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Delivering unrooiled live

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Australia's news channel This is PM Agenda. Good afternoon welcome to

the program I am David Speers

as we go to air this

afternoon as you may have

seen on the bottom of the

screen in the last half hour

BHP Billiton has announced it

will not be proceeding with

the approval for the

expansion of the Olympic Dam

mine in South Australia by

the deadline of December it

was due to announce any

expansion. This is a heavy

blow for South Australia this

afternoon and rewill have

extensive coverage of it over

the next hour. We are

expecting to hear live from

South Australian Premier Jay

Federal Opposition Leader Weatherill and also the

Tony Abbott because while

this is a big blow for South

Australia it will also have a

big political ramifications

federally as well. The

expansion would have made it

the world's biggest open cut,

open pit mine, mostly

uranium, also copper and

gold. The expansion would

have been worth more than $27

billion. It would have

generated 6,000 jobs in

construction, 4,000 ongoing

jobs and an indirect 15,000

jobs for the South Australian

economy. The statement

released by BHP Billiton in

the last half hour says it is

not going to be proceeding

with the expansion as

planned. It will investigate

alternative less capital

intensive design of the open

pit expansion, Marius

Kloppers the choef executive

officer says current market

condition, include be subdued

commodity prices and higher

capital costs led to this

decision. Let's bring in Sky

News Business editor James

Daggar-Nixon for more on this before we get to the

political reaction. Thanks

for joining us. They have

been threatening this BHP for

a while now, any surprise

with this afternoon's

announcement? Not a huge

surprise, there has been

speculation for a number of

weeks that this result was

going to include an

announcement about a delay to

this huge Olympic Dam

expansion. The expansion

plans have been mooted since

about 2005 and worth noting

as well, they are very much

championed back then by one

Marius Kloppers who now leads

BHP Billiton and has made the

decision as you say to moth

ball it. You are rightly

saying the big reason we are

seeing this is not something

that is singular to impp ,

but rather something -- BHP

Billiton but something

afflicting now just the Australian resources sector

but the global one. That is

the issue of falling

commodity prices while at the

same time seeing increased cost, BHP Billiton going a step further suggesting

throughout the next 2013 no

new approvals will be made in

regards to projects. The key

for BHP Billiton is about prioritising where to put their cash. They still have

an awful lot of money but

within the subdued commodity

price environment the key is

trying to pick the right

commodities, the right

projects that will deliver

over the long-term and it

seems from this announcement

from the long term Olympic

Dam isn't high on that list

and a huge blow, particularly

for South Australia,

royalties obviously on hold

from this massive project as

well as I suppose some of the

employment that was likely to

take place from this. And

interesting side note, no

doubt one will that will get kicked around the market as well, BHP Billiton saying

that their bottom line

impacted to some $500 million by the high Australian

dollar. And indeed that high

Australian dollar has

factored in on some decisions

to haurlt CAPEX in terms of

some of the projects. So we

have been having a lot of discussion about with whether

or not the RBA should take

any formal intervention in

the Aussie dollar, this might indeed strengthen the calls

for those who believe they

should perhaps do so. You

have mentioned a couple of

the key factors there. The

high Australian dollar and

the lower commodity prices

but the other part of this

equation, according to Marius

Kloppers statement is higher

capital costs. As I mentioned

we will get a lot of

political reaction to this

coming up the half hour we

are about to hear from Martin

minister then the Opposition Ferguson the resources

Leader Tony Abbott and I'm

sure the Coalition will blame the carbon tax as being part

of this decision. What do you

think higher capital costs

means? What is BHP

specifically pointing to

there? Ing one of the major

issues for BHP Billiton and

right across the mining sector here in Australia,

labour costs it ?a massive

issue for -- it's a massive esh Er for them at the

moment, there is a fine --

finite pool they can draw

from, it is not within Australia but globally.

That's a massive impact on

them. We haven't had much

discussion, in regards to whether or not the mining tax

or the carbon tax, we know

BHP probably through this

result would have had any

impact through either of

those but with a future their

could include some costs from

that it may factor but I

would suggest the main issue

for them at the moment very

much is going to be labour

shortages and what that is

doing to the general wage increases that we are seeing

right across the sector. It's

a key one from them and in an

environment where you are

getting that largely offset,

amplified I should say by if you like or at least

falling commodity prices it

is a big, big issue. Not just for BHP Billiton but you

heard similar issues from the

likes of Tom Albanese, the

Rio Tinto CEO as well as

Twiggy Forest, at fofrtess

cue. This is -- Fortescue.

We should point out, when we

talk about the mining tax at

the moment it only applies to

iron ore and coal. Not to

uranium, gold and copper

which the Olympic Dam is

about, only if it were to be

expanded to other areas would

it effect it directly. And

there is no plans for the

government yet to do that but

Terry Nassios, the BHP --

Jack Nasser the BHP chairman

and Marius Kloppers have spoken about the uncertainty of the tax environment in

Australia, clearly they don't like the mining tam or carbon

tax applying to other

projects in Australia, with

they will get more on the

politics as I say throughout

the course of this hour but

where BHP say they will investigate alternative less capital intensive design of

the Olympic Dam open pit

expansion involving new technologies to improve the

economics of the project, can we really hold out much hope that's going to amount to

much? I would suggest many in

the market at the moment

would have a very big

question market over that.

Just what -- mark over that,

what they mean by that, the

technology is around at the

moment, whether or not it is

something they will have to

go back to the drawer board

and try to invent we will

wait and see. It is as you

say the big bill that comes

with the open pit that is the

big issue for them at the

moment and the costs involved

with that. What they mean by

new technologies and get back

to the drawing board and

finding new ways to make it

more cost effective, we will

wait and see whether that

means drawing this out until

we see some bounce back in

terms of commodity prices or some sort of easing in terms

of costs is the big question.

It will be interesting to see what Jay Weatherill has to

say with regards to that.

What sort of time line he has

been given, indeed whether or

not BHP Billiton has even

given him a time line. In the market the speculation leading up to this was that

they were going to look for

at least a couple of years

but that what we have heard

could blow-out to a little

bit longer than that. Let me

ask you about the overall

picture of mining resources

in Australia because we do

hear a lot from the

Government about this record pipeline of investment now we

have seen a very, very big

project canned. Is the

pipeline of investment still impressive? Look, the current

and - the current investment

plan is still very, very large but there is no doubt

it is peaked. You have to

look at the terms of trade as an indication to that, just

the last month the RBA suggesting that it had, in

fact, peaked the expectation

that is very similar in terms

of the pipeline of investment

while at the moment it stands

quite large, the added investment isn't being put in there at the moment and that

is largely off the back of

concerns about commodity

prices. About costs here. But

also worth noting as well,

some have suggested there is

still a little bit of concern

over the uneven nature of

just what the tax landscape

is going to be in regards to

those iron ore and coal

projects with the NRRT and of

course more broadly with the

carbon tax. It was interesting to note a few

broking houses had come out

and suggested this BHP result

was going to be some sort of

belt weather as to whether or

not we have -- bellwether to

whether or not we have been

reflection of the end of the commodities boom. Speaking to

a few guys post this

announcement they have said

look, it's a bit suss saying

whether or not this seg

anifies the end however it certainly shows a plateau in

terms of the resources boom

so if we have seen the best

time, the Halcyon days may

well be behind us, what the

new normal is going to be in terms of commodity prices this likelihood it seems is

that they will be a bit lower than they have been in the

past. BHP Billiton, James

have announced also of course

their full year net profit looking beyond just the

Olympic Dam project the net

profit is down more than a

third to in American dollars,

$15.4 billion, in Australian,

$14en 8 billion. -- 14.8

billion, how has the market

reacted to that? Initially

rather positive. They were up

0.25% we saw the share price

move 0.5%. It's pulled back

from that. Initial reaction

was it has been reasonably

good result so it beat to the

upside most expectations only

marginally. It is the first

drop off we have seen in

terms of earnings growth in a

number of years for BHP

Billiton but set against the

background of high costs, a high Australian dollar and

low commodity prices, it is

no big surprise that we have

seen this profit result as

you say at that headline

level drop about 35%. However, still reasonably

good levels considering that

backdrop. So not such a bad

result and we did see a bit

of a positive impact in terms

of its share price off the

back. Sky News Business editor James Daggar-Nixon.

Excellent analysis. Thank you

for joining us with this

breaking news. We are going

to hear from Martin Ferguson

the resources minister as I

say very sportily and hear

from Tony Abbott, the

Opposition Leader will be

join pd by all of his South

Australian colleagues to make

remarks about this unfolds news this afternoon. Let's

check in on other stories,

top stories this hour back to

the news desk. Thank you

hello. Sex discrimination commissioner Elizabeth

Broderick says women struggle

to flourish in the Australian

Defence Force. The second

part of the Australian Human

Rights Commission report

found there is still a gender

imbalance when it comes to

promotion. Sky News Sydney

reporter Cameron Price has

the details. This is the

Australian Human Rights

Commission review into the

treatment of women in the

Australian Defence Force.

More than 600 pages detailing

21 recommendations to improve

the treatment of women in the

force and combat sexual

harassment. It follows the

Skype sex scandal last year,

that prompted this report and

the Australian Human Rights

Commission says change is

needed. Sexual harassment

and abuse exists today in the

ADF. It ruins lives, it

divides teams and damages

operational... Potentially

the pit is as big as the

South Australian CBD in terms

of Adelaide, and I might say

you're talking about removing

overburden for a period of

about five years which means

a huge capital outlay before

you turn a quid. So I simply

say there is - that Australia and South

Australian government level,

but as far as I'm concerned

the project is still there to

be grabbed, our responsibility is to work with BHP Billiton, to

actually get this project in

place in the future. Mr

Ferguson the Opposition is already citing the carbon

tax, the mining tax and industrial relations regime.

What is your response? Have a

look what BHP Billiton said.

It is very clear. Both

publicly and privately in

discussion with me, there is

nothing more the South

Australian and Australian

Governments could have done.

This is a board decision, it

is a commercial decision. It

is not a regulatory decision. Everything BHP Billiton

wanted was given to BHP

Billiton by the two

Governments, over 12 months

ago. There is praise for the

South Australian Government

in their statement but there

is no praise for the Federal

government. It is kind of

glaringly not there. I think

I spent a bit more time with

BHP Billiton than you do. I

know where their head's at. I

have had discussions with the

chair of BHP Billiton, as

late as last week. Someone

who has to follow the market

and I might say where each of

the projects are up to this

was not a committed capital

investment. I always knew it

was challenging. This is the second interaction which has

led to the BHP Billiton board

saying no not at this time.

Look at the drop in commodity

prices. Look at the earnings

of BHP Billiton. You know,

Olympic Dam was competing with all the other BHP

Billiton projects around the

world in terms of potential investment funding. March

last year BHP Billiton spent

12.5 billion in Australia. In

iron ore, thermal and coking

coal. We did exceptionally

well. This was always the

project that was going to be

hard to get because the

capital intensive nature.

Change in the economic

circumstances given the cost

of capital, and I might say

the global environment has

led to the BHP Billiton board

appropriately probably being

very cautious in terms of their willingness to commit

to a project such as this at

this point in time. But

easing commodity prices are

we likely to see more

projects now being delayed

from other companies? We are

pretty lucky we have

investment pipeline of about

$270 billion. Huge amount of capital investment under way

in Australia at the moment. I

think quietly that investment

pipeline is going to be put

in place. The real issue is

given the global community at

the moment and the issue of

commodity prices, look at

thermal coal at the moment

about $80 a tonne, iron ore

down to about 115, I think

coking coal is about 118, our

job is to actually deliver

the existing investment. I

think potential new

investment is going to be challenging to a variety of boards for some time to come.

But we have got 280 billion

committed capital in

vestment. Go and have a look

at Barrow Island in the Gorgon project to see what

benefit it is bringing to

jobs in Australia and

opportunities for maritime

services, aviation services,

catering services, manufacturing services etc.

My real challenge at the

moment is the resources

minister with companies such

as BHP Billiton, is to try as

we are through enterprise

migration agreements and all

the associated training

programs to get the labour in

place to built these

projects. It's a huge

challenge, we are the envy of

the world in terms what we

have got under way in Australia at the moment. Are

you completely ruling out the

mining tax and carbon tax had any impact on this decision? Firstly the mining

tax only applies to three

commodities. In essence the

PRRT for petroleum, the MRRT

for coal and iron ore. In

terms of this project it is

always going to be the

question of the huge capital

intensive nature of it, the

cost of capital. It is

completely unrelated to the carbon tax and BHP Billiton

effectively says that in its

media release and I might say

in discussions with me as

late as today in terms of its

decision on this project.

On the MRRT has a credit of

about $670 million in tax liability. I haven't been

through what else BHP

Billiton may or may not have

said today or in recent

times. Those issues have been

attended to by the Treasurer

and treasury. All the forward

projections in terms of the budget estimates are of a

treasury nature and I will

wait and see where we end up

over the next 12 months. You

say all is not lost but when

can you see this project

going ahead again. Is it

years away? That is for the

BHP board to zid. This is a

commercial decision, purely a commercial decision. It is no

no way related to any regulatory process in

Australia. They have

indicated publicly that they

want to revisit the project

and I say this is the third

time it's been revisited. The

current proposal is far

different in nature to the

original proposal I was

working on in 2008. They will

have a hard look now at the

capital intensive nature, how

we get the cost of the

project down and so they

should. Because they have got

a priority to look after the

needs of shareholders. And

our job, both mine and Tom

Koutsantonis the South

Australian minister is to re-affirm the commitment to

the project and continue to

work with the very constructive way we have

worked with BHP Billiton. How will that effect the South Australian economy? It would have been lovely to get

the project up. It would have

been, the icing on the cake

for South Australia. But I

give full credit... We will

leave Martin Ferguson now for

now, we have the South Australian Premier Jay

Weatherill commenting on this

decision. Let's listen to

that. Port Augusta, Port

Piriie aroundial why decided to have some of the benefits

in relation to this

expansion. BHP have made

clear today its decision is

based on global factors quite

outside of our control. Such and the Commonwealth have done everything in their power to provide the

circumstances for the project

to proceed, a point

encouraged by BHP Billiton. I

want to say to South

Australians is that these

resources are world class,

they belong to us and they

will be developed. I

explained to BHP is beyond

the regulatory approvals they

also need community

permission to develop this

resource. Given that this is

the second time they have disappointed South

Australians there can be no

doubt that the community

permission will now come at a

cost. I have been told by BHP that it's their wish to proceed with the expansion.

They have told me they need

to do this in coming years

because of the mine in years

coming to an end. There is

also clear advantages of them

obtains the approvals that

are already in place. They

have told me they will

continue the site preparation

with Olympic Dam and

engineering works to ensure

that they are ready to

proceed. They told me that

they will under take a series

of pilot tests on new

technologies that will assist

them to bring this project

on. The discussions that BHP

have requested from the South Australian government will

take place over the coming

weeks and because of the

nature of them they will need

to be concluded before the

end of the year. Are there

any questions? Your

predecessor Mike Rann (INAUDIBLE). Well, this is an

important project for the

state and there is no doubt

this is a disappointment. But

we also need to remember that

this project sits amongst a

number of mining projects and

resource projects in South

Australia. We are still on

track to meet our target of

$20 billion in mining

production by 2020. And those

projects that comprised that

target will have their own

business cases, their own

approval s, a locomotive that

is pulling their projects

through. They all have their

own revenue and those numbers

are independent of the

Olympic Dam expansion. They

are also independent of the

recent announcement just last

week of the reserves of shale

gas by Santos. Alright

apologies for the quality on that line from South Australia but can you tell

from Premier Jay Weatherill,

disappointment but also confidence that this

expansion project will still

go ahead at Olympic Dam.

Similarly from his federal

colleague, Martin Ferguson

the Federal resources minister expressing no

surprise what BHP Billiton's

announced today but some

confidence that down the

track this will still happen.

Martin Ferguson also importantly pointing to the

overall investment pipeline

of $270 billion still he

thinks is going to be

delivered. He's saying the

real challenge here is the

labour, getting that labour

in place. The workers to fill

the jobs. That is the big

concern that he raised there

and obviously defence there

of the enterprise migration agreements. That the Government has been

criticised from unions over,

bringing in foreign workers

to fill a lot of the resource

project jobs. Dismissing

emphatically there the mining

tax had anything to do with

this pointing out the mining

tax only covers iron ore and

coal. There is also the petroleum resource rent tax which covers gas, not

uranium, copper and gold

which is what the Olympic Dam

mine involves. Also, emphatically rejecting the

carbon tax is to blame,

pointing to the statement

from BHP this afternoon which

makes no mention of the

carbon tax, only current market conditions subdued

commodity prices, and higher

capital costs. He also,

Martin Ferguson refers to his conversations with Marius

Kloppers and BHP in which he

has obviously been told, he

says, that the carbon tax is

not to blame for this

decision. Martin Ferguson

clearly new this was coming,

we will hear from Tony Abbott

though shortly, the

Opposition Leader, who is

bound to blame the carbon tax

and the mining tax in some

part for today's decision to

contributing to an uncertain

tax environment in Australia.

Contributing to this decision

from BHP today. If you have

tuned in to recap BHP

Billiton, are not proceeding

for now with the expansion, a

huge expansion of the Olympic

damn mine in South Australia.

This -- Olympic damn mine in

South Australia, some $27

billion, would have created

6,000 jobs in the

construction phase, 4,000

ongoing jobs and 15,000

indirect jobs as well. Some

of the infrastructure that

would have associated that

massive mine expansion, a

desalination plant, a new gas

fired power station, a new

electricity transmission line

all the way from Port Augusta

and a rail line as well to

connect Olympic Dam about

105km rail line that was

meant to go ahead as well.

New airport facilities as well. A whole raft of infrastructure that was due

to accompany the expansion of

this mine to make it the

world's biggest open cut mine

for uranium, copper and gold.

As I say, we will hear from

Tony Abbott very shortly on

this. His reaction to it and

we will get further reaction

for you this afternoon. We

will take a quick break and come back. Stay with us.

We are leave now to Opposition Leader Tony

Abbott. Because we have just

had devastating news for

South Australia. The Olympic

Dam mine expansion hasn't

just been postponed, it's

been changed and postponed.

It will no longer be the $20 billion investment bonanza

that the people of South

Australia and Australia more

generally were hoping for, it

will be a scaled back

investment if it goes ahead

at all. So that's 8,000

construction jobs, 4,000

permanent jobs, 13,000

associated jobs that South Australia won't get because

of the changed investment

climate created in

significant measure by the

Government's new taxes. Now

BHP has been warning for

months through Marius

Kloppers, and through Jack

Nasser that the mining tax,

the carbon tax, and other

factors were increasing

uncertainty instead of taking

these warnings seriously and

addressing their concerns,

the Commonwealth government

has just pushed on with its

plans to impose more costs on

new projects. What we have

seen I regret to say from

this Government is a

situation where good projects

have become marginal and

marginal projects have become

impossible. This is not the

way to run our country, this

is not the way to get the investment that Australia

needs. Now the Coalition

does have a better way, we would abolish the carbon tax,

we would abolish the mining

tax, that would improve

investor confidence and it

would maximise the chances of

ensuring the projects like

Olympic Dam do come to our

country. I'm going to ask

Christopher pooirn as the

senior South Australian --

Christopher Pyne as the

senior South Australian

member of the Coalition to

say some words and we will

take questions. We South

Australians stand here more in sorrow than in anger

today. This is a cas trofk announcement for South

Australia for months and months the opposition has

been warning that the Government's policies, whether it is the carbon tax,

the mining tax, uncertainty

over the accelerated depreciation, uncertainty

over the diesel feel tax

rebate, are working like a --

fuel tax rebate are working

like a wrecking ball through the economy and unfortunately

that wrecking ball has now

just claimed its biggest

victim in the Olympic Dam mine expansion. South

Australians were looking

forward to Olympic Dam as a

Saviour for our economy. The

Federal government's policies

have now made that impossible

for our state, we need a

change of Government at the

federal level if the Olympic

Dam expansion is to go ahead in any form otherwise the

same issues of uncertainty

and high taxing regimes that

exist today will simply

continue into the future.

Recently Jack Nasser was complaining about industrial

relations regimes when he was flagging this a couple of

months ago. Will you commit

now to doing implementing a

policy along the lines of

what he is asking, should you

be elect ed given this is now

about investor confidence? I

have been saying for a long

time that we needed to

address the flexibility

problem, the milltancy

problem and the productivity

problem. I have also been

saying ever since the

Government announced its abolition that the Coalition

in Government would restore the Australian Building and

Construction Commission in

full. And one of the big

problems that we currently

are beginning to experience

with major new resources

projects is industrial

militanty in the construction

phase. This is cas atrofk

for South Australia, what are

we talking about, is South Australia now a basket case?

What sort of message does z

that send to business and

investors in that state? We

have to face the reality that the Olympic Dam expansion was looked forward to by

businesses all across Adelaide and South Australia

to save them from what is a very depressed state because

of the policies of both the state and federal government.

We are the highest taxed

state in the country. We have

the highest electricity

prices in the world. And of

course as a catast rooshtion

rophe for South Australia,

South Australians must be

wondering now where our great

economic future lies and it

does still lie with this

project but not under this Government. There is no way

BHP Billiton will be able to

bring this project to book

under the current policies of

the Federal government.

(INAUDIBLE). 12 months away

from an election now, the critical policies you are

talking about and blaming in

decision on be changed when

you get into Government,

assuming that's the case, you must therefore predict this

project will go ahead under a

Coalition government. We will

maximise the chances of this

project going ahead by

abolishing the carbon tax,

abolishing the mining tax,

and giving big investors the

kind of confidence that they

need if they are going to

make multi-billion dollar

commitments to our country.

The mining tax doesn't apply

to uranium or copper isn't it

wrong to attribute any part of this decision to the

mining tax? BHP is

Australia's largest iron ore

producer, it is pretty close

to being our largest coal

producer if not our largest

coal producer, BHP is massively affected by the

mining tax. The profitability

of BHP is massively affected

by the mining tax. The

investment climate for BHP is

massively affected by the

mining tax. It is absolute

nonsense to say that the

mining tax doesn't impact on BHP. Mr Abbott...

(INAUDIBLE) They have

swindled Government and they

won't be paying the mining

tax. One of the facts which

they are only too conscious

of is that you cannot trust

the current government. Let's

not forget, this is a government which said there

will be no carbon tax under

the government I lead. And

there is a carbon tax. Sure

this government is saying the

mining tax won't extend beyond iron ore and coal but

how can you believe them on

the mining tax when you couldn't believe them on the

carbon tax. Mr Abbott, the

announcement is BHP had

announced the second lafrgest

corporate profit in history

today, how can you say that

isn't a dime against the

Government. That is today,

this is about the future.

Sure mining companies have

been doing very well based on

previous policies. They are

not going to do so well based

on current policies. Current policies effect the future.

The future is looking much

less prospective for the kind

of investments that Australia

needs if we are to have the prosperity in the future that

we have enjoyed in the past. The other big project for

South Australia of course is

the $36 billion future submarines project. The Government has committed to build them in South

Australia, given this

decision today what's your message to South Australians

about that project? We have always said that we would

prefer the submarines to be

built at home. And if they

are going to be built at home

we prefer that to happen in

South Australia. We have

always said that. But again

with this Government you have

always got to remember that

you can't trust what they say

and you can't trust that they

will have the money. Given

the fact that this is a government which is much

better at spending money than

it is at creating the kind of buoyant economy that will

generate the revenue. BHP would already know your

position on carbon tax and

mining tax, assuming, if

there is a Coalition

government at the next

election is there anything

else you can do in a policy sense to make it more

attractive to BHP to go

ahead? Sure they know our

position, but they don't know

the outcome of the next

election. What they do know

is that the current

Government will stoop very

low indeed and will stop at

nothing to try to win the

next election. That's why

they can only take for

granted the abolition of the

carbon tax and the abolition

of the mining tax after there

has in fact been a change of Government. Would you

consider tax breaks to make

it more - as an incentive to

BHP to invest? What we want

to establish for all

investors in this country is

a level playing field. And

the carbon tax and the mining

tax mean that there is no

level playing field for investment in Australia vis-a-vis investment

elsewhere. Thanks so much.

Thank you. Tony Abbott and

his South Australian

colleagues there from the Coalition. Laying blame for

this decision at the feet of the Government saying that

the uncertainty about the tax environment in Australia and big part of that the carbon

tax and the mining tax, are

responsible for this decision

by BHP. Pointing there to comments throughout the

course of this year BHP

Billiton Jack Nasser and chief executive Marius Kloppers raising concerns

about the tax environment in Australia. The statement we

need to point out though from

BHP this afternoon does not

mention the carbon tax

directly, simply blaming

things like the low dollar,

subdued commodity prices and

capital costs. And we have

discussed already this hour

some of those significant

labour capital costs that are

contributing and putting

pressure on the miners and

have contributed certainly to this decision in South

Australia. But it is a real

blow to South Australia as

you heard Christopher Pyne acknowledge there he

described Asotasi

devastating? -- described as

devastating some that the

Australians see as a savior

for the economy there, it

would have created thousands

and thousands of jobs and the

Coalition expressing some confidence they will provide

the environment if there is a change of government to

attract back this sort of

investment but BP do now

appear to be looking at a

more scaled down version of

the expansion of this Olympic

Dam mine in South Australia.

For more reaction on this,

I'm joined by Nick Champion a

Labor MP from South Australia. How disappointed

are you at this decision? Well, obviously

it's always disappointing

when you don't get, you know,

the go button pushed but what

BHP have said they will look

into a lesser extensionive

way of removing the over--

expensive way to remove the

overburden of the mineral,

there is an amount of dirt to

remove before you get to the uranium and gold and copper

and they are looking at a

less capital intensive way of

doing that and because they

are looking at these new

technologies they will talk

with the South Australian

Government about how they

have to change the indenture

agreement which they have

with the South Australian

government. It does mean if

they do this it's going to

take longer and it may not be

the scale of project they

were looking at. What the

company's release says is

that their operating in a obviously different global environment than they were

even 12 months ago, and so

they want to look at the project again. They are not saying they are not going to

do it. They are saying they

are looking at doing it in a

different way. I don't think

that's an excuse for the

Liberal Party, Tony Abbott,

Christopher Pyne to line up

like a bunch of gargoyles and

trash talk the South

Australian economy which is

what they have been doing. Not the South Australian

economy? They have been. The other day Tony Abbott compared South Australia to

Tasmania. Now, with all due

respect to the, you know,

Tasmanians lovely people, but

their economy is not roaring along. The South Australian... Is going very

well. Shdecision is hardly

going to. The -- this

decision is hardly going to help the South Australian economy. The South Australian

economy is going very well,

we have opened 20 new mines

we have a car industry that's

on its way back and, you know, exporting, producing

the Cruze. With respect

that's a glass half full of the South Australian economy.

This was the big fish of

mining projects. It is very

important to realise it has

been delayed not, not you

know, it is not like they are

not going to do it it's just

being delayed. Delayed and delays. They are looking at

doing it in a different way.

Delayed, scaled down and may

not happen at all. We have to

wait and see. It doesn't look

like it will be unusual I think for a company if they

weren't going to do a project

not to get that over in one

hit. If you know what I mean.

I think that we will see a different project, obviously

emerge from this, but we will

still see an expansion of

Olympic Dam. I'm confident of

that because it's in the

company's interests. Do you accept that the comments

putting together the comments

of both the chairman Jack Nasser, CEO Marius Kloppers

through the course of this

year there are concerns at

BHP Billiton about the tax environment in

Australia? Well, look, you

know, there is going to be a

lot of commentators on these

things. I'm ask you. The

mining tax doesn't apply to

this project eblgt. It

applies to a lot of BHP

projects though. But not to this project. They haven't

mentioned any of that in this

release. It could seem to me

that's just politics by the

Liberals to say, well, it is

a mining tax, the mining tax

doesn't apply to this project

and the carbon price, what

they get from the carbon

price is certainty about how

we will price carbon. And

cost. Are you seriously

saying the taxation

environment in Australia has no impact on this

decision? Well that's what

the company said. Well, it's

not what they have

said. Well, if they have - I

could think... Taxation environment... I would think if that was a factor in the consideration they would have

put it in the release.

Really? I think that's what

they would have done. All

they have said through the

course of this year... They

have put in place you know,

they have talked about the

pressures that are on them in

the international market, low

commodity prices, a changed

environment, if you like for

capital investment, certainly

less money going around the

globe than there was even 12

months ago. We are a capital

constrained world now. You

know, they are the factors

that have impacted this

decision. Let me ask you

this finally, as a South

Australian you're willing to

say that you're completely comfortable with what this Government has done when it comes to taxation. Certainly. You are

not worried at all about the

impact that it's having on investment in South Australia. Not at all and if

you look at all the, mining, literature, South Australia

is a great place to invest.

It's a place that's lauded we

have got very good you know,

explorations schemes. We have

got a lot of new mine s

opens. All systems go and

this very big project is

being looked at again to do

it in a different way, but

this is you know, just

another step in our journey

to becoming one of

Australia's great mining

states. The one thing BHP

Billiton does specify in the

statement as being to blame

is the higher capital costs.

That's clearly part of the

equation. The price of money

that is the... Capital

refers to labour as well

doesn't it. So is there an

argument here that there needs to be some industrial

relations reform? Well, I

don't think industrial relations reform is so

important for miners, what

they tend to be after is a

skilled workforce and that's

why the Government, a budget

or so ago, put in huge

amounts of money into skills

training and I have seen that

in my own electorate with the

training a lot more grader

drivers now which are exactly

what BHP needs, because we

put $1 million simulator down

there for the civil train,

which is the civil engineers. These guise earning... It is not a

problem, obviously something

that has to be factored in

but not something that's

fixed by an sfreltions Act,

it is fixed by skills policy and potentially something

that's fixed by, you know,

having the appropriate skills

coming from across

Australia. We will have to

leave it there, thank you for

joining us. Cheers. After

the break we have the panel,

Mark Kenny from 'The

Advertiser', and Andrew

Probin from the 'West

Australian'. Stay with us.

You are watching PM

Agenda. We will continue our

coverage of this news this

afternoon that BHP Billiton

is not going to proceed with

the planned expansion of the

Olympic Dam uranium mine in

South Australia. Big blow to

the South Australian economy.

Joining me in Canberra now,

in the studio, Andrew Probin

from 'West Australian'

newspaper, Mark Kenny from

'The Advertiser'. Mark Kenny,

your home town paper no doubt

will be all over this. It's a

big blow to the South

Australian economy. It's a

big blow in the sense that

this was going to underpin

the whole future development

of the state. There were a

lot of jobs associated with

it both directly and

indirectly and so there have

been a lot of hopes about it

and the Government has put a

lot of effort into, both state government and federal

government for a long time

have put a lot of effort into

it, BHP Billiton has invested

a lot of money in the sort of

exploration phase of it. And

for a time it seemed like it

was very much going to go a

head but we have known now

for some time thatting thises

have got a bit marginal and

there have been rumours about BHP Billiton backing out and

we have this decision. It's a

blow and atmospherically it

is also go going to have a

big impact on morale in the

state and morale in the Government. That's right we

will get to the politics of

this in a moment. But Martin

Ferguson's point earlier,

that the stuff and Jay Weatherill made this point the resource is still in the

ground, it's going to be

developed one way or another, BHP Billiton have said in their statement they are

looking at cheaper ways of

getting it out. What do you

think, Andrew, is it... Should there be too much confidence that's going to

happen? I think there are

good point points and of

course have you got to look

what BHP is making its money

doing. It is iron ore. You look at the figures here, I

have the figures in front of

us and $15 billion in iron

ore in the last year. You can't forget... How does

that compare to uranium?

Well the uranium is not here

because that's what they were

going to do. They also made

the second biggest corporate

profit in Australian history.

Second to themselves. They

have got lots of corporate pressures and corporate

pressures from investments in

the states as well. We know that Marius Kloppers decided

not to take his bonus which

is ex gazillion dollars for

the next 10 years. So, there

is lots of issues here and -

I know the politics it looks

just dreadful given the

mining tax coming in and the

carbon tax and so on. The

mining tax doesn't directly effect the Olympic Dam

project does it. No it

doesn't and BHP was one of

the designers of the mining

tax. So I'm not sure. And

also... Can I jump in there

what will be interesting as

the debate ensues is the

extent to which that fact is

acknowledged by people consuming, that is by people

talking about it? The streets particularly in Adelaide but around the

place. It's a very easy tag

for the Opposition to join

the mining tax MRRT with this

decision to say this has been

a critical factor in BHP

saying look the tax environment's too hostile for

us, it will cost us too much.

This new tax is too

prohibitive and we have

decided to shelve this

project. Of course the MRRT

does have implications for

BHP in respect of the iron

ore profits are you talking

about and it is other

activities but it does not

apply to Olympic Dam. The other point is someone questioned Tony Abbott they

have been saying that BHP,

Xstrata and Rio, the big

players were not going to pay

much. If they had their lines

right, then it would be slightly more credible

wouldn't it. A carbon tax

though in all of this, we

know BHP and others have been

critical of it and the tax

environment in Australia.

They haven't put it down as

one of the issues though in the statement today. Can Tony Abbott reasonably say that

this is part of the problem?

It doesn't matter whether he

can reasonably say it it is

whether he effectively can

say it and he is effectively

saying it and it will have an

impact in the electorate. It

sort of makessen when you

hear about it, it doesn't

really need to be strictly

true, it is part of the

overall tax environment.

Wayne Swan was in parliament

today just as it happens

points out to the Opposition

that the tax as a proportion

of GDP is significantly less

now than it was under the

last Government but it is all

noise really, the point is

this is a very easy political line for the Opposition to

run and they are running it

already and they they are

running it with some gusto.

Another project a smaller

scale, Woodside in Western

Australia put on hold a

further exploration work on

its Pluto LNG operation, the big question has the peak

passed when it comes to these

big mining investment? The peak's coming because we have

got a lot of stuff that's

still going to happen.

Regardless of... But the

price peak has passed by the

looks of it. The price peak.

Well, I think that what you

are seeing even with the BHP

figures, that the prices have

come off on things like iron

ore, and yet they are still making more money because the

volume s are increasing, so

there is massive expansion,

and while there is going to

be some prices going down

effectively over the coming

years, the volumes are going

to be much, much bigger

-- Ideas the other thing to

say about -- I think the

other thing to say about BHP

this decision is about

delaying a final decision on

the project and reconfiguring

it now that's obviously been

seen as the project eblgts

being shovel e -- project

being shelved and quite understandsably and that may

be where it ends up, but from

BHP's point of view they have

had to come to a decision

about whether there is a

greater risk in committing

all of this money now where whether there is any great cost to them in delaying it

and they have come to the

conclusion that delaying the

project does not prejudice

their position in respect of

those future profits. Now

that's pretty logical I

guess, and in the current

environment with the way

commodity prices are and so

forth, there are a lot of as of atmospheric things around

this, the industrial

relations environment tax and depreciation and everything

else but at the end of the

day the company has made a decision it doesn't need to risk this sort of capital in

this way, in this vol I'm

route now. I want to move on

to a couple of other issue,

Craig Thomson is clearly

pretty buoyed by that KPMG

report that came out last night, damning report how Fair Work Australia handled

or mishandled the whole

enquiry into the Health

Services Union, including himself. A raft of problems

with the enquiry they weren't adequately prepared for such

a task, didn't have the resources the staff didn't

follow lines of enquiry they

should have. It didn't

dispute the finding just the

process. It seems to me this

doesn't clear Craig Thomson

but he does have a pretty

good argument that it is

pretty hard to prosecutor him

now, Andrew based on this enquiry? It seems to have

been a bit of a shambles so

it certainly doesn't help the

prosecution but as you say

the conclusions haven't been

- they stand. Me remains

under a police

investigation. It goes into

the nitty-gritty things why

didn't they go to the actual

records rather than relying

on the paperwork when we are

in a digital age and they

should have done some, you

know, forensic work to given

that the accusations were

quite serious. The bottom

line, not a body yr or at

least they weren't when they

did this, that was adequately prepared for this sort of

task. A surprise really because we thought after

three and a half years it was

going so well the truth is it

did take an enormously long

time Wednesday we know there

was a sham pels and -- we

know it was a shambles and

the records weren't kept

adequate ly and they weren't

investigated with the rigger

and method would have been

preferable and there was a

lot of delay. It leaves Craig

Thomson waiting for what the

Victorian police

investigation find, now he

has already been subject to some other police

investigations and there have

been threats of court action

against him but in terms of criminal proceedings, well

that really turns on what the Victorian police come up with

and he may well be in the

clear. I think in a way that

could be a difficult thing

for Labor then. In a court

of public opinion eye I'm

sure it helps Craig Thomson,

a little but the Government

have been still very careful

about this. They don't want

to say he's clear or welcomed

back into the Labor fold at

all until all those court

proceedings are wrapped up. Does he ever need to be welcomed back to the Labor

Party. He is not pre selected

for the seat and... It is

unlikely he will be back

there sitting in the caucus room. The whole Slater &

Gordon issue about Julia

Gillard's past, trickles on

this week. This morning 'The

Australian' newspaper had the

transcript of that interview

that she did the internal

probe interview at Slater &

Gordon back in 1995. We have

a couple of key sections from the transcript that I want to

show you. This is Julia

Gillard interviewed by Peter

Gordon at the firm at the time about what happened with

the fund that she set up.

This is about why a file

wasn't actually opened in the

law firm on this whole fund

that she helped set up for

her then boyfriend Bruce

Wilson. P

So some acknowledgment there she should have. Then

we get to this issue was any

of the money from the fund

used to pay for renovations

on her home. She says:

but she does say in the

rest of the transcript goes

through various receipts and

items that were done that she

did pay for. And then

finally, I want to show you

this one, she's talking about

a guy called Bill The Greek

who was associated with the

Australian Workers Union, and

helped line up some workers

to do various things on in

terms of the renovation s she clearly wasn't happy with,

things like a brick wall that

Bill the Greek built she

didn't like much. She says: Peter Gordon:

There is another word

there. What is the sum total

of this transcript? First of

all, Bill the Greek is no

Jamie Durie. I mean that's -

it is like if it weren't

didn't have a serious element

to it, it's a very funny.

This guy - I mean she's got

this - she had this lovely

house, this Victorian house

and it had some dodgy windows

and she asked Bill the Greek

and he got a guy called Con

to come in and she's

obviously disappeared, she's

busy at work, she comes back

and theeps beautiful windows

have been replace -- these beautiful windows have been

replaced with aluminium

sliding things and she's

horrified. He's put in some

posts they They have some

fluting and he's of he's done

lots of concreting and it's

bloody awful quite clearly

and she's not happy about

it. She's not. She's paid

some money. This is where we

get to the tricky stuff she

clearly didn't want to pay

for the work she didn't like

and didn't ask for. It looks

like she ev lent I did pay

but is resentful about having

to pay for it. The yachters

are chasing the money. The

contract seems to have gone

via the AWU so it looks like

this is how it all came out

so the bills delivered to the

AWU, the AWU are saying what

is hell is this and they

fling it on to someone else

and they go, asking

questions. But I don't think,

I think when it comes to did

she get any material benefit

from this, look I think that

this kind of shows that if

she did she didn't want it.

But I don't think she got it

but the most serious stuff is

probably is this work that

she did in '92 and what

transpired in '95. We are

out of time. The important

thing about this really is we

just came off talking about the Craig Thomson matter and

the appalling goings on in

the HSU we now have another

story where Labor's connected

with some really dodgy

practices going on in another

major u