIS —I am not asking you about the intimacy of your knowledge; I am asking whether you know.
Mr Clarke —I do not know.
Senator BRANDIS —Do you know, Mr Wilson? Does anyone know? Ms Constable, do you know?
Ms Constable —Discussions were held between companies and the Treasury portfolio and ministers. Information was provided to them about production levels and volumes in relation to iron ore and coal. That is as much information as I have.
Senator BRANDIS —That information, of the character you described, was provided to government by respectively BHP Billiton, Xstrata and Rio Tinto, was it?
Ms Constable —Information was provided by those companies, yes.
Senator BRANDIS —The government has declined to publish the price and volume assumptions on which the modelling was based. I ask that that data be provided to the committee please, Mr Clarke.
Senator Sherry —We will take it on notice.
CHAIR —Senator Brandis, I understand that Senator Ludlam has some questions and Senator Pratt has some further questions.
Senator BRANDIS —I will not be very much longer on this, Madam Chair. Are you aware, Mr Clarke, that Mr Sam Walsh from Rio Tinto Iron Ore said recently, ‘The government expects higher revenues from the MRRT than the companies expect to pay because the government is using different assumptions in its modelling from the companies.’ Are you aware of that statement?
Mr Clarke —I am not aware of that direct quote.
Senator BRANDIS —Are you aware that words to that effect have been said or, in fact, are being observed within the industry?
Mr Clarke —Like you, Senator, I have read all of the media coverage on this issue.
Senator BRANDIS —Do you agree with that statement?
Mr Clarke —I have no basis for agreeing or disagreeing. I do not know.
Senator BRANDIS —I am not now asking about the policy transition group; I am asking about the period prior to the convening of the policy transition group. What input, if any, did officers of your department have in the development and design of respectively the RSPT and the MRRT?
Mr Clarke —I answered the latter part of your question at length in the previous estimates when the committee asked exactly what involvement my department had had in the RSPT development. I could paraphrase previous answers if—
Senator BRANDIS —You were not asked by me, I do not think.
Mr Clarke —No, it was not you, Senator.
Senator BRANDIS —If it is already on the record, that is fine.
Mr Clarke —It is.
Senator BRANDIS —So, only to the extent to which it is necessary for you to explain more fully your answer to my question, can you answer my question in relation to the MRRT?
Mr Clarke —Yes. So post the RSPT and pre the MRRT and PRRT—
Senator BRANDIS —So we are talking about the period between 2 May and 2 July, effectively?
Mr Clarke —yes—officers of my department were involved in advising the government, through Minister Ferguson, on design issues in regard to resource taxation.
Senator BRANDIS —What issues did you provide advice on? I am not asking for the substance of advice, merely the categories.
Mr Clarke —Well, taxation design issues is as specific as I can be, Senator.
Senator BRANDIS —Taxation design issues. Okay. But I think you have told us you did not provide any information in relation to the modelling assumptions.
Mr Clarke —Other than in respect to offshore oil and gas, no.
Senator BRANDIS —I understand. Are you confident that the levels of revenue forecast from the MRRT are sound—that the forecasts are sound?
Mr Clarke —As we have established, I am not privy to the modelling, so I have no basis for responding to your question.
Senator BRANDIS —Okay. Finally, Mr Clarke, or perhaps you, Mr Wilson—since you are involved in the policy transition group, you might be the person to ask this question of—has the government given any private assurances to BHP Billiton, Xstrata or Rio Tinto in relation to the implementation or operation of the MRRT beyond the terms of the heads of agreement?
Mr Wilson —Senator, I do not think that I can speculate on what the government has or has not—if you mean by the government—
Senator BRANDIS —Are you aware of any?
Mr Wilson —No, I am not aware of any.
Senator BRANDIS —Are you, Mr Clarke?
Mr Clarke —No, Senator.
Senator BRANDIS —Do you know whether or not assurances have been given?
Mr Clarke —Do I know what I do not know?
Senator BRANDIS —Well, you may not know what those assurances were, but do you know whether in fact assurances have been given?
Mr Clarke —No, I do not.
Senator BRANDIS —Mr Wilson?
Mr Wilson —No.
Senator BRANDIS —Thank you.
CHAIR —Senator Ludlam, go ahead.
Senator LUDLAM —I have a couple of questions that relate to some recent announcements by the Northern Territory government relating to the Angela Pamela uranium mine.
Mr Clarke —I will just bring other officers to the table.
Senator LUDLAM —Okay. This might be fairly quick because I am really just seeking some procedural advice, strictly about how the Commonwealth interacts with the Territory on mining approvals. So in this case we are talking about a uranium mine. First of all, is there any difference in the way that the Commonwealth would handle a uranium mining licensing and approval process from how it would handle any other kind of mineral project?
Ms Constable —In relation to uranium mining, it is treated similarly to all other minerals. The Territory government maintains regulatory authority over all applications for exploration licences within the Northern Territory. However, in the case of uranium, the Commonwealth owns all uranium deposits in the Northern Territory, and our minister, the Minister for Resources and Energy, is consulted at the end of the Northern Territory’s approval processes.
Senator LUDLAM —In addition, we have got an EPBC trigger, which I know is not your domain. I am sure it would be contested by the Aboriginal traditional owners, but for the point of this debate the Commonwealth owns all deposits of uranium in a way that we would not say that we owned all iron ore or all gold deposits in the Territory.
Ms Constable —That is correct.
Senator LUDLAM —That was a decision made not in law but—what would we call it?—an executive decision by Mr Ferguson a year or two ago, or more?
Ms Constable —No, that has been in place for many years.
Senator LUDLAM —Has it?
Ms Constable —Yes.
Senator LUDLAM —For how long? Since the 1950s when we were first mining there?
Mr Sheldrick —The Atomic Energy Act defines prescribed substances as belonging to the Crown, and prescribed substances are uranium and other similar types of substances.
Senator LUDLAM —And that goes way back?
Mr Sheldrick —I think it is 1953.
Senator LUDLAM —That sounds about right. For the purposes of this conversation, though, there was an announcement made by the Commonwealth some time ago that it would take over environmental approvals for uranium mining from the Territory. For example, the Territory government used to have a blanket opposition to uranium mining and milling new operations. That was a policy change a couple of years ago, I think. Does that make any material difference?
Ms Constable —The EPBC Act is still in place. There is a nuclear trigger within the EPBC Act which automatically refers uranium mining to the Commonwealth for consideration on environmental assessment and approvals processes. So the Commonwealth plays a very big part in relation to uranium mining—from exploration through to development—which also includes environmental approvals.
Senator LUDLAM —Just to clarify, in the process of approving exploration licences, prospecting, exploration and converting to a mining licence, the Commonwealth has no formal involvement or jurisdiction until some kind of trigger document is submitted via the EPBC Act; is that correct? What is the Commonwealth’s earliest point of intervention in this process?
Mr Sheldrick —An application for a mining lease is given to the Northern Territory, and the Northern Territory minister, under various acts, is then required to consult and take the advice of the Commonwealth minister in making the decision on that application. As was stated earlier, that is not the case for an exploration permit.
Senator LUDLAM —Got it. So it is not hypothetical but entirely reasonable to suggest that, in the case of Angela Pamela mine, the Northern Territory minister, on receipt of an application for a mining licence from Cameco-Paladin in Alice Springs, might say, ‘I am not interested in granting that,’ but the Commonwealth could quite easily override that and say, ‘Yes, you will.’ Is that the case?
Mr Sheldrick —The Northern Territory minister is required to take the advice of the Commonwealth minister. What the decision is in that case—
Senator LUDLAM —You have been pretty clear: they will do what they are told.
Ms Constable —Every project is considered on its merits. There is not a carte blanche approach to these issues. The Northern Territory minister would consult with the Commonwealth minister and then a decision would be made by the Northern Territory.
Senator LUDLAM —Who is the decision-making minister? I am not trying to draw you into a hypothetical about what a minister might decide, but I want to know where final responsibility resides for the granting of a mining licence. Is it at the Territory level or the Commonwealth level?
Ms Constable —It sits with the Northern Territory, after consultation with the Commonwealth minister.
Senator LUDLAM —If the Commonwealth minister said no and the territory minister said yes, whose view would prevail?
Ms Constable —The Commonwealth minister’s views are taken into account. We do not have a situation where advice has been sought by the Commonwealth and any action has been taken.
Senator LUDLAM —The advice has been sought by the Commonwealth? Who seeks the advice?
Ms Constable —It is sought by the Northern Territory government.
Senator LUDLAM —That is why I am perplexed. So the Territory minister seeks advice from the Commonwealth on whether a mining licence should be granted. Are you saying it has never been tested? What happens if there is a difference of views between those two ministers?
Ms Constable —At this stage there is nothing before the Commonwealth minister for consideration.
Senator LUDLAM —No, that is not the question that I asked you.
Mr Sheldrick —I am not aware of any case where there has been a difference.
Senator LUDLAM —We have one before us now. I am not trying to get into what people might say; I recognise it is hypothetical and I do not want to draw you down that track. But I want to know what the administrative arrangements are if there is a difference of opinion. By regulation or by law—could you point me to where it is?—whose view would prevail if there were a difference of opinion?
Ms Constable —Senator, I would like to correct you. There is nothing standing before the Commonwealth minister in terms of consultation right at this stage.
Senator LUDLAM —That is correct, yes. I stand corrected on that. There is very much the potential for that situation to arise, but it is not currently before us. You are right. Sorry, Mr Sheldrick?
Mr Sheldrick —I think your question was where is the legislation that governs this.
Senator LUDLAM —I just want to know who the decision minister is.
Mr Sheldrick —Yes. My understanding is that under the Mining Management Act the Northern Territory minister must act in accordance with the advice of the Commonwealth minister.
Senator LUDLAM —Right. So I think we have now got two contradictory views that you have put to us. One is that the mining minister decides and the other which is what you said before—that is, that the Territory minister will do what they are told. If the Commonwealth minister for mining and resources and so on says this should happen, then the Territory minister must take that advice. I am not seeking to paraphrase, but is that what you have just told us?
Mr Sheldrick —I am sorry; that is what I thought I said before. The Northern Territory minister must take the advice of the Commonwealth minister. That is consistent with what I said earlier I thought.
Senator LUDLAM —All right. So if there is a difference of opinion and the Territory minister is against the granting of a given mining licence and the Commonwealth minister is for the granting of that same licence, the licence will be granted?
Ms Constable —We have not got a situation like that. You are putting a hypothetical to us.
Senator LUDLAM —No, I am really not. Can you point me to the regulation or where it is written down? If we are getting into complexities here, I want to know what will happen when that situation arises, unless it is—
Senator Sherry —Hypothetically, Senator. It is a hypothetical.
Mr Sheldrick —Under section 34(3)(b) of the Mining Management Act.
Senator LUDLAM —Of the NT Mining Management Act?
Mr Sheldrick —Yes.
Senator LUDLAM —Have you got that section in front of you?
Mr Sheldrick —I do not have the section, but that is where I understand it says that the Northern Territory minister must act in accordance with the advice of the Commonwealth minister.
Senator LUDLAM —All right. If that is what it says, that is pretty clear and I am sorry if I have created confusion around that. So the NT government’s views could well be overridden should a lease application come forward. Thank you. I think that takes care of a couple of those actually. So there would be no need for the company to appeal an NT government decision; that would just be made as such. You do not have the act in front of you, but is there any process for documentation or appeal of any of those decisions, or does it just roll out? Is it fairly simple?
Ms Constable —There is always a right of appeal on any decision that is made. But, as I said, this has not been tested.
Senator LUDLAM —No, not as yet. Thanks very much. That was eventually helpful. I have a couple of other questions for Mr Davoren, who I am sure was hoping we would not let him go home empty-handed, on radioactive waste management. Mr Davoren, nice to have you back. You have probably got a pretty clear idea of what I intend to ask you about. Could you maybe just by way of opening statement, unless you have one that you wanted to give us, provide us with an update of progress towards the national radioactive waste dump.
Mr Davoren —I think you would be aware that the National Radioactive Waste Management Bill 2010, which the government introduced in February of this year, was not passed in the last parliament and the government has said that it will be reintroduced in the current sittings. As the government has said, it is not going to act under the existing legislation from the Howard government. There has been no substantive action on that project.
Senator LUDLAM —Great, and that is welcome and appropriate, I should add. I think that is a wise course of action. Is it your understanding that that will in fact be introduced into the House tomorrow? Is that still the intention?
Mr Davoren —I understand that under the government’s agreement with your party and the Independents you are consulted on the introduction, so you may know more about it than I do.
Senator LUDLAM —Okay; touche. You have got no information that would contradict the idea that it is being introduced into the House of Representatives tomorrow?
Mr Davoren —I know it will be introduced in the current sittings.
Senator LUDLAM —If I knew I would not ask you. Honestly, I would not want to waste your time.
Mr Davoren —I am not going to comment on it, Senator.
Senator LUDLAM —Okay. In June, which I think was the last time we spoke, you reported on attending a meeting of the Muckaty Aboriginal Corporation to give a presentation on the radioactive waste dump process. You gave us a bit of detail at the time about what had happened there. Has there been any further correspondence between the department and the MAC and/or the Northern Land Council to discuss procedural developments or any other issues relating to the Muckaty proposal?
Mr Davoren —No.
Senator LUDLAM —No other correspondence?
Mr Davoren —No.
Senator LUDLAM —No further meetings?
Mr Davoren —No meetings.
Senator LUDLAM —Calls? No? Okay. That was for the land council as well as for the corporation.
Mr Davoren —That is right. We are, of course, in frequent contact with officers of the Northern Land Council as we are parties to current litigation in the Federal Court, as you would be aware.
Senator LUDLAM —That is right. That probably does actually cross into the issues that I was raising. So you have been in touch with the land council fairly regularly about the Muckaty proposal?
Mr Davoren —Under that situation, where we are both in the same litigation, you would imagine we would be in very frequent contact.
Senator LUDLAM —Sure. Are there further consultation meetings planned with traditional owners, the NLC or other stakeholder groups that are unrelated to that Federal Court action?
Mr Davoren —No. We are waiting until the bill is in place or an act is in place before we proceed.
Senator LUDLAM —Does the department provide regular—or irregular—briefings or updates to the Northern Territory government or any Northern Territory government departments on the process that is under way?
Mr Davoren —Not at all. I think you know the attitude of the Northern Territory government to this project.
Senator LUDLAM —Yes.
Mr Davoren — I deal with them on a host of other issues—Rum Jungle and matters like that—and the question is never raised.
Senator LUDLAM —I would have thought you could take a contrary position on the process but still be required to brief them, or communicate.
Mr Davoren —They have not sought such a briefing.
Senator LUDLAM —That is fine. Has the department requested any information from the Northern Territory government to assist with the site selection process? Have you sought any information from them?
Mr Davoren —A lot of that work on the site selection process was done by Parsons Brinckerhoff, and I understand that a number of Northern Territory agencies cooperated in providing information, as they would to any business.
Senator LUDLAM —That was concluded a good long time ago now.
Mr Davoren —It was. That is right.
Senator LUDLAM —So nothing since then?
Mr Davoren —Nothing since then.
Senator LUDLAM —On site selection. So that does not just relate to Muckaty. Are there any other Northern Territory sites under any form of scrutiny, observation or research as potential sites?
Mr Davoren —No active consideration at this stage, Senator.
Senator LUDLAM —Sorry, no active—
Mr Davoren —No active consideration at this stage.
Senator LUDLAM —So there might have been some consideration in the past but you are not currently identifying or considering any other sites?
Mr Davoren —There were sites brought to our attention but none are being considered at the moment.
Senator LUDLAM —Okay. Fine. Has the department at any time briefed the department of everything—the Department of Sustainability, Environment, Water, Population and Communities—or the minister on the current state of work in this issue? I realise they will be involved when it is referred, I guess, through the EPBC down the track, but have you done any preliminary work with that department?
Mr Davoren —Yes, we keep them abreast of developments, Senator.
Senator LUDLAM —Great.
Mr Davoren —They get correspondence on the matter. We help them to respond to such correspondence. We assist them with their briefing.
Senator LUDLAM —What does that actually look like? Have they sought a briefing from your department or did you offer that?
Mr Davoren —It is mainly in written briefs and there is an exchange of that sort of briefing material.
Senator LUDLAM —Is that in advance of formal environmental impact assessment that they have requested information from you?
Mr Davoren —It is more on the policy position, when their minister gets questions. It is nothing to do with assessment under the EPBC Act.
Senator LUDLAM —Has there been any instruction or can you provide us with any advice at all—either from the minister or from the department’s side—that waste produced by states and territories, as opposed to Commonwealth obligated or Commonwealth produced waste, may also be taken to the proposed facility?
Mr Davoren —It was clear in the statements by the minister in his second reading speech that the government was intent on a national approach. So at some stage that would involve a facility that could accept waste from other states and the Territory.
Senator LUDLAM —What about the design that you are putting together at the moment? Is it just designed for future expansion, or what are you actually putting together at the moment?
Mr Davoren —I think it is fairly well known that the bulk of the national inventory comes from the Commonwealth, so within the constraints of the Commonwealth inventory, the state inventory is quite small.
Senator LUDLAM —If the bill is passed unamended reasonably soon according to whatever parliamentary timetable we end up with, what happens then? What does your work program look like?
Mr Davoren —As I have said to you before, we will be having further consultations with the Northern Land Council. You will be aware that their chair, Mr Kim Hill, indicated an interest in discussing the deed under which the previous site was volunteered, so I think the first thing we would do is revisit that deed with the Northern Land Council.
Senator LUDLAM —’Not a done deal,’ I think were the words that he used. Lastly, there was one recommendation of the Legal and Constitutional Affairs Legislation Committee that I thought was worthwhile, recommendation 1, which said that before any further action was taken on this matter, the minister should sit down and meet with the traditional owners who have raised concerns over a period of five years or so. Has that occurred to your knowledge?
Mr Davoren —He did have a meeting with the traditional owners of the nominated site.
Senator LUDLAM —No, the traditional owners who dissent, the traditional owners who do not want the stuff dumped up there. Has he met with them?
Mr Davoren —As far as I am aware, he has not consulted those people, but if you need information—
Senator LUDLAM —Sorry?
Mr Davoren —As far as I am aware, he has not consulted those people, but if you want information on who the minister has consulted, I think you had best direct that to him.
Senator Sherry —I will take that on notice.
Senator LUDLAM —If you could, Minister. These folk have been phoning, they have been writing letters, they visited his office a couple of times, they visited here in the House and they have invited him on a number of occasions to meet with him in Tennant or somewhere close to there, or anywhere actually, over a period of about five years. If you can respond with any indication at all that the minister has even once taken the slightest interest in those invitations that would be great.
Senator Sherry —I can only take it on notice.
Senator LUDLAM —That is okay. I understand. Thanks, Chair. That is all I have got.
Senator PRATT —I understand that the National Mine Safety Framework has been under development since 2002 and that there has been some commitment of funds to implementation in the current budget. Where is the framework up to in terms of its implementation? Will it be concluded in time for it to come into operation at a time that will make it consistent with the rest of the national occupational health and safety regime?
Mr Stamford —The National Mine Safety Framework was established under an implementation plan that was passed through COAG in May last year. At the moment, it is on track to meeting the deadlines in the timetable contained in that implementation plan.
Senator PRATT —I beg your pardon?
Mr Stamford —There was an implementation plan which was passed through COAG in May last year. The timetable in that plan is currently being adhered to in bringing forward the National Mine Safety Framework.
Senator PRATT —How is it going in terms of the working groups with Queensland, New South Wales and Western Australia?
Mr Stamford —The National Mine Safety Framework regulations drafting instructions were provided to the MCMPR, which is a ministerial council, and then those drafting instructions were passed through to the BRCWG, which is looking after the broader regulatory structure for the Safe Work Australia legislation under the new Workplace Health and Safety Act. They went through by 30 June this year.
New South Wales, Queensland and Western Australia have legislation or parts of legislation which are separate to their overarching occupational health and safety legislation. They are currently together in a working group underneath their ministers as part of the MCMPR. They are currently considering additional legislation to make sure that their legislation, firstly, is consistent with the OH&S legislation as it is coming through and, secondly, where additional detail has been identified by those states, it is consistent between those states.
Senator PRATT —So each jurisdiction is forming its own legislative instruments but they will be nationally consistent as agreed by that process. Is that what you have said?
Mr Stamford —They will be nationally consistent through that process, yes.
Senator PRATT —How will mining regulations progress under that model?
Mr Stamford —There will be mining regulations ultimately brought forward under the work health and safety act, the WHS legislation. The three states that we have been discussing—New South Wales, Queensland and WA—will be bringing forward separate consistent legislation which takes account of what is contained in the WHS legislation. There will be additional regulations that they will be bringing forward to meet their own additional requirements as mining states and to make sure that their own mining legislation, which is separate to their OH&S legislation, is also consistent.
Senator PRATT —I have another question on a different topic. It is with regard to the offshore petroleum safety regulatory inquiry reports. One is entitled Offshore petroleum safety regulation: better practice and the effectiveness of the National Offshore Petroleum Safety Authority, NOPSA; the other is Offshore petroleum safety regulation: marine issues and the 2008 review of NOPSA’s operational activities. What steps are being undertaken to implement recommendations in these reports, both in terms of what NOPSA is doing and indeed the department?
Mr Squire —The minister released his final response to those various reports at the South East Asian Australia Offshore Conference on 23 September. There are a significant number of those recommendations which relate to the National Offshore Petroleum Safety Authority, or NOPSA. NOPSA has provided the minister some advice in terms of how it intends to respond to those particular recommendations. NOPSA is due to report to the minister by the end of this year on progress in implementing those recommendations.
Senator PRATT —You received responses to the government’s draft response, as I understand it. I am interested to know where the Western Australian Department of Mines and Petroleum is up to.
Mr Squire —I am sorry, Senator. I do not quite follow your question.
Senator PRATT —I am interested in the nature of their response, but you are welcome to take that on notice. As I understand it, NOPSA has said that there are about 28 matters related to the authority that it is responsible for and that it is going to report progress at the end of this year; is that correct?
Mr Squire —That is correct.
Senator BRANDIS —Mr Clarke, I have one more question arising out of some of the answers that you and Mr Wilson gave me. You will recall earlier I asked you a series of questions about the effect of variations in state and territory royalties on the offsetting of the MRRT. I understood both you and Mr Wilson to be telling me that this was an ‘implementation issue’—that was your phrase—and that it was for Mr Wilson’s policy transition group to deal with. Is that right?
Mr Clarke —My response and my understanding is that the PTG will indeed address this matter in their report to government.
Senator BRANDIS —I think I gave you the wrong reference to Minister Ferguson’s speech in Brisbane on 14 October, because elsewhere in the report—and this is the passage I omitted by mistake to read to you—it says this:
Mr Ferguson said that although companies had raised the issue of crediting royalties during consultation, it was outside the scope of the policy transition group.
Do you want to change your earlier answers in view of what I can now tell you that Minister Ferguson said in Brisbane last Friday—that it is outside the scope of the policy transition group?
Mr Clarke —I have nothing further to add to my earlier answers.
Senator BRANDIS —Thank you.
Senator BUSHBY —I just have a couple of questions about the Global Carbon Capture and Storage Institute. How much money has Australia committed to this organisation?
Mr Clarke —One moment. I will bring the relevant officer to the table.
Ms Sewell —The Australian government has committed $400 million to the global institute and, as part of the election outcome, the global institute lost $45 million.
Senator BUSHBY —It lost $45 million?
Ms Sewell —The funding was reduced by $45 million.
Senator BUSHBY —Yes, that is one of the savings they were using to offset new spending. Okay. How much has actually been paid to the institute?
Ms Sewell —To date $100 million has been paid.
Senator BUSHBY —How much has been paid to the institute from other countries to date?
Ms Sewell —Five hundred thousand dollars was announced as a funding contribution from the United States last week.
Senator BUSHBY —Has that been paid?
Ms Sewell —I am afraid that is a question that you would have to direct to the institute. It was certainly announced as a formal commitment by the United States.
Senator BUSHBY —That was announced on 9 October—would that be correct?
Ms Sewell —Last Saturday or Saturday week.
Senator BUSHBY —How much project funding has been allocated by the institute?
Ms Sewell —As at 30 June the institute had spent and committed—this is a total figure—$59,900,000.
Senator BUSHBY —So it had spent and committed $59 million. How much of that was committed for projects in Australia?
Ms Sewell —The institute announced funding for two Australian projects last week. That was a total of $2.5 million for Carbon Net, a Victorian project, and $1.83 million for the Callide A oxyfuel retrofit project in Queensland.
Senator BUSHBY —That is a total of about $4.1 million for Australian initiatives so far.
Ms Sewell —Yes.
Senator BUSHBY —What about overseas projects? How much has been committed to overseas projects?
Ms Sewell —Can I make a distinction there: these are specific announcements about specific CCS projects, as distinct from funding that the institute has otherwise committed to, for example, capacity-building exercises, workshops—
Senator BUSHBY —No, specific projects are probably what I am actually interested in.
Ms Sewell —At the same time the institute announced funding for four projects overseas: $2.2 million for the Rotterdam port hub development; $2.55 million for a feasibility study for a CCS plant in Romania; and two projects in the United States associated with the Tenaska company—$8.03 million to undertake the concept definition for a new coal-fired power plant and $825,000 for a retrofit of another Tenaska plant.
Senator BUSHBY —We have had a commitment of $500,000. I am not sure how much has been paid by the US, but it has committed $500,000. We have put in $100 million, with potentially another $236 million. Of the money that we have actually committed so far, most has gone to countries that have not put any money in. As I understand it, the US committed $500,000 and a couple of days later there was an announcement saying that multimillion-dollar projects were being announced in the US.
Mr Clarke —The suggestion in your question is that these two variables are linked. Your question explicitly links them. We cannot accept the premise of your question.
Senator BUSHBY —I am not saying that one drives the other, but what I am saying is that Australian taxpayers are putting a lot of money into this institute. There will be a whole host of reasons, I am sure, in terms of capabilities and expertise, why it might be going elsewhere. Nonetheless, the bulk of money is going elsewhere than into Australian industry.
Mr Clarke —That outcome at this stage is exactly as would have been expected. It is the inference that this is somehow an inappropriate position for the institute to be in that I am challenging.
Senator BUSHBY —It is for the parliament and the people of Australia to decide whether they are happy that this is how their taxpayer funds are being spent. What I am trying to do is ensure that people have the full information so that they can make that decision in an informed way.
Mr Clarke —Nothing that Ms Sewell has said to you is not on the public record—excuse the double negative. It is all on the public record. The point is that the institute is a global institute. It is not an Australian institute; it is a global institute. During its initial years it was almost fully funded by the Australian government. That is by design. It is performing as intended and by design. The point—and our funding agreement with them drives this—is that the expenditure of the funds is against the global good of deployment of CCS technology. Their judgment as to which projects will best support that global good is exactly what we have set them up to do.
Senator BUSHBY —Is there an intention that more money will be sought from other countries?
Mr Clarke —In terms of the question of diversification of funding beyond its initial years—where it started as 100 per cent Australia and now the US has made the first material contribution into it—now is the time for the institute to start looking at diversification of its funding sources. The issue was discussed at their most recent members meeting last week. They are starting that process, yes.
Senator BUSHBY —I will leave it at that. In view of the time, I want to ask a couple of questions of Geoscience.
CHAIR —Thank you to the officers of the Department of Resources, Energy and Tourism involved with outcome 1.