Stand and deliver

In my working career I had a long engagement with the twin issues of relationships between the federal government and Australia’s other jurisdictions and between States themselves, both through gigs in manufacturing (way back in the 1970s) and energy (from 1980 to 2007, mostly through industry associations but also through chairing the energy committee of the Critical Infrastructure Advisory Council). Apart from the sterling work done to establish the NEM, this experience has not provided me with huge confidence in the commitment of politicians to co-operative federalism.

As Paul Keating said, and he was quoting his mentor, Jack Lang, in the race of life always back self interest – you can be sure it is trying. This is demonstrated time and again in energy policymaking and especially in the past decade.

The Keating/Lang quote has popped back in to mind in observing the stirrings from the West over the prospect of an intercontinental pipeline being pursued to bring gas to the beleaguered south-east coast, a thought bubble initially floated by defeated WA Premier Colin Barnett and seized on by Malcolm Turnbull and others of his ministers, increasingly desperate to find a way out of the maze of trouble that is the south-eastern gas market (a problem on which I have helped focus over the past five years through the Quest Events Australian Domestic Gas Outlook annual conference – and one where the writing was on the wall from the get-go).

If the federal cabinet thought that a $3 billion to $5 billion pipeline was a get-out-of-jail card for the mess in to which south-eastern State and Northern Territory politicians have dragged the national government, it can now think again.

If they want to take our gas because of policy failures in the East, says new West Australian Premier Mark McGowan, they (ie the federal government) will have to provide a better deal on the goods and services tax (a major irritant for WA policymakers of all stripes and their community for years and years).

And further, declares his Mines Minister, Bill Johnston, if they want our gas in the East, the federal government is going to have to come up with a reservation policy (like Labor introduced in WA when it was last in office). “Let’s understand what would happen (without reservation),” says Johnston. “They’d export our gas from the east coast.”

Former WA Treasurer and now opposition leader, Mike Nahan, is no less trenchant. “We should not focus on exporting our gas to the East but (on) importing jobs and investment to the West,” he says, a slap for Barnett, who has not retired but is still sitting on the Liberal Party backbench.

Being in the position of all care and no responsibility these days, I’m quite looking forward to trekking across the Nullabor in mid-May to observe the next instalment of all this at first hand during the Australian Petroleum Production & Exploration Association annual conference in Perth, billed by the association as a forum for taking a hard look at the issues (of which the east coast imbroglio is but one) in hard times.

It’s a great deal more fun being on the sidelines observing the stress and strain than in the middle as manager of the industry association (a role I held for almost 11 years, mostly in the 1980s) and it is interesting to see how many issues keep coming back to the fore in different guises (like the debate today over the petroleum resource rent tax, initiated in the 1980s by Keating, Bob Hawke and Peter Walsh, and one of the biggest matters with which I got to wrestle on behalf of APPEA members during my time there).

With a dozen keynote addresses, including one by McGowan, and some 90 other presentations, the 2,000 or so attendees expected at the 2017 APPEA conference will be exposed to one of the best opportunities around to be better informed on the challenges energy stakeholders (oil and gas professionals, analysts, politicians, bureaucrats and service and skills providers) face in a time of rapid change and turbulence.

The value of the industry to the economy and to international investors is vibrantly illustrated by the conference’s exhibition – this year featuring 135 exhibitors from two dozen countries occupying 9,000 square metres of the cavernous Perth Convention Centre. In terms of gathering information (“networking” in the jargon), the APPEA exhibition aisles have few peers.

The other illustration of the event’s importance is the way journalists flock to it each year. There have been occasions in recent years when 40 to 50 of them have been on hand for four days – and media news directors don’t let that happen lightly in these straitened times.

My heading on this TiP – “Stand and deliver” – was chosen with the WA Government’s hardline retort to Canberra in mind, but it applies equally to APPEA and its members with respect to the conference. As APPEA chairman Bruce Lake says in the event’s program (which is on the association website) “at times like this (the conference) becomes more important than ever – (this) is our strongest platform for conveying our key messages to politicians, our supplier partners and the media.”

One of those messages this year will need to be, I think, a stronger emphasis on how the recent florid campaign about the alleged failings of the PRRT, arguing for new tax imposts on the industry, just ignores the fact that in 2014-15, despite recording a net loss of $600 million amid the wreckage created by the global oil price collapse, APPEA’s members coughed up $5 billion in various tax payments to the nation’s governments.

The community at large just doesn’t know this. Nor do they get that imposing still higher burdens on oil and gas investors in Australia is no way to help them get reliable and more affordable energy.

In an environment where so much of what drives political decision-making is public opinion, this is not a minor point.

Meanwhile, the West’s pollies know a good card when it is handed to them: if Turnbull & Co want the WA’s gas resources to flow east they will need more than “nation-building” rhetoric – and that’s before the work has been done to establish if the pipeline concept is even commercially viable (not least for the deeply worried manufacturers for whom it is being offered as a lifeline).

As pipeline major APA Group has been saying in recent days, the idea faces “massive logistical and economic hurdles” – and this was before McGowan & Co made the stakes a bit higher.

FOOTNOTE: I wrote this post before waking up on Thursday to news that the Turnbull government proposes to introduce regulations to limit gas exports from the east coast (to quote today’s Australian Financial Review, “if they are emptying domestic reserves to meet overseas contracts.”) This just adds more bite to my “Stand and deliver” headline — and to the timeliness of next month’s APPEA conference in the energy debate. We do indeed live in interesting times.

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