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Transcript of interview with Fran Kelly: ABC Radio National Breakfast : 2 November 2011: Minerals Resource Rent Tax, coal seam gas, Qantas dispute



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Minister for Resources and Energy, Minister for Tourism

ABC Radio National Breakfast Interview with Fran Kelly 02 November 2011

E & OE

Subjects: Minerals Resource Rent Tax, coal seam gas, Qantas dispute

FRAN: As we mentioned today the Federal Government will introduce its mining tax legislation into the parliament. The nine related bills will apply a 30 per cent tax to the super profits made by iron ore and coal projects. Resources Minister, Martin Ferguson, has been their leading player in this drawn out tax debate. He’s in our Parliament House studio. Minister, good morning.

FERGUSON: Good morning Fran.

FRAN: You need four of the six crossbenchers to get these bills through the lower house. Will you get their votes?

FERGUSON: The Treasurer is involved in detailed discussions, I’m not going to go into the detail of those discussions publicly, but these issues are capable of being worked through. But the key issue is the Minerals Resource Rent Tax, in association with the changes to the Petroleum Resource Rent Tax. This change is long overdue. We’ve got huge increases in commodity prices at the moment, record profits. Just in terms of our earnings from the export of these commodities, they jumped 27 per cent last year to $175 billion, and they’re going to continue to grow, and we will share the benefits of these taxation outcomes with the broader Australian community, which is also long overdue.

FRAN: You seem to be on firm ground with the Australian community if the internal polling, leaked today, internal Labor Party polling, leaked today, is anything to go by. Over 60 per cent think they’re not getting their fair share of the mining boom. Generally, I think the Independents are on board with that kind of sentiment, but Tony Windsor has told us he wants action on coal seam gas mining before he’ll sign up, Andrew Wilkie has concerns about the scope and treatment of small miners. Do you feel like you’re being held to ransom here, and will you pay up?

FERGUSON: Well it’s the nature of the Parliament at the moment. It’s an unfortunate situation. We have to deal with the cards that were dealt to us at the last election, but let’s go to some of those issues. When, yes, you go through the detail of this tax, you’ll see that in terms of the small miners we’ve gone out of our way, for example, in magnetite to effectively provide them the opportunity to pay little or no tax, because at the taxing point magnetite the dirt is of very little value. The value is the downstream processing that occurs. Similarly I might say the tax-free thresholds. You know this is a complex piece of tax legislation. It effectively puts in place the recommendations of the Argus-Ferguson report - detailed consultations with industry. And I think it’s now accepted broadly in the mining industry, and there’ll be a few exceptions, that

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the tax is appropriate. If anything, I might say from the mining companies’ point of view - they’ve got huge profits - it’s their best defence about continuing to invest in Australia and to get the benefits of the commodity prices available. It’s our responsibility as the Government to actually lead and take these tough decisions. I think sentiment in the broader community is with us. They see the annual reports and the 6 monthly reports of these mining companies, they look at the profits and they scratch their head and think well where’s our share? I’m in tourism, why shouldn’t I get a share, for example, with a cut in company taxation.

FRAN: Sure, on that level it’s clear. But let’s look at Tony Windsor’s demands. We heard from him this morning, he met with the Prime Minister yesterday. His demands are clear and absolute. He says he wants several hundred million dollars every year from the mining tax revenue to fund, basically, environmental assessments of the impact of coal seam gas mining, and he wants mining exploration licences for coal seam gas halted until that science is in. What’s your response to that?

FERGUSON: Well firstly, we don’t have any control over the mining exploration licences, they are totally the responsibility of state and territory governments. But I think we’ve also got to deal with a few facts. The Commonwealth Government, in terms of this industry, through the Murray Darling processes and the Environmental Protection and Biodiversity Conservation Act, is the lead regulator that has put very rigorous conditions in place with respect to the issue of water. I’m currently involved in discussions through my department about extending those conditions by agreement across all state and territory boundaries because that’s appropriate. This is about trying to ensure that whilst it’s a state responsibility, just as coal mining is, iron ore mining is, uranium mining, copper, lead etc. We want to try and get a common approach to best practice federally through discussion and engagement with state and territory governments, not

only on the use of water, but also which chemicals can and can not be used for example, how we better engage with the rural community. But people have got to understand that this is not a new industry. 30 per cent of Australia’s east coast gas currently comes from coal seam mining activities. And for example, in Brisbane 90 per cent of our gas comes. What’s happened, we’ve got a huge growth in industry over a very short period, there’s a lot of misunderstandings out there about what is occurring, and one way or another we’ve got to try and work out, in a scientific way, how we bed down this, because this is of major long term benefit to Australia.

FRAN: But…

If people want action on climate change, then gas is clean energy, it is about the transition to a low emissions economy.

FRAN: Well Tony Windsor, again this morning, was not too impressed with the government keep restating this is state issues. Let’s just hear his comment this morning.

AUDIO: WINDSOR: There’s too much of this passing of Martin Ferguson saying it’s a state issue, it’s a state issue. Occasionally the Commonwealth does get involved and what I’m saying is we need to establish two processes; one where the Commonwealth can be involved if there’s a trigger mechanism; and two that part of the funding goes toward getting some science right before we start allocating bits of paper, well the states do, and getting some cash for those bits of paper. All the angst and concern could be removed.

FRAN: That’s Tony Windsor this morning. He’s right isn’t he? You can get involved as you said through the Environmental and Biodiversity Act, to name one Act?

FERGUSON: That’s what we’ve actually done in terms of the Murray Darling region, and I’m now working with the states. I think we’ll get a common outcome about those rigorous conditions, with respect to the use of water, across state and territory boundaries. I’ve got a Ministerial Council on the 9th of December in Melbourne, where we’ll talk about where we’re up to and what’s got to be done. But can I also say, that in terms of scientific outcomes, then you’ve got to be prepared to accept the outcomes. About eighteen months ago I went up to the Liverpool Plains area with Tony Windsor. We committed $1.5 million to a Namoi water study. People then said they were prepared to accept the outcome of those studies, both

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from a company and a rural point of view. We’re doing work in Geoscience Australia, another $5 million in terms of proper assessment of water issues…

FRAN: Yes, but Martin Ferguson, since then Santos has already moved in and started moving on some of the places where he thought there was this rider in place about it being a particularly fragile element of the water, of the basin.

FERGUSON: Let’s get the facts right about what Santos is doing. This is a small pilot appraisal point, actually going to a proper assessment of the water table and aquifers. This is not the commencement of coal seam methane activities by Santos with respect to this site. I might also say they thought they’d chosen a site to do this test drilling going to the proper assessment from a scientific point of view of water issues in an area to avoid confrontation. We also have a section of this community who is just totally opposed to economic development. People have to understand $45 billion in Queensland, huge job opportunities, apprenticeships and I might say, export earnings. This mining tax is about spreading those benefits to the broader community, including I might say to the agricultural community. People shouldn’t forget this very region, the Liverpool Plains currently benefits from coal seam methane gas in terms of their normal activities both as farmers and I might say, with respect to their households.

FRAN: Minister, the vote is going to be tight when it comes if you count each individual Independent, and each of them seems to have their own issue with this. Meanwhile the Liberal MP, Mal Washer has indicated he might be prepared to support your legislation. Have you been speaking with Mal Washer?

FERGUSON: Look, Mal will make his own assessment. He clearly has said publicly he thinks that the broader community, and he’s a Western Australian, should get the benefit of these record commodity prices and profits. I’ll let Mal speak for himself and his own party room in the house, as a matter of course.

FRAN: Minister, can I just ask you about the Qantas dispute. Now you are the Tourism Minister as well as the Resources Minister. The cost to the industry of the Qantas shutdown was put at around $250 million. What’s the long term damage to Australia’s reputation do you think, as a tourism destination? Is there one?

FERGUSON: Firstly, as the Minister for Tourism, I’m delighted it’s all over. We’ve got the breathing space with huge pressure on all the parties to sort out their differences, if not then Fair Work Australia will make the appropriate decisions. The most important outcome for the tourism industry, after months of a guerrilla war, we’ve currently got certainty, people can now start planning their holidays, trying to get more people from overseas to prop up the Australian industry that’s doing it very tough because of the strength of the dollar at the moment. I just want to get on with life. This has been an ugly dispute, over not just the 24 hours of last Saturday, but also over many months. It’s done damage to the tourism industry. I think the responsibility on everyone now is just to move on, get an appropriate outcome, and continue with the certainty we’ve got at the moment and try and help this industry. Just think about the last twelve months. You’ve had the floods of Queensland, Cyclone Yasi, Fukushima in Japan, the Christchurch earthquakes. What more does this industry have to suffer? We can not have any more damage imposed by our own short term stupidity.

FRAN: Just a couple of weeks ago you raised, in fact you were the first Minister to raise the spectre of Government intervention if the parties didn’t sort it out. Would you have liked to see the PM leap in more quickly on Saturday afternoon and take charge of this dispute, trigger the Ministerial powers and the Act to force a stop to industrial action?

FERGUSON: My comments at the time related to, I suppose, a lack of understanding about the Fair Work Act in the tourism industry at the moment. They were calling for changes to the Act to enable Government to intervene. I clearly indicated the capacity was there. The issue really was at what point were you able to argue successfully within the industrial commission that in the national interest people should be required to terminate industrial action. Either sit down and negotiate an outcome or Fair Work Australia determine through arbitration the appropriate outcome. At that point we had a guerrilla war, in essence a cat and mouse game. Every time you looked as if you might end up with a situation of triggering that national

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interest test the unions would pull back, they take off the bans and things would settle down. That’s why we had months of damage to the tourism industry. Finally last Saturday it got to a point and the Government was very decisive. The Prime Minister said we have had enough, we’re now going to put it in the industrial commission, which occurred on Saturday evening, and we got the notification just after 2 o’clock on Saturday afternoon. We argued for termination, my department did detailed work to prove the national interest test because of the significant damage to the tourism industry. That was established on Saturday evening. The debate was then about whether we suspended industrial action or terminate it. I think the industrial commission got it right and backed the Government. We’ve now got a situation where the parties have got to show a bit of maturity and sort it out, because if they are incapable of doing it, and I told them this back some weeks ago, then the industrial commission will do it.

FRAN: And the unions are worried that this sets a precedent, that if you’re a big corporation then you can just lock your workers out and get arbitration, if you’re a worker you can’t.

FERGUSON: Well I think, from a union perspective, they did take a considerable amount of industrial action, but they’re also playing a cat and mouse game. Every time it looked as if we might be in a difficult situation, with the tourism industry at a crisis situation, they pulled back. Having done detailed damage to Qantas but also more importantly our international brand name as a tourism destination, and we need tourists because just under a million Australians are employed and directly employed in this industry, in essence they pull back, the national interest opportunities would disappear, then we’d end up a couple of weeks later with further problems. But look, let’s put it all behind us.

FRAN: OK.

FERGUSON: We’ve now got some peace in the industry, a capacity to get on with our job, pressure on the parties to show some maturity, and as Tourism Minister and with the work of Tourism Australia and all state and territory tourism organisations, our job is to assist this industry to try and encourage Australians to have a holiday, preferably here at home, but also to concentrate on our growth markets. And Asia is our growth market, be it on resource and energy commodities, or I might say, tourism. We’ve got growth of 10 per cent per year on tourism out of China, that is a huge opportunity for Australia, but we need certainty.

FRAN: Martin Ferguson, thank you very much for joining us.

FERGUSON: Thank you.

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