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Unconventional Gas Mining
12/04/2016
Adequacy of Australia's legislative, regulatory and policy framework for unconventional gas mining

BICKNELL, Mr Gregory, Chief Executive Officer, Chamber of Commerce and Industry, Northern Territory

[08:52]

CHAIR: Welcome. Information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. I now invite you to make a short opening statement and then, after you have spoken, I will invite members of the committee to put questions to you.

Mr Bicknell : I shall be brief to help you catch up on a bit of time.

CHAIR: That would be helpful, Mr Bicknell.

Mr Bicknell : No problem. I am here on behalf of the members of our organisation, which number 1,250. We are a chamber of commerce and part of the international chambers of commerce around the world. We are slightly different here. Our membership is spread right across the Northern Territory. Our members are mainly here in the Top End, but 30 per cent of our membership is from the regional areas of the Northern Territory. We have no great scientific expertise. Our concerns around the unconventional shale gas issue is related to economics and the importance of the industry to the economy of the Northern Territory going forward over the next 20 years. Also, for the top of Australia, we have been very strong proponents of the northern Australia development plan. We see some key issues around economic development for northern Australia over the next few decades unless this industry goes ahead. That is a view that is supported by our members. Like most residents of the Northern Territory, they have some concerns, but those concerns can be met through a regulatory process, which I believe took a little bit of extra time to talk about earlier.

We regularly survey our members across the Northern Territory. Our most recent survey on the unconventional gas issue showed that the majority of businesses in the Northern Territory were in support of that. Most of our members are small to micro businesses; they are not the big end of town. We do not have a big end of town really in the Northern Territory. The majority of businesses, some 96 per cent of businesses in the Northern Territory, employ less than 20 people, so small businesses are very close to what is happening in their neighbourhoods. They can see that the economy of regional Northern Territory is often reliant on either government spending or the mining industry, and we have seen a downturn in both of those over the last couple of years. The mining sector is nowhere near as strong with commodity prices, and we are also seeing that some major government programs have come to an end in some of the regional areas, so that is having some real economic impacts.

The bright light on the horizon for those small businesses was exploration and development of the onshore gas industry. They are very keen to see that industry proceed but with the proper regulations surrounding it, particularly in terms of land access and water security. They are the two key issues that are raised by the business community, as they are by the wider community. But our members are satisfied that there is due process being undertaken by the Northern Territory government that will set a regulatory framework in place that will address the issues from the business community.

In terms of the economics of the Northern Territory, we have been reliant on the resource sector for many years. We are seeing a change in the dynamics and we really need to move with the times and make sure that, if these sorts of developments are taking place, we have the regulatory framework in place. The economy in the Northern Territory has always borne the brunt of issues surrounding the tyranny of distance. The cost of supply of raw materials and the cost of energy are all things that make it very difficult for businesses to operate here. We need the economies of scale to be able to continue economic development in the north and prevent some of the population drain that we are seeing, affecting the whole of the Northern Territory economy. That has been fairly constant over the last few years. We are seeing a range of people coming into the Northern Territory for short-term economic opportunities and not settling long term. For any economy to remain strong it needs a good strong population base.

We certainly welcome the estimates on the impacts of this industry in terms of 4,000 to 6,000 jobs. It will have some major impacts on the gross state product for the Northern Territory and also lessen our reliance on Canberra for funding, with the royalties from this industry coming direct to the Northern Territory government, rather than to the Commonwealth government, as the offshore gas royalties do. That is something that any jurisdiction should be looking at—achieving a better degree of self-sufficiency and having some control over that ourselves rather than relying on the machinations of Canberra.

I will leave it at that, at this stage. We are a bit unfortunate in that LNG18, the major LNG conference, is on in Perth today and tomorrow, so a couple of people who would have been here with me are not.

CHAIR: Thank you, Mr Bicknell.

Senator WATERS: Thanks very much for your time. You mentioned that you conducted a survey and you found a majority of businesses were in support of unconventional gas and the fracking that goes along with it. I am wondering what sort of investigation you have done into, say, the experience in Queensland—whether you have spoken with your counterparts about the real, on-ground impacts of what this industry has done to small business, to communities and to other industries.

Mr Bicknell : I have spoken to Queenslanders—nothing formal. The structure of the chambers of commerce is slightly different in other parts of the country, so the chambers in Queensland generally look after companies in Brisbane rather than in the regional areas. We are part of the northern alliance with Advance Cairns, Broome Future and the Karratha chamber. Anecdotally, they are quite supportive, but we have not done any sort of rigorous study around it.

Senator WATERS: Obviously there is not that much unconventional gas in the north, so I am not aware that Advance Cairns has any actual experience with the industry. What sort of information base did you provide to your members, or, indeed, what have you looked at yourselves in the course of conducting that survey?

Mr Bicknell : We have referred our members to—we have used the Hawke report as a basis for people to have a look at in terms of background. As you say, things are a bit different around the country. That was something done specifically for the Northern Territory, and from our perspective it offered a reasonably diverse report on what was happening and what the situation is in the Northern Territory.

Senator WATERS: I am not familiar with that report myself—I am a Queensland senator—so I will have a look at that in due course. I am just reflecting on the experience in Queensland. There was obviously an awful lot of promise about local jobs. That, in our experience, did not eventuate. Many of the jobs were fly-in fly-out or drive-in drive-out, and many local businesses and certainly the community members in those smaller towns then found that they were not able to attract workers or keep workers in those smaller businesses. I am just wondering: were the respondents to your survey able to say why they were in support of this industry? What do they actually think is going to be good for them?

Mr Bicknell : They were able to add some commentary to their responses. It is quite early at this stage. It has been mainly people's experience with opportunities out of the exploration phase. In some smaller centres such as Katherine, which is quite a small town in the bigger scheme of things, there have been some very good economic opportunities out of that exploration phase, which have been very noticeable. But even those businesses have welcomed the fact that that has occurred some distance from Katherine.

Senator WATERS: I am interested, if you can outline what those economic opportunities were in the exploration phase for those folk at Katherine.

Mr Bicknell : They were things like supplying transportable buildings, supplying food and supplies to the camp, doing repairs on equipment that they are using, some fabrication work on various parts of the exploration camps, some assistance and some opportunities for bores—just the general sorts of opportunities. I believe there were some labour supply opportunities. That is probably about all I can recall at the moment.

Senator WATERS: Thanks for that. Mr Bicknell, do you have any tourism representatives that are members of your chamber?

Mr Bicknell : We have some. There are not a huge number of tourism operators who are members of the chamber. There are a couple of other tourism associations that operate, one in the Top End, one in Katherine and one in Central Australia, and they generally join those associations.

Senator WATERS: We might have some questions for them at a later date. I am just interested in the potential conflict between the two industries, which is of course what we have experienced in Queensland.

I have one final question, Mr Bicknell, and probably the department would know more about this but please share your knowledge if you have some. I recall reading some coverage—it must be a year ago now—about proposed fracking near or even under Uluru. Are you across that at all? Can you shed any light on that?

Mr Bicknell : No.

Senator WATERS: Unfortunately, it seems that I will have to put some questions on notice for the department to get to the bottom of that one. Thank you for your time, Mr Bicknell. There are no further questions from me.

Senator LUDWIG: The only question that I have is: in terms of your membership, does that include most of the oil and gas companies that exist in Northern Territory? Are there some that are not members of your association?

Mr Bicknell : There are some that are not.

Senator LUDWIG: Who are they? Are they large or small? In short, are the big companies members of your chamber?

Mr Bicknell : Those that are currently producing are members. Those in the exploration phase do not tend to be.

Senator LUDWIG: So, as a general rule, the smaller exploratory companies are not members?

Mr Bicknell : Yes. It is not a size related issue; it is more about what stage of development they are at. If they have permanent operational staff they tend to be members of the chamber. In the exploration phase they do not.

Senator LUDWIG: Of the larger ones, what companies are members?

Mr Bicknell : I do not think that I am in a position to give you their names, but it is pretty easy to guess from what I have just told you.

Senator LUDWIG: I am entitled to ask, but you do not have to answer if you do not wish to. Do they pay according to their size? In other words, how are your membership fees structured?

Mr Bicknell : It is based on the number of employees. They are certainly not our top-paying members.

Senator LUDWIG: We do not know who 'they' are yet anyway. Thank you.

Senator PERIS: I have a couple of questions. Mr Bicknell, you were saying in your presentation that members of the Katherine region were potentially for this. Recently there was an article where Willem Westra van Holthe publically came out and denounced his support for onshore fracking and said 'not on his watch or anyone's watch'. He is the member for Katherine. He is totally against it and his constituents are against it. What do you say to that?

Mr Bicknell : He is not a member of the Chamber of Commerce. I read what is in the media as well as anyone. People have responded to a survey to our membership—it was not to a wider audience. As with any of our surveys, we get a diverse range of opinions. There are members right across the Territory who are not supportive of it, but the majority of them were. That is what I am commenting on.

Senator PERIS: Did you say to Senator Ludwig how many members you have?

Mr Bicknell : We have 1,250.

Senator PERIS: And you said 30 per cent of those are regional.

Mr Bicknell : Yes.

Senator PERIS: Is that below the Berrimah line regional or is it just—

Mr Bicknell : It is outside of the Top End—basically Katherine and Alice Springs.

Senator PERIS: Are you able to take on notice, if it is publically available, whether your members are business owners and whether the Chamber of Commerce is representative of the agricultural or the farming industry?

Mr Bicknell : Our constitution requires that a business be operating in the Northern Territory to be a member. It is broad. We do not cover the pastoral sector very much and we do not cover the tourism sector very much. Retail, manufacturing and international traders are all members. We have members basically right across the spectrum but no real core group where you could say that one group is better represented than any others amongst our membership.

Senator PERIS: Would it be fair to say that it is not just public perception or commentary; that mining can provide a false economy?

Mr Bicknell : This is only a belief rather than something I have actually proven, but it is more the cyclical trends in the industry that tend to be more of a worry to members than perhaps a false economy.

Senator PERIS: I guess FIFOs or people coming in to work on that are bumping up the economy and then leaving and deflating it.

Mr Bicknell : FIFO is a problem right across northern Australia. You are damned if you do and you are damned if you don't. If you don't use FIFOs on a project such as Blaydin Point here, at the end of the project you suddenly have a really severe impact on the local economy. So I think there needs to be a mixture of both.

Senator PERIS: Being a Territorian myself, born here, would it be fair to say that the Northern Territory offers more than the minerals sector? When you look at our fishing, our tourism and the agriculture, there is so much potential beyond the mining sector.

Mr Bicknell : Yes, it has always been a place that offers a lot of potential. It is bringing that potential to reality that has remained a little bit of an issue for a long time, and often for the reasons that I mentioned before. The cost of transportation and the cost of energy are things that make running a business here fairly difficult. Everyone talks about international competitiveness now, but the cost of getting a container from here to Singapore is three times the cost of one from Sydney. We just do not have the economies of scale. There are barriers to operating businesses here, and we do not have the population to sustain a wide range of businesses within the Northern Territory either.

CHAIR: Thank you, Mr Bicknell, for your time.