Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
The petroleum industry and ecologically sustainable development under a coalition government



Download PDFDownload PDF

"THE PETROLEUM INDUSTRY AND ECOLOGICALLY SUSTAINABLE

DEVELOPMENT UNDER A COALITION GOVERNMENT"

an address by

FRED CHANEY MP

SHADOW MINISTER FOR THE ENVIRONMENT

to the

"APEA IN CANBERRA" SEMINAR

10 October 1991

COMMONWEALTH PARLIAMENTARY LIBRARY MICAH

Mr Chairman, Ladies and Gentlemen.

It is always a pleasure to be asked to participate in an Australian Petroleum Exploration Association conference.

Perhaps distance lends enchantment but I have very happy memories of my dealings with your organisation and indeed you earned a permanent place in my affections.

It was the dedication by APEA the organisation, and many of its member companies, to focus on workable solutions in negotiations with government and Aboriginal people during my time as Minister for Aboriginal Affairs that provided me with very good memories.

Now, with my environmental responsibilities, I don't hesitate to say that I think APEA has maintained its high standards with respect to its approach to environmental matters.

Last year the South Australian Minister for the Environment, Susan Lenahan, at this seminar praised your field guide publications. Let me add my endorsement for that sort of practical and invaluable guide to those whose main jobs

involve finding and recovering the resource that they must act at all times in a sensible and sensitive way with respect to the environment.

Maintaining your own high environmental standards is a key part of achieving the goal of sustainable development.

Just as industry associations and individual companies must come to terms with acting in an environmentally-responsible way so must governments, and Oppositions, decide how best to establish the legislative and other framework within which

they should operate.

That brings me to the subject you've given me today, the petroleum industry and ecologically sustainable development under a Coalition government.

Last week I spoke at a conference here in Canberra which focussed on the Government's Ecologically Sustainable Development (BSD) process. I said then that while we had been generally supportive of the BSD process, it was beginning to resemble a football match with no boundary lines, no goal posts, the participants able to kick in any direction at will and with an umpire who appeared to have swallowed the whistle.

I want to make it clear at the outset today that my increasing level of concern about the likely medium term outcome of the process - for which I blame the Government's failure to lay

down clear environmental and economic objectives to guide the process - in no way detracts from the Opposition's strong support for the concept of sustainable development.

2

The notion that we have a responsibility to our children and their children to ensure as best we can that they are able to enjoy at least the same quality of life and standard of living as we have has been central to our approach for years and remains as firm as ever.

Whether you call that a belief in sustainable development, a term that was quite satisfactory as far as the United Nations Brundtland Commission was concerned in 1987, or ecologically sustainable development, as the conservation movement and the Government prefers, or even "economically, socially and ecologically sustainable development" as your former Executive Director, Keith Orchison, suggested last year, is not, as far as I am concerned, of central importance.

But because some people tend to get into a bit of a lather over nomenclature let me indicate a personal preference for the shorter and simpler version of "sustainable development" because, for me, that encompasses all the concerns that others

seek to address by the addition of extra words.

As a group who are sometimes subject to undue pressure from some elements of the environment movement - as occurred with Greenpeace in the Victorian offshore areas - it is worth acknowledging that much has been achieved by the environment movement that has been worthwhile. The activism of the 70s

and 80s led to the notion of much greater care and attention for environmental issues becoming a high profile public and political concern during those decades. Many of the "old" ways of doing things did not pay sufficient attention to

environmental factors and without the efforts of the people to whom I have referred we would be confronting much more serious problems than we now do.

But I am quite sure, however, that with due care and attention we can move on from here to provide Australians with the kind of environmental and economic futures most of them would want.

There are grounds for optimism about the future.

I was interested to note that in the Draft Report of the BSD Energy Production Working Group, in a reference to the pessimistic Club of Rome forecasts. It said:

"... the concern commonly argued in the 1970s by the Club of Rome among others, that we might be running out of energy and other resources, has changed. Now the worries about the continuing growth in our use of fossil based energy resources relates much more to the damage that their extraction, processing and use impose on the global environment."

This is a truly significant change. While not for a moment suggesting that we should be profligate with our resource use, it is a timely reminder that doomsday prophecies about supply have been somewhat overtaken by concerns about how to deal

3

with the anticipated growth in energy use, particularly in the developing countries, consistent with the long term wealth of the world's environment.

Many, though, still see doom, albeit a different doom, on the horizon.

I've spent some time this week with one of the great warners of this last quarter century, Paul Ehrlich, a man· whose face and stated certainties about the future became well known to Australians in the 1960s and 1970s.

Professor Ehrlich remains challengingly unrepentant and is one of many who will continue to ensure the public remain alive to environmental risks. I raised in our discussion declining commodity prices which sits oddly with warnings of impending

scarcity.

I was interested to come across an article from the New York Times magazine in December 1990 that told of a bet he had with an American economist named Julian Simon. The magazine told the story of the wager between what it described as "the boomster and the doomster" over what would happen to the prices of five metals, in inflation-adjusted terms, between

1980 and 1990.

Simon's thesis was that if world resources became scarcer because of population growth , their price should rise. He offered a wager against that proposition related to what would actually happen with respect to any natural resource over any

time span.

The subsequent bet was based on the prices of chrome, nickel, copper, tin and tungsten and covered a period when global population increased by 800 million. When Ehrlich and his associates paid up, the price of all five metals they had

chosen had declined in price and Simon would have just won overall even without the inflation adjustment.

In reporting that fascinating exchange I do not seek, nor would I accept, the description of "boomster".

I regard the projected doubling of world population within perhaps the next 40 or 50 years as driving the inevitable environmental challenge facing the international community.

To feed, clothe and to provide shelter, education and employment for those extra five billion people is going to require a huge lift in production of goods and services. Of special relevance to you is the inevitable increase in demand

for energy. The challenge is how that will be done without devastating the global environment.

In Australia,the critically important position of your industry sector is indisputable.

4

In a perceptive analysis of the strengths and weaknesses of the Australian economy in a paper for the Business Council of Australia, Mr M W But1in concluded that "by far the most likely means that will resolve the debt problem is through more efficient and diversified exploitation of our natural

resources". In musing about how nice it would be for Australia to have a success on the scale of Apple corporation's contribution to the US economy which if adjusted

to the size of the Australian economy would be equivalent to annual export receipts of around $200 million, he said:

"But to set this example in context, we already have a major project - twenty years in the planning - that will provide ten times that benefit (relative to the size of the economy) when it is fully functional. It is the North West Shelf gas project - a resource-based

activity."

In a similar vein, the draft BSD report I quoted earlier says:

"Until such time as Australia can broaden its economic base, the economy and its export performance will remain heavily dependent upon commodity exports. The process of broadening the export base, however, may itself increase energy intensity in resource processing."

It is the clear view of the Opposition, therefore, that resource exploration and exploitation to satisfy domestic and export energy demands will remain central to Australia's economic well being long after most of us in this room have ceased to take much of an interest in the debate. To appreciate the need for ongoing exploration and new discoveries one only has to recall an Australian Institute of Petroleum estimate that by 1999 the cost of petroleum imports

is likely to be about $5.6 billion.

As I and other Opposition spokesmen have made clear on many occasions, continuing resource development, including energy resources, have the support of the Opposition as a key part of our economic future.

The challenge is how to do this without jeopardising our environmental well being or, as the Draft Report puts it:

"A principal goal underlying sustainable energy production must be to assist in meeting community aspirations for improvements in material and non-material well being (or quality of life) not only for this

generation but for future generations."

Given the much greater prospectivity of offshore Australia much of your industry's interest will obviously lie in our approach to activity in this area.

You will appreciate that the Leader of the National Party and Shadow Minister for Resources and Energy, Tim Fischer, has

5

responsibility for the policy most directly bearing on your industry. It is not appropriate for me to trespass too far into his area but I confirm our very positive views about the importance of your industry to Australia's future.

One of the main concerns that comes through from the Draft BSD report, and indeed one of my top priorities as environment spokesman, is the question of preservation of biological

diversity. In other words, how do we best preserve and protect those species of plants and animals which constitute the web of life in which humankind exists?

One of the great difficulties is a lack of information about exactly what is there to preserve.

The Energy Production BSD Draft acknowledges that, with respect to marine areas particularly:

"The lack of detailed biological and other environmental information at present is a major cause of uncertainty in decision making"

This audience would be interested to note that the report goes on to mention that much of what is known with respect to biodiversity "has been acquired by the energy production industry itself, either in support of its development plans

and or monitoring programs"I

In terms of the attitude of a Coalition government to the concept of sustainable development I want to go back to my earlier reference to Keith Orchison's speech.

He said then, and I agree, that a precise, generally agreed definition was not a priority.

As far as we are concerned, sustainability means the achievement of maximum usage consistent with ongoing environmental and economic viability.

This broad approach enables us to embrace the concept of a multiple land use model, support for which is made clear in our current Resources and Energy policy document.

One of the major causes of concern, of course, for your industry is the question of access.

Onshore or offshore, you need much greater certainty about where you can do things and what you can do in those places.

Likewise, environmentalists are confused by the unpredictability of government decision making in this area.

This issue is important in terms of biodiversity.

One of our priorities on assuming office will be to put in place an environmental assessment and approval process which

6

will not short-change environmental concerns but which, once satisfied, will be honoured by the Commonwealth government.

I note the South Australian decision some years ago to introduce a new category of Regional Reserve to its national parks system which provides both for species preservation and utilisation of natural resources. While that system is opposed

by conservationists as a model for other parts of the country, it does appear to have been successful in that State.

Land use decisions are, and always will be, difficult.

From the point of view of your industry, the approach to sustainable development under a Coalition government will be pursued within some clear policy objectives.

The three main principles are:

1 Areas of special environmental value (the Great Barrier Reef is the most obvious example) will be given absolute protection. This is an exception to the general rule in favour of multiple use, although, of course, the Reef example operates in a multiple use sense as far as tourism is concerned.

2 There will be ongoing work to identify areas of special value in terms of their significance as repositories of biological diversity or because they are part of significant ecological systems. As mentioned earlier, we

suffer from a serious lack of information in this area.

3 An acceptance of the fact that the position is not totally predictable because of incomplete knowledge.

The Energy Production BSD Working Group draft report is useful in that it brings out the complexity of the issues faced in determining policy in this area. Like many of the other drafts, however, it gives rise to the risk that we will become enveloped in endless analysis and never reach a point of ultimate clarity.

That endless analysis will produce endless words. The question is, will it produce results?

Quite honestly I don't think that most of this discussion comes to grips with the real difficulties you face - the unpredictable political element of decision making.

Over the first day of this conference you have had soothing words from the Government, its bureaucracy and the Opposition. The general statements of support for your objectives are bi­

partisan.

And neither side is saying you can remove the reality of difficult choices in future.

7

Both sides can promise to improve - simplify the cumbersome overlapping web of government requirements - and the Opposition believes that can certainly be improved upon.

But when you add to the real and unavoidable difficulties that you and government must deal with an overlay of decision making based on perceived electoral advantage or ideological compromise you raise the reality of sovereign risk.

The total illogicality of the Government's position on uranium is one example of a senseless outcome based on ideologically and politically dominated compromise.

The failure so far to achieve greater value adding to our wood chip resources - notwithstanding clear and encouraging statements from the Prime Minister and Senator Button since 1987 is another example of policy failure.

The "totemic" Coronation Hill decision is too recent in memory to need analysis here. But it is a sharp example of how another layer of examination - the RAC - did not override the

politics of the situation.

I don't care what is said to you by Mr Crean or Mr Griffiths, there is no way they can wipe out the history of decision making which has destroyed trust in the process of the government.

That legacy of mistrust is not restricted to your industry. The see-saw of the Resource Security proposal for the timber industry with bickering ministers and departments is a current

example of a key industry/environment debate where politics weighs more than substance. Both industry and environmentalists have expressed their dissatisfaction.

It will be our signal contribution to sustainable development to restore trust by making decisions based on concern for the facts. My experience with your industry suggests that won't pose problems for you, you deal with facts well.

We will in concert with other interested parties in the community go on dealing with the sorts of issues canvassed in the BSD documents. For example, some interesting options for marine area planning are canvassed. The draft suggests that

areas might be categorised in relation to their ecological significance with access determined according to environmental sensitivity. It also considers the creation of large multiple-

use management areas with zoning to permit activities such as petroleum exploration and development. This fits in with the Opposition policy commitment to multi-use where that does not sacrifice essential values.

Let me conclude by saying that the best way to predict and react to how any government is likely to behave is to look at what drives that government.

8

The Hewson-Fischer government will be guided by some very fundamental economic and environmental concerns.

On the economic side it will be committed to making Australia more productive by changes to the labour market, to our transport system and to the balance between public and private

ownership. It will do these things because that is the only way to reduce our crippling national debt and provide real hope of a long term revival in employment prospects for the million-plus Australians now out of work.

As far as your industry is concerned, recognising the vital importance of increasing oil and gas supplies for both domestic use and as export commodities, it will give priority to delineating the resource and its exploitation using best available technology to minimise the impact of both exploration and production.

This will be done against a framework of environmental priorities that emphasises preservation of biological diversity and ecological systems and preserving the amenity of areas for recreation and tourism purposes.

As far as the marine environment is concerned, we are committed to negotiating with the States to secure a National Strategy on Coastal Management to be implemented co­ operatively.

On taking office we will review the progress and effectiveness of the present Government's marine conservation program, Ocean 2000, announced almost a year ago but for which first funding has only just been provided in the 1991-92 Budget.

I have no doubt that the next government will be able to work cooperatively with your organisation.

I have few difficulties with the plea for bipartisan action contained in your publication Land Use and Environmental Protection in Australia published last year.

We would endorse the first three points about trade and economic development, the need for an environment policy that embraces the key elements of the National Conservation Strategy for Australia and for the adoption, wherever practicable , of the principle of multiple and sequential land use.

We would part company on the final point about the use of the Resource Assessment Commission or a similar mechanism to arbitrate in environment-development issues. I have previously announced our decision to abolish the RAC because we consider

it an unnecessary addition to the already over-layered decision making process. Sadly the Government proved very early in its life that analysis does not provide a substitute for principled decision making.

9

I thank your industry for its contribution to the BSD process. I thank you even more for your contribution by your actions to an image of industry which is positive and constructive and protective of values including environmental values which are important to the Australian community. I look forward to working with you again.