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Monday, 23 February 2009
Page: 1461

Mr GRAY (Parliamentary Secretary for Regional Development and Northern Australia) (7:25 PM) —Uranium mining in Australia was a catalyst for the development of sophisticated environmental management—not just in uranium mining but in all mining activity. Early mining projects in Australia did not consider environmental impacts until after the resource had been mined out, if ever. Australia’s first significant uranium mine—at Rum Jungle—was an example of a mine that operated in this way. Many years after Rum Jungle closed, the Commonwealth funded remedial work to make the site safe and to remove environmental risks. I recall visiting Rum Jungle in the early 1980s when I was living in the Northern Territory.

In the early 1970s the Whitlam government were uranium sceptics. Rex Connor strongly supported mining the metal but viewed the six dollars per pound price as too low, and he stopped contracts being made. Labor’s 1973 platform was strongly in favour of uranium mining. Rex Connor dreamed many dreams. Most were impractical or simply bad public policy—buying back the farm, a national gas pipeline from one end of Australia to the other delivering gas at zero transportation costs. Who knew who was going to pay for the pipeline? Of course, no-one was, could or did. He wanted an Australian government owned uranium mining, milling and enrichment industry. The latter dream actually began to interfere with policy making, with not just the price of uranium becoming an issue, but government ownership of the resource becoming an issue too. I will say more about the Lodge Agreement which unjammed that policy mess later.

Uranium mining led the way to world’s best practice in environmental standards. In 1975, the Whitlam government commissioned the Fox inquiry to look at the best ways to structure uranium mining. The Fox inquiry was Australia’s first example of a thorough environmental impact assessment, although at the time it was not known as that. The inquiry found that the hazards of mining and milling uranium, if those activities were properly regulated and controlled, were not such as to justify a decision not to develop Australia’s uranium mines. The hazards involved in ordinary operations of nuclear power reactors, if those operations were properly regulated and controlled, were not such as to justify a decision not to mine and sell Australian uranium, Fox said. Any development of Australia’s uranium mines, he said, should be strictly regulated and controlled and that no sales of Australian uranium should take place to any country or party that was not a party to the Nuclear Non-Proliferation Treaty. Exports should be subject to the fullest and most effective safeguards agreements and be supported by fully adequate backup agreements applying to the entire civil nuclear industry in the country supplied, and Australia should work towards the adoption of this policy by other suppliers, he said.

The inquiry was the direct and indirect impetus for a number of outcomes. Kakadu National Park was formed as a national park with considerable influence on its development from the inquiry’s findings, the Ranger and Narbalek uranium mines were established, great wealth was created and the position of the Office of the Supervising Scientist was created. The research done by the Supervising Scientist at the Ranger mine defines world’s best practice in environmental monitoring. For example, the Supervising Scientist is a leader in biological monitoring of water quality and an acknowledged leader in environmental management, giving public confidence in uranium mining.

There has been a lot of work done in looking at royalty regimes in the Northern Territory and their impact on Aboriginal communities. This work has been done as long ago as the early 1980s. One of the leaders, Jon Altman, from the Australian National University’s Northern Australia Research Unit published extensively in that area. Mining in the Northern Territory today shows little of the great struggle to establish a mining economy and culture that took place through much of the early part of the last century, but by the middle of the last century mining was not just a minor proportion of the Northern Territory economy; it was a minor proportion and in decline—from a low base and in decline. In 1951 the administration of the Northern Territory came under the auspices of the new Department of Territories. In September of that year the Minister for Territories, Paul Hasluck, convened the first Native Welfare Conference in Canberra. At this conference there was a clear change in government policy from protection and preservation of Aborigines to assimilation. In a statement made on 6 August 1952 the Minister for Territories, Paul Hasluck, summed up this policy:

Policy of assimilation and the measures taken for the education and care of natives mean that less dependence is placed on reserves as an instrument of policy than was placed on them in the days when it was considered that the interests of the natives could only be served by keeping them away from white settlement.

In 1951 the Commonwealth Department of Supply and Development expressed interest in encouraging the mining of bauxite deposits in the Northern Territory. The Commonwealth government took a massive and proactive role in considering both the mineralisations of the Northern Territory and how they might be extracted to the national interest. Of course, in the 1950s the national interest of Australia had a much more militaristic view and a much greater focus on how we preserved our resources for our own national advancement than for trade. The Minister for Territories took the view that the intention of the Commonwealth was that the reserve lands were for the exclusive use and benefit of Aborigines, while no individual property rights were actually created. The effect of the reservation system was to give collective rights to Aborigines living on reserves to exclusive use of that land. Hasluck instructed officers of his department that if mining were to proceed then Aboriginal inhabitants of reserves should receive some monetary compensation for the loss of land that had been set aside for their collective use. That was an insightful position from Paul Hasluck at that time.

Despite the belief that mining development should be beneficial to Aboriginal assimilation, there were two important and complementary innovations introduced in 1952. The first was the proposal that statutory royalties exacted from mineral production on Aboriginal reserves should be earmarked for the collective benefit of Aborigines residing in the Northern Territory. The second proposal was for the establishment of a trust fund into which those royalties could be paid. It seems that the Commonwealth was willing to forgo its right to a royalty from minerals that Australian mining law had determined were the property of the Crown. The fact that royalties were regarded as compensation to Aborigines for the expropriation of minerals from their reserves for the loss of productive lands through resumption or revocation implies that royalties were intended as a form of rent.

Later in 1952 there was a cabinet decision that clearly stated:

Royalties shall be levied on minerals won from mining on aboriginal reserves or from lands resumed therefrom for mining purposes.

It went on to say:

A Trust Fund shall be established into which the royalties will be paid and applied, with the approval of the Minister, for the general benefit of aboriginals as the Minister determines, including the making of grants to Aboriginal institutions.

In that decision you see a deliberate step to create a process whereby mining was both encouraged and enabled but that royalties would be paid, and they would be paid for the benefit of Aboriginal people.

The Uranium Royalty (Northern Territory) Bill 2008 applies a royalty regime to uranium and associated minerals—thorium, specifically—mirroring the existing profits based mineral royalty regime under the Northern Territory’s Mineral Royalty Act 1982 and applying it as a Commonwealth law. This means that royalties on uranium will be consistent with the royalty regime that applies to other minerals in the Northern Territory. The royalty regime would apply equally to products on Aboriginal land, as defined by the Aboriginal Land Rights (Northern Territory) Act 1976, and non-Aboriginal land in the Northern Territory. It would also protect the existing rights on Aboriginal land such that royalty payments made by the mine operator would be passed to the Northern Territory and an equivalent amount would be paid by the Commonwealth into the Aboriginal Benefit Account, which assists Aboriginal people in the Northern Territory. The new royalty regime does not apply to the Ranger mine because it is the only currently operating uranium mine in the Northern Territory and the royalty determination for that mine has been in place since it began operating in the 1980s. Jabiluka would be in the system should it ever be opened. I hope it is opened. I visited Jabiluka in the early 1990s and had a good look around at what was then a surgical mining operation with great potential and great capacity to generate wealth for the benefit not only of the mine operators but also of the people in the surrounding communities.

The Northern Territory Treasury under the new system would administer the royalty regime on the Commonwealth’s behalf to provide consistency with the existing royalty regime for other minerals. Additionally, this royalty regime would obviate any additional administrative complexity for the Northern Territory royalty collection processes, especially for mines that contain a number of different minerals. It should be noted that the actual royalty rate is set by the Northern Territory government and not by the Commonwealth. The regime to be introduced is a profits based royalty regime and is less distorting to investment decisions than an ad valorem royalty, which currently is the case. The NT will also need to enact consequential amendments to relevant Northern Territory legislation such as the Northern Territory Mining Act.

This bill is designed to create an efficient royalty regime and ensure consistency. This reflects the Commonwealth’s desire to streamline regulation, and this bill, which is consistent with existing Northern Territory legislation, is an example of cooperative federalism. The profits based royalty system provides a simple and consistent approach for both business and government. Though less distorting than ad valorem royalties, the profit based royalty is not as efficient or non-distorting as a resource rent tax. A resource rent tax has been applied to petroleum projects in Australia for over 25 years. A resource rent tax is levied on profits over a level defined as ‘adequate’—an ‘adequate’ return from an Australian resource project.

The Rudd government’s tax review, headed by Secretary to the Treasury, Ken Henry, is investigating all aspects of Australia’s taxation system, including how mining companies are taxed. According to an August 2008 Financial Review article that canvassed expert opinion on a resource rent tax:

A resource rent tax is generally viewed as more efficient than a royalty tax because it is responsive to changes in prices and costs and better rewards investment in marginal projects.

In that same article, David Lewis of PricewaterhouseCoopers defined the petroleum resource rents tax as a tax on superprofits and regarded such taxes as being both appropriate and nondistorting. I think that he is right in that assessment, but I doubt that we will ever have a nationally applicable resource rents tax regime—it is simply too hard in a federal structure. But we should aspire to have one.

This bill is also about uranium. The first significant discoveries of uranium in Australia were at Radium Hill in South Australia in 1906, Mt Painter in South Australia in 1910, Rum Jungle, which I mentioned earlier, in the Northern Territory in 1949 and the South Alligator Valley, including Coronation Hill, in the Northern Territory in 1953. In Queensland there was Mary Kathleen in 1954 and Westmoreland in 1956. The Commonwealth Atomic Energy Act 1953 gave the Commonwealth total control over territorial uranium and control over state uranium for defence purposes. An early principal task of the Australian Atomic Commission, which we now know as the Australia Nuclear Science and Technology Organisation, was to locate, mine and supply uranium to Britain and the United States for nuclear weapons production. Rum Jungle in the Northern Territory was the first place in Australia where uranium was produced in quantity and for this purpose.

The Australian Labor Party has had a long history of supporting the development of a uranium mining industry in Australia. One of the earliest mentions of nuclear energy in official Labor history was the foreign policy platform of 1957, which contained the following words:

We urge that nuclear research to hasten the application of atomic power for industrial purposes be encouraged in the development of Australia. Further, we demand the protection and safeguarding of Australia by the retention here of basic raw materials and the necessary manufacturing and industrial processing rights so as to ensure this country’s self-sufficiency in times of emergency or conflict.

The Ranger mine holds a special place in the consideration of uranium mining in Australia and indeed of mining in general. During the 1970s, the Labor government paved the way for the opening of the Ranger uranium mine with the Fox inquiry. Uranium was discovered at Ranger in 1967, operations commenced in 1980 and reached full production a year later. Today, the mine is operated by Energy Resources of Australia, or ERA, a subsidiary of the Rio Tinto group. When Ranger opened in 1981, it produced a rate of approximately 3,300 tonnes per year of uranium-oxide. Shortly after it was opened I had the pleasure of the first of four or five tours of the mine site. It has since been expanded to a capacity of around 5,500 tonnes per year. Sales are to Japan, South Korea—with some controversy from time to time—France, Spain, Sweden, the United Kingdom, Canada and the United States.

Energy Resources of Australia provides 11 per cent of the world’s production of uranium. According to ERA, the company makes royalty payments to the Commonwealth government of 4.25 per cent of its net sales revenue, plus yearly rental of $200,000 for use of the land. The Commonwealth government distributes this money to Northern Territory based Aboriginal groups, including the traditional owners. An additional 1.25 per cent of net sales revenue is paid to the Commonwealth and distributed to the NT government. In 2007, ERA’s royalty expenses totalled $18.3 million, of which $14.1 million was distributed to Northern Territory based Aboriginal groups.

ERA is situated in the Alligator River region and is the dominant contributor to the regional economy. The company employs more than 450 permanent, full-time and fixed-term contract staff, with an annual payroll in 2007, including contracts for services, of more than $80 million per year. At the end of 2008, the number of Indigenous employees was 95, up 46 per cent from the previous year’s figure of 65 employees and double that of 2006. Indigenous employees work in a variety of roles, from trainees to managers and everything in between. The company has a target of having 20 per cent of their workforce Indigenous. They are currently at 18 per cent but hope to get to 20 per cent by the end of this year. In December 2008, ERA was recognised by the Minister for Trade in the Australian Export Awards with a minerals and energy award.

It is important to consider the changes that have taken place in mining royalties and Indigenous benefits in the Northern Territory over the course of the last 50 years—from an initial assumption by Paul Hasluck that royalties would be paid purely to Indigenous people to a situation today where companies actively employ Indigenous people and pay royalties in addition to that. It is a perfect mix, and a mix which comes atop a policy matrix which has created the best environmental management, the best environmental framework and the best science in the world for ensuring that uranium mining can take place in a safe way, a well-regulated manner and to the benefit of local communities and our nation.

Over the course of the years, the Australian Labor Party has, from time to time, taken positions opposed to uranium mining. It has done that, frankly, because our community is deeply and broadly divided on the issue of uranium mining. The first big division took place in the Australian Labor Party in its 1977 conference in Perth when the then deputy leader, Tom Uren, lead the charge to ban uranium mining—and he was successful. The election that followed, which Labor lost, was an election where Labor attempted to make uranium a central issue. That was not unlike the situation, one might think, in September of last year when the then Premier of Western Australia clearly stated that if elected he would oppose uranium mining. He lost the election.

Some might say that the people of Western Australia voted for uranium mining. The harsh reality is this. On election day an insightful public opinion poll was published by Newspoll. There were 1,802 people interviewed. Forty-eight per cent were in favour of a ban on uranium mining and 38 per cent were against a ban. These figures are important, because they bring to mind observations made by the Western Australian mining minister last week. Norman Moore, the Minister for Mines and Petroleum, has warned companies against speaking out publicly on plans to start uranium mining in WA, claiming it would only heighten community fears about the state government’s decision to lift a uranium ban. In his first address to a mining conference since becoming minister, Mr Moore told the RIU Explorers Conference in Fremantle yesterday that they would need to convince the public that mining uranium was safe and environmentally friendly. I believe uranium mining is safe and environmentally friendly, but we do need to continue public education. (Time expired)