Deepwater Horizon event

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The Deepwater Horizon burns after the explosion. Photo: US Coast Guard

The Gulf of Mexico oil rig Deepwater Horizon was either a triumph of 21st century human engineering or one of the worst excesses of global capitalism, take your pick. For 13 years the South Korean-built monster rig plied ocean waters finding hard-to-reach oil 10,000m deep in the Gulf of Mexico until its life was ended, as was 11 people aboard, in a spectacular explosion on April 20, 2013. There followed the largest oil spill ever over 87 days until the well was finally capped.

The Hollywood film Deepwater Horizon barely taps at the surface of many of the issues but as disasters action films go, it shines a rare light on corporate excess. The movie partially focuses on the death by a thousand cuts in the lead-up and ignores the destructive aftermath to concentrate on the human element of the disaster on the day, but to that end it does a fine job.

Deepwater Horizon, the rig, had a complicated history the film alludes to in its corporate colour-coded cast. Swiss company Transocean owned the rig and flew it under the Marshall Islands flag of convenience. Almost half the world’s fleet is registered in three countries – Marshall Is, Liberia and Panama – none of which has a large maritime fleet. The flag of convenience is globalism writ large, offering economic and regulatory advantages, and increased freedom in choosing employees from an international labour pool but also anonymity, tax advantages and immunity from prosecution.

The rig had worked in the Gulf of Mexico all its life. In early 2013 the rig was in the Macondo Prospect 40km off Louisiana, a field whose exploration rights were owned by a three-company conglomerate. The majority shareholder (65%) was British multinational oil giant BP. Texan oil company Anadarko owned another quarter, with the remaining 10% with the Japanese keiretsu Mitsui. Transocean and all three field owners would suffer big financial penalties after the event but well-known BP carried the most reputational damage.

Deepwater Horizon’s primary asset was its ability to explore for oil at deeper levels than any other rig in the world. It had a great success rate in finding oil wells and was finishing off at Macondo at the time of the accident. It was considered a “lucky” rig and had a fine safety record. But as the GFC began to bite and the oil price dived, the owners and operators were looking to make cost savings whereever they could. Inevitably, maintenance suffered as the company culture changed. BP was investigated for having a “worse health, environment and safety record than many other major oil companies.”

The problem was exacerbated by a administrative conflict of interest. The US government makes big money from Gulf wells through selling off the exploration rights licences in auctions held by the Minerals Management Service. However that same Minerals Management Service was also in charge of the regulation and inspection of the oil rig. The pro-business George W Bush administration was keen to remove “red tape” from commercial enterprises. But some of that tape was holding things together. According to an Associated Press investigation MMS’s examination was performed with a lack of detail, lax regulations and poor record keeping. During its lifetime, Deepwater Horizon had six citations of non-compliance, five relating to safety and the sixth to electrical equipment.

The safety event covered in the film was the failure to test cement at the well.  The investigation found this would have cost $128,000 and taken 12 hours. BP and Transocean blamed each other for the lack of safety checks and misinterpreting the results of the checks that were performed. Neither admitted cost cutting caused the accident. BP issued a terse statement after the movie’s release to say it was not an accurate portrayal of events and it ignored “multiple errors made by a number of companies”.

Accurate or not, the film’s portrayal of the explosion was spectacular on screen. The proximate cause was a problem with the blowout preventer. Some of the 126 workers on board later testified the electric lights flickered, followed by two strong vibrations. A blowout occurred – a bubble of methane gas escaped from the well and shot up the drill column, expanding quickly as it burst through seals and barriers before exploding.  The explosion caused an uncontrollable fire and after 24 hours, the rig sank. The nearby Tidewater-owned supply boat took 94 workers to safety. Four more made it to another vessel and 17 were rescued by helicopter. Those that died were mostly on the platform floor at the time of incident. The film Deepwater Horizon is dedicated to those 11.

The tragedy did not end there. It took almost three months to cap the oil spill and almost five million barrels of oil spilled into the Gulf of Mexico. There was extensive damage to marine and wildlife habitats in one of the most productive ocean ecosystems of the world. Oil and compounds entered the food chain leading to fish with oozing sores and lesions and pelican eggs with petroleum compounds. Several species were critically endangered and there was a sharp increase in dolphin deaths. There were also human physical and mental health consequences to those living near the Louisiana and Florida Gulf coasts.

In July 2015 BP agreed to pay a fine of $18.7 billion to the US government and five states, the largest in US corporate history. The size of the fine shows that although the regulator was compromised (and eventually split up by the Obama administration), the US court system remains a strong bulwark agains unfettered capitalism. Imagine how little BP would have paid had the accident happened in, say, Mexican waters. The company remains bullish. BP recorded a loss in September 2016 of $1.5b but the net loss includes a $5.5 billion loss for settlement in the gulf of Mexico oil spill, leaving the adjusted net income to be around $1.5 billion in profit. Its dividend is still safe.

Deepwater Horizon, the rig, was a force of nature, that ultimately was unnatural. Deepwater Horizon, the event, was a tragedy with many deep repercussions. Deepwater Horizon, the Hollywood movie plays on that tragedy for emotional reaction. BP might well say that the movie did “not reflect who we are today, the lengths we’ve gone to restore the Gulf, the work we’ve done to become safer, and the trust we’ve earned back around the world”. But the movie forces people to think about chain reactions and human agency in corporate decisions. That’s no bad thing and it deserves a wide audience.

 

 

 

Australia: a country in desperate need of a climate change policy

Before someone puts Tony Abbott out of our misery, the Liberal Party should take a long moment to think about climate change and what its next leader should do about it. It is a process it needs to complete by December because its government will be representing Australia at the Paris Climate Change conference. That conference has the goal of containing “climate disruption” within a two degree upper limit and the adoption of an international agreement to move the world towards a low-carbon economy by 2020. Australia hasn’t the slightest hope of meeting any such commitment based on its current policies.

The working document for this conference is the Intergovernmental Panel on Climate Change’s 2014 Synthesis Report (or whatever will supersede it this year).The climate change science in this report is telling us we are in bad shape. Each of the last three decades has been warmer than any decade since the 1850s. The last 30 years are likely to be the warmest 30 years of the last 1400 years. The upper ocean temperature is warming and ocean acidification has increased by a quarter in the industrial era. Arctic sea ice is decreasingly by 4% a decade and the sea level rose 0.2% in the 20th century. This has resulted in large increases in carbon dioxide, methane and nitrous oxide, particularly in the last 40 years.

The future the report is predicting is more rising sea levels, more greenhouse gases in the atmosphere and more extreme weather events including cyclones, droughts and floods across the world. This is a dire scenario and if inter-generational theft means anything at all, then surely this is it. What then, is the government of Australia doing about it?

It’s actually hard to tell it is doing anything at all. While it is unsurprising to note Tony Abbott hasn’t mentioned climate change in a speech in over three months, it’s more surprising to note a search of the Liberal Party policies page has no official policy on climate change. That is, unless you think scrapping the carbon price, removing government oversight mechanisms, building highways and tunnels, and supporting the coal industry amount to addressing climate disruption.

The closest thing the Liberals have to an official environment policy is a $2 billion green army aimed at heritage and agriculture protection as much as the environment. The Green Army is a John Howard-style militia inspired by the motherhood vision for Australia where “individually and collectively, we can more often be our best selves” so they can “do the right things by those around them.” This army lacks the artillery to deal with bigger environmental problems especially in two industries Australia is vulnerable in: manufacturing and mining.

Then there’s “direct action”. Seen by almost everyone outside the government as a hopelessly ineffective solution, it does not even merit its own policy page on the Liberal website.  There is blurb on the Emissions Reduction Fund (the centrepiece of the policy) on the environment department website but is lacking in detail. Its reliance on big government intervention to meet targets is also stark contrast to the laissez-faire attitude the Coalition has in other areas of the economy. A market-based cap-and-trade approach seems a more logical approach but that would admit its opposition to Labor policy for the last four years was wrong.

This extraordinary inaction to the world’s biggest problem can only be explained one way. This government has been captured by those who do not believe the climate change science. When the government repealed the carbon price legislation last July, Liberal Senator Ian McDonald said what many in his party room would agree with. “If there is global warming, notwithstanding that in Brisbane on Saturday morning we had the coldest day in 113 years – but I have always indicated,” McDonald said, “I have an open mind on this.”  McDonald was incoherent but what he meant is he has a closed mind on this. Climate change is bunkum, he believes, or “crap” as his party leader once offered. Nationals MP Barnaby Joyce, who was instrumental in wrecking bi-partisan agreement on carbon pricing, takes a similar view.

Joyce doesn’t have a vote on who should be the next party leader but he will be active behind the scenes. He is a fan of Tony Abbott because he knows Abbott will continue the ‘do nothing’ approach. But even Abbott’s one and only speech on climate change in the last three months admits that is no longer an option. On December 14, 2014, Abbott was dragged kicking and screaming into pledging $200m over four years to UN’s Green Climate Fund, despite it being what he called “socialism masquerading as environmentalism”. Abbott did this not only because he was friendless on the issue but because he knows Paris is looming. Abbott admitted he needed a taskforce “to propose possible new post-2020 targets for Australia to take to the Paris Conference of the UNCCC in December 2015.”

That taskforce is yet to materialise leaving Australia no closer to effective action. “Direct Action” may or may not fluke its way to achieving Australia’s miserly 2020 target but is utterly useless beyond that. Abbott and his supporters can doubt the science all they like, but the world is moving on anyway. Australia needs a climate change policy before December. This is the problem Malcolm Turnbull, Julie Bishop and anyone else who would be prime minister needs to grapple with urgently.

Alternate realities: Tony Abbott speaks out on climate change

abbottIt was inspiring and refreshing to hear Australian Prime Minister Tony Abbott address the world on the great challenge of our time: global warming caused by human actions. Abbott was in New York to address the UN Security Council on the challenge which he called “the weightiest of matters” and saying those who opposed action were a death cult.

“Countries do need to work together to defeat it… and every country is a potential target,” Abbott said.

Abbott pointed out the destructive work of those who have opposed action on the matter.

“It’s hard to imagine that citizens of a pluralist democracy could have succumbed to such delusions – yet clearly they have,” he said. “The Australian Government will be utterly unflinching towards anything that threatens our future”.

Abbott congratulated Barack Obama on the broad coalition he had formed to take action on climate change.

“The West can’t solve this problem alone – and won’t have to,” he said. “Our goal is not to change people, but to protect them; it’s not to change governments, but to combat (global warming)”.

But Abbott remained optimistic.

“Even in what seem to be darkening times, there are grounds for hope,” he said. “The (denialist) horror has generated all-but-universal revulsion.”

Abbott said he was delighted to attend the world leaders meeting on combating climate change which he said had major ramifications for Australia as well as the world.

“As President Obama made clear, it’s not often that they have a leader-level Security Council meeting,” Abbott said. “I was happy to accept the President’s exhortation to attend, because this is a very important domestic issue, as well as being a critically important international issue.”

Abbott said he wanted to remind the world of what a good global citizen Australia has been. “It’s absolutely imperative that at all times, and in every way, our government remains vigilant,” he said.

Abbott praised President Obama’s speech where he pledged America’s support to fight climate change.

“It was a really outstanding speech by President Obama. It was uplifting. It was honest. It was challenging. It was a fine, fine speech. It was the speech of a great leader, and to his credit, President Obama has been measured and considered here. He hasn’t rushed in. He hasn’t been quick to reach for the gun. He has carefully weighed the situation as it has developed and he has acted to prevent genocide,” Abbott said.

Abbott then went home to Australia to focus on his Energy Green Paper 2014, a plan which throws all the nation’s resources into renewable power.

The news of the otherworld: Wrecking the RET

A sure sign the Warburton Review into the Renewable Energy Target was flawed was the lavish praise in yesterday’s editorial in the Weekend Australian. It was the second of two editorials with the main one bemoaning the lack of decision making in the “national interest” which is Weekend Oz’s code for “Murdoch’s interest”. Murdoch’s interest applauds the Abbott Government for its foreign affairs stance, fiscal consolidation and market-based reforms but castigates it for the way it sells its economic messages, as well as taxing high earners, introducing a “gimicky” medical research fund and bringing back knights and dames. Rupert Murdoch remains doggedly republican.

His pride and joy The Australian is now 50 years old – a month younger than me – and we are both showing our age. I’m still in control of my faculties but I’m not so sure about the Oz / Woz. This sorry excuse for a broadsheet is becoming more unhinged, especially on climate science. The page 5 exclusive yesterday from “environment editor” Graham Lloyd talks about “Records detail heat that ‘didn’t happen”, a giveaway it is climate change Oz headline writers think “didn’t happen”. The story is muddled junk which took forever to get to its dubious point the BOM are fudging figures to over-egg increasing temperatures. Lloyd’s sole “proof” is old weather records from Bourke in northern NSW. There is also a dubious graph which show local temperatures heading downwards over 150 years. The graph ignores its own spikes in the last 20 years. The lede is buried in the last sentence from a man who rescued the old records: “At the moment they (BOM) are saying we have a warming climate but if the old figures are used we have a cooling climate”.

Lloyd didn’t interview anyone who might gainsay that remark. His only expert is another sceptic “Queensland researcher” Jennifer Marohasy who agreed temperatures were warmer earlier in the century. Lloyd doesn’t mention Marohasy’s views are not widely shared. Lloyd has form with kooky climate theories and his employers always push them prominently. Dissenters to climate science interpretation like Marohasy and Bjorn Lomborg get a good run in the op eds. Though many organisations reacted negatively to the results of the RET review, they were absent from the Weekend Oz news pages. There was not a single article on RET nor any op eds, leaving only His Master’s Voice in the editorial.

The editorial began by attacking favourite enemy Christine Milne for petulance in throwing the review in the bin before calling it a “balanced, rational assessment”. Most of what followed was a direct copy and paste from the review. As Lenore Taylor said, the RET did exactly what it was designed to do: it pushed investment from fossil fuels into renewables.

The Woz said it was too expensive and heavy subsidies were ultimately lowering productivity and national income. The key statement in the review picked up by Peter Martin was the RET was helping the “transfer of wealth among participants in the electricity market”. This line is pure Dick Warburton, who led the four-person review and a man of commerce who prefers the hands of the market to move invisibly.

Warburton was the perfect choice to lead the review to a particular outcome, a successful businessman who doesn’t think climate change is caused by humans. When appointed review chair in February, Warburton told the Australian’s Sid Maher he was not a climate sceptic. The Australian did not ask Warburton if he believes climate change is real and if so, what is causing it and what we should do about it. As Taylor said, the result of the review only made sense if the intention was to deny the problem it was trying to solve.

The Australian quotes the review’s statement the RET created jobs at the expense of other industries. It claimed removing “inefficient subsidies” would free up investment for research into more efficient renewable energy sources. But with no carbon tax or any other market mechanism to support it, it would just as likely lead to more investment in fossil fuels. The RET exceeded its 20% target, generated a large surplus of electricity and lowered prices.

The scheme would cost $22b to its end point in 2030 (less than $1.5b a year or about 15 super hornet planes) which is a small tax price to pay for a good outcome. But the review didn’t see it that way. It was “distorting investment decisions” (again, doing what it was designed to do), the low prices were “artificial” while the cost of the scheme meant added 4% to those prices, though that figure was trending to negligible. The Warburton Review said it was not generating any new wealth just transferring it to other players in the market. As Martin picked up, the big losers are the mining companies who backed Abbott’s axing of both taxes (carbon and mining).

The RET helps reduce carbon emissions by an additional 300 million tonnes to 2030, the equivalent of 100,000 cars taken off the road. But cars aren’t coming off the road, they are increasing as is the impatience of those who rely on them, paying an increased price in transport and electricity. Warburton said abatement cost was too high but that cannot be proven. The Government’s hollow sounding “direct” action has no modelling or explanation how it might achieve its (low) targets. It is also unlikely to pass an increasingly feisty Senate that Abbott has managed to alienate, despite it containing many philosophical fellow travellers.

Abbott was able to “axe the (carbon) tax” but not do much else other than clear the cupboard. He dismantled the Climate and Science ministries, gutted CSIRO and abandoned the Climate Commission. Removing the hated RET is the next step in the ideological agenda that undersells the problem of climate change and leaves Australia behind in solar, wind and geothermal research. Murdoch’s rags are only too willing to help to put the boot in. The Government continues its brutal search and destroy mission of all legislation enacted between 2008 and 2013. If this is evidence of the “adults in charge” then for god’s sake bring back the children.

Fifty-five pieces of legislation

THE thing politics has over policy is that it is a sport. When The Age called this out in its editorial asking for the head of Julia Gillard, it was condemned for focusing on palace politics instead of setting the agenda of policy. The Age knows personal drama is infinitely more interesting than the 55 or so pieces of legislation yet to pass in the final week of the 43rd parliament of Australia.

But here where I don’t have to pander to profit or personal drama, I can take the time to look at all 55 remaining bills, in alphabetical order.  They cover wide-ranging issues of environment, the world economy, employment, education, tax reform and agriculture.

This is what parliament is for: to change and enact law. Each of the 55 bills is important to someone or something; a truth the independent members of parliament (who raised most of them) know all too well. I’m hoping people feel more informed for reading them; I did for writing them down.

1. African development bank Bill 2013 

Enables Australia to become a member of the African Development Bank Group by authorising payments to subscribe to membership shares in the African Development Bank and meet membership and ongoing subscriptions to the African Development Fund.

According to Bernie Ripoll (Lab) the bank promotes sustainable economic growth to reduce poverty in Africa. The bank has 78 member countries, comprising 54 African and 24 non-African countries. In 2011, the Independent Review of Aid Effectiveness recommended Australia join the group as it would represent value for money, and be a high-level indication of Australia’s commitment to development in Africa.

2. Australian Jobs Bill 2013 

The far-reaching bill would require private and public projects of half a billion dollars or more to develop an Australian Industry Participation plan. The Australian Industry Participation Authority would administer and monitor compliance reporting back to parliament. In the first debate, Liberal backbencher Craig Kelly saw an obvious problem: The measure would see government officers embedded in business, “just like it used to be in the Soviet Union”.

The planning regime will cost $1 billion dollars to implement, so I wonder if it will be subject to an Australian Industry Participation plan if it passes.

3 Australian Ownership Bill 2013

This Katter bill wants to limit foreign investment in Australian agribusiness and agricultural land. It would require the Foreign Investment Review Board to take “the national interest” (a contested concept) into account in foreign investment and prevent non-Australians from owing half or more of an agribusiness or land more than four hectares.

4 Aviation Laws Amendment (Australian Ownership and Operation) Bill 2013

Another Katter bill to amend air acts to ensure Australian international and domestic air services are at least 51% Australian owned and operated, do at least 80% maintenance in Australia and use only Aussie crews.

5.  Broadcasting Services Amendment (Advertising for Sports Betting) Bill 2013 [No. 2]

A Greens bill to amend the 1992 broadcasting act to prohibit ads on odds, restrict betting ads to after 9pm, prohibit “non-ad ads” and freeze betting ads before sports broadcasts. Given the 1992 act is pre-Internet, this seems papering over enormous cracks.

6. Competition and Consumer Amendment (Australian Food Labelling) Bill 2012

This one from the Greens wants to amend the Competition and Consumer Act 2010 to specify country of origin on food with labelling based on the weight of the ingredients.

7.  Competition and Consumer Amendment (Strengthening Rules About Misuse of Market Power) Bill 2013 is an adjunct of 6 to strengthen the act to protect people in complicated supply chains eg where a $1 litre of milk to the customer is a net cost to the producer.

8. Customs Amendment (Prohibition of Certain Coal Exports) Bill 2013

Amends the Customs Act 1901 to prohibit the export of coal mined in the water catchment valleys and district of Wyong (NSW) and enable the minister to prohibit the export of coal mined “in other areas”. This is Craig Thomson’s attempt to shut down Wallarah Two underground mine despite no-one ruling it in at the moment. “People in electorates trust the laws, they don’t necessarily trust the politicians,” Thomson said. “And that’s why I tabled a bill today that looks to restrict the export licences of miners in the Wyong Shire in particular, but more broadly any other area that the minister by legislative means, deems to be appropriate.”

9 Dairy Industry (Drinking Milk) Bill 2013

Katter’s call to register dairy regional representative bodies and Fair Work Australia to determine a modern award for dairy farmers with farmers and processors to establish enterprise agreements and collective negotiations.

10 Early Years Quality Fund Special Account Bill 2013

Peter Garrett’s bill to establish the Early Years Quality Fund Special Account providing $300m over two years to long day care services to pay employee wages, costs and expenses and is an early pay off for Gonski to make kindy-teaching a better paying job.

11 Environment Protection and Biodiversity Conservation Amendment (Making Marine Parks Accountable) Bill 2012 [No. 2]

Townsville LNP’s George Christiansen’s “Making Marine Parks Accountable” bill amends the Environment Protection and Biodiversity Conservation Act 1999 to allow Government to set an area of sea, or land and sea as a Commonwealth reserve with the help of an independent scientific reference panel and a stakeholder advisory group. Christiansen wants to protect fishing constituents’ access to marine parks.

12 Environment Protection and Biodiversity Conservation Amendment (Moratorium on Aquifer Drilling Connected with Coal Seam Gas Extraction) Bill 2013

Amends the Environment Protection and Biodiversity Conservation Act 1999 to place a two year moratorium on aquifer drilling connected with coal seam gas extraction; and impose penalties for contravention. Katter wants to ban CSG mining for 24 months.

13 Fair Indexation of Military Superannuation Entitlements Bill 2012

Katter bill to index military retirement benefits the same way as Australian age and service pensions, based on a higher-end consumer price index.

14 Fair Work (Job Security and Fairer Bargaining) Amendment Bill 2012

This Greens bill amends the Fair Work Act 2009 to expand enterprise agreements, settle disputes, and make provisions on industrial action. The object is to consider items of job security, full employment and work/life balance when the full bench makes a workplace determination.

15 Fair Work Amendment (Arbitration) Bill 2013

Katter bill to remove the restriction of Fair Work Australia dealing with disputes by arbitration, mediation or conciliation, or by making a recommendation or expressing an opinion.

16 Foreign Acquisitions and Takeovers Amendment (Cubbie Station) Bill 2012

Katter bill to stop the foreign takeover of Cubbie cotton station near Dirranbandi, Qld.

17 Grape and Wine Legislation Amendment (Australian Grape and Wine Authority) Bill 2013

Ag Minister Joe Ludwig’s bill to create a new Grape and Wine Authority by merging the Grape and Wine Research and Development Corporation and the Wine Australia Corporation. The merger would align strategy and achieve efficiency gains.

18 Homelessness (Consequential Amendments) Bill 2013

Social inclusion minister Mark Butler’s bill introduced with the Homelessness Bill 2013, to repeal the Supported Accommodation Assistance Act 1994 and makes an amendment to the Commonwealth Electoral Act 1918. The bill ensures homeless people can still vote in elections.

19 Homelessness Bill 2013

Butler’s main bill which provides for the recognition of homeless people and those at risk of homelessness. There is a recognition of homelessness and an aspiration everyone should have a home. The aim is to remove barriers in social inclusion and improve service delivery.

20 Imported Food Warning Labels Bill 2013

This Katter bill imposes penalties on those who don’t label imported food properly.

21 Income Tax Rates Amendment (Unlawful Payments from Regulated Superannuation Funds) Bill 2012

Bill Shorten’s bill – Combined with the Superannuation Legislation Amendment, the bill amends the Income Tax Rates Act 1986 to impose a 45 per cent tax on superannuation benefits illegally released early. See also 50.

22 Infrastructure (Priority Funding) Amendment Bill 2013

Greens bill to amend the Infrastructure Australia Act 2008 to prioritise Commonwealth rail funding over roads, with the exception of road projects designed to fix an urgent road safety issue or which construction has already begun.

23 Intellectual Property Laws Amendment Bill 2013

Greg Combet’s bill to tighten IP laws on crown use, implement a TRIPS protocol to supply developing countries with generic versions of patented medicines, protect plant breeder IP and bring in joint patent regime for Australia and New Zealand. Despite its international importance, this huge bill got little attention in local media. International Business Times said the law would enable Australian companies to respond to future health crises in less developed nations.

24 International Organisations (Privileges and Immunities) Amendment Bill 2013

Bob Carr’s bill to amend the International Organisations (Privileges and Immunities) Act 1963 to give privileges and immunities to the International Committee for the Red Cross and the International Criminal Court. The first part is required because Australia has signed an MOU with the Red Cross making it a legal entity while the second provides support for victims in ICC trials and removed a roadblock to Australia’s accession to the ICC Agreement on Privileges and Immunities.

25 Live Animal Export Restriction and Prohibition Bill 2013

Andrew Wilkie’s bill calls for the end to live animal export by 2017 and in the interim ensure “satisfactory treatment” before slaughter.

26 Malabar Headland Protection Bill 2012

Minister for State Gary Gray’s bill provides for the protection of Malabar Headland following divestment to NSW. Malabar Headland is in south-east Sydney and was declared a 70-hectare national park in 2010. It was transferred to NSW in 2012 after remediation. The bill ensures Commonwealth oversight of the site.

27 Marine Engineers Qualifications Bill 2013

Wilkie’s bill to amend marine regulations to ensure Australian standards are followed despite the rundown of Australia’s merchant fleet.

28 Marriage Equality Amendment Bill 2012

Greens bill to allow gay marriage. Likely to fail due to Liberal block of conscience vote.

29 Migration Amendment (Reinstatement of Temporary Protection Visas) Bill 2013

The Coalition’s Scott Morrison’s bill to restore two new temporary protection visa classes lasting three years. One is the offshore entry TPV for refugees entering at an “excised offshore place” (eg Christmas Island) but who meet Australian protection obligations, the other a “secondary movement” offshore visa which is the same except the person is a non-citizen who transited in a country other than Australia where the person could have sought protection.

30 Migration Amendment (Temporary Sponsored Visas) Bill 2013

Immigration Minister Brendan O’Connor’s variation on the TPV bill and one of the few bills gathering media attention due to the furore over 457 visas which are a subclass of TPVs. It require sponsors in the TPV program to do Australian labour marketing testing with Fair Work inspectors oversight before employing someone on these visas.

31 Military Court of Australia (Transitional Provisions and Consequential Amendments) Bill 2012

and 32 Military Court of Australia Bill 2012

Nicola Roxon’s bill to establish the Military Court of Australia as part of the Federal Court to overcome the High Court challenge to the 2007 Military Court to deal with widespread military abuse. Lane v Morrison came out of a recruitment drive here in Roma in 2005. After a round of golf and drinks, Lane supposedly ”tea-bagged” an army sergeant but denied the charge before the military court. Lane successfully argued the court was unconstitutional.

33 Minerals Resource Rent Tax Amendment (Protecting Revenue) Bill 2013

Greens amendment to the ill-fated Minerals Resource Rent Tax Act 2012 to disregard increases in state royalties after 1 July 2011 when calculating royalty credits for the tax. Adam Bandt’s objective is to protect tax revenue from being eroded by increased State Government royalties.

34 National Electricity Bill 2012

Rob Oakeshott’s bill to make the national electricity law a Commonwealth law rather than state law. Oakeshott said the states’ electricity networks have seen the biggest increases in electricity prices and have the biggest say in how the pricing rules are set. “There’s a clear conflict of interest in states owning monopolies and regulating monopolies at the same time,” he said.

35 National Health Reform Amendment (Definitions) Bill 2013

Amend definitions in the 2011 National Health Reform Act to allow the new National Health Performance Authority report on the performance of hospitals and primary health care organisations.

36 Native Title Amendment Bill 2012

Nicola Roxon’s bill to amend the Native Title Act 1993 to disregard historical extinguishment of native title and broaden the scope for voluntary indigenous land use agreements. 

37 Paid Parental Leave and Other Legislation Amendment (Consolidation) Bill 2011

Families Minister Jenny Macklin’s bill to clarify provisions related to ‘keeping in touch’ days. This means that they can come to work for up to 10 days during their parental leave, without it affecting their unpaid parental leave entitlements.

38 Pay As You Go Withholding Non-compliance Tax Bill 2011

Wayne Swan’s bill imposes a pay as you go (PAYG) withholding non-compliance tax on directors and some associates where their company has a PAYG withholding liability for an income year and the director or associate is entitled to a credit for amounts withheld by the company during the income year. These amendments reduce the scope for companies to engage in fraudulent phoenix activity or escape liabilities and payments of employee entitlements.

39 Primary Industries (Customs) Charges Amendment (Australian Grape and Wine Authority) Bill 2013

Joe Ludwig’s bill amends three acts to form the new Australian Grape and Wine Authority (see 17).

40 Primary Industries (Customs) Charges Amendment Bill 2013

Ludwig’s bill removes product specific maximum rates for R&D charges and marketing charges as changing them is difficult, slow and expensive. See also 42 and 48.

41 Primary Industries (Excise) Levies Amendment (Australian Grape and Wine Authority) Bill 2013

Another Ludwig bill changing three acts to form the new Australian Grape and Wine Authority (see 17 and 39).

42 Primary Industries (Excise) Levies Amendment Bill 2013

Another Ludwig bill to implement the government’s rural R&D policy, to remove product specific maximum levy rates for R&D levies and marketing levies. See 40 and 48.

43 Public Interest Disclosure (Whistleblower Protection) (Consequential Amendments) Bill 2012

Wilkie bill and companion to number 44 with consequential amendments to four acts.

44 Public Interest Disclosure (Whistleblower Protection) Bill 2012

Wilkie’s bill provides a comprehensive definition of public interest disclosure and provides protections to public officials to make such disclosures. 

45 Reducing Supermarket Dominance Bill 2013

Katter bill to reduce market share to 20% by enforced divestiture over six years and establish a Commissioner for Food Retailing.

46 Renewable Fuel Bill 2013

Katter bill to regulate renewable fuel and mandate 5% ethanol by 2017 and 10% by 2020.

47 Reserve Bank Amendment (Australian Reconstruction and Development Board) Bill 2013

Katter bill to establish an Australian Reconstruction and Development Board to fix financial arrangements of stressed agriculture businesses and associated industries.

48 Rural Research and Development Legislation Amendment Bill 2013

Ludwig’s third R&D bill affecting 8 acts. See 40 and 42.

49 Student Identifiers Bill 2013

Tertiary Education Minister Chris Bowen’s bill to introduce a national student id from 2014. Needed because there is no single repository of records for vocational education and training.

50 Superannuation Legislation Amendment (Reducing Illegal Early Release and Other Measures) Bill 2012

With 21, Bill Shorten’s complex bill to ensure civil and criminal penalties for promoters illegal early release of superannuation benefits, part of his “stronger super” reforms.

51 Tax Laws Amendment (Disclosure of MRRT Information) Bill 2013

Joe Hockey’s bill to provide an exception to the prohibition imposed on taxation officers about the disclosure of information regarding the tax affairs of a taxpayer. Hockey wants to remove doubt tax officers can provide information about the MRRT when the Minister wants to make it publicly available. The intention is to reveal how much the mining tax has raised, without breaching tax privacy laws.

52 Tax Laws Amendment (Special Conditions for Not-for-profit Concessions) Bill 2012

Treasurer Swan’s bill to amend taxation legislation to restate the ‘in Australia’ special conditions for income tax exempt entities. The bill is raised after the High Court found charities are considered to be pursuing their objectives principally ‘in Australia’ if they merely operate to pass funds within Australia to another charity that conducts its activities overseas.

53 Telecommunications Legislation Amendment (Consumer Protection) Bill 2013

Communications Minister Stephen Conroy’s bill amends the Do Not Call Register Act to clarify who is responsible for telemarketing calls and faxes where third parties are involved, vary industry codes and tighten the ombudsman standards.

54 Veterans’ Entitlements Amendment (Claims for Travel Expenses) Bill 2010

Julia Gillard’s own bill to amend the Veterans’ Entitlements Act 1986 to extend the time period for lodging a claim for non-treatment related travel expenses from three to 12 months and enable further extensions of time in exceptional circumstances.

55 Voice for Animals (Independent Office of Animal Welfare) Bill 2013

Greens bill to establish the Office of Animal Welfare as an independent statutory authority originally planned by Labor. Bandt said the Office would be a centre of excellence for animal welfare science and law, and work to harmonise and improve animal welfare laws across the country. He also said it would give animals a voice in parliament, independent of the Agriculture Department and Ministry, to reduce animal cruelty.

Dealing with the Golden Age of Gas

According to the International Energy Agency we are in a “golden age of gas”. Affordable ways of getting shale gas out of the ground has been the game-changer turning the US into a net energy exporter, as it comes to terms with its “social licence to operate”. Virtually non-existent ten years ago, the US expects shale to dominate production by 2040.

In the short to medium term, growth will be steady rather than spectacular. The International Energy Agency’s new Medium-Term Gas Market Report said natural gas would grow at 2.4% a year to 2018. While this is down on last year’s forecast of 2.7% due to the weakness of the European economy and upstream production difficulties in the Middle East and Africa, gas will become more a more significant transport fuel with abundant shale gas in America and more stringent environmental policies in China.

IEA executive director Maria van der Hoeven said the next five years would be important for the world gas economy. “Gas has already arrived as a major fuel in power generation, but the next five years will see it emerging as a significant transportation fuel as well, driven by abundant supplies, and infrastructure investment, as well as oil dependency and air pollution concerns,” van der Hoeven said. “During this period natural gas vehicles will have a bigger impact in reducing oil demand than biofuels and electric cars combined.”

Australia is an increasing large player of this massive industry, though not currently in shale gas. Australia’s ‘proven and probable’ reserves of coal seam gas and conventional gas are around 140,000 petajoules, enough to meet 70 years of gas demand at current rates of production. The potential in-ground resource of coal seam and shale gas could be four times as large as known reserves.

CSG and shale gas are chemically the same as conventional gas (99% methane) but are unconventional because they are not directly released from empty underground chambers but instead extracted from coal (CSG) or sandstone (shale gas). Australia leads the world with CSG extraction technology but drilling for shale gas has a bonus CSG doesn’t have: liquid hydrocarbons or shale oil. These liquids have a re-sale value that makes shale gas more of a profitable proposition.  Australia does have recoverable shale and waiting for cheaper sources might be the reason Korean giant KOGAS withdrew from negotiations with Chevron to buy $29b of gas from its Gorgon project in WA.

But for now Australia is riding on the back of coal seam gas. High gas prices in Asia have supported enormous investment in gas infrastructure in Australia, despite high construction costs relative to other countries. On the east coast, $50 billion has been committed to developing LNG export facilities and a further $116b development is underway in WA. They represent 13 new LNG trains (a train cools and compresses the gas into LNG) making the industry an economic driving force over the next decade and beyond. In 2014 the first Liquefied Natural Gas carrier ships will dock off Gladstone, ready to ship LNG to Asian markets. Already the fifth largest exporter of gas thanks to WA LNG, by 2015 Australia could be second only to Qatar. By 2017 it could have the world’s largest gas export industry worth by Grattan Institute’s measure $58 billion a year.

But as Grattan also found out, in their “Getting Gas right” report, that does not mean good news for everyone. Domestic prices will be higher and the government will need to intervene to ensure fair market outcomes. Over 93% of Australia’s coal seam gas reserves are in Queensland and the industry has a large footprint here in the Roma region, with lots of gaswells, compressor stations, camps and the Wallumbilla Hub.

The Hub, some 52km south-east of Roma, is little known outside the region but it is crucial topic of conversation at Council Of Australian Government meetings. The Wallumbilla hub is a perfectly positioned traffic cop of pipelines linking the Queensland gasfields with Brisbane, Sydney, Newcastle, Gladstone and Adelaide. Like COAG’s Standing Council on Energy and Resources, Grattan Institute promotes its importance as a new trading hub to drive a more transparent market.

In 2012 SCER commissioned work on the possible design of a gas trading market at Wallumbilla. The hub is a major pipeline interconnection point for the Surat−Bowen Basin and in December SCER agreed to the ‘brokerage hub’ concept, with a view to launching a voluntary market from early 2014. The ‘brokerage’ hub is an exchange, to match and clear trades using existing physical infrastructure. Given physical limitations, separate trading nodes would be created for each of the major pipelines connected to the hub. The introduction of services to assist gas trading between nodes may follow and the market model is intended to be capable of replication in other locations.

The Wallumbilla Hub was among three government initiatives Grattan sees as crucial for the industry, along with fixing the NSW mess and the ability to trade pipeline capacity. NSW does not have a proper social licence to operate and the strong anti-gas lobby has led to State Government restrictions. The impasse could lead to a statewide gas shortage by 2016. The stalemate caused by community concerns and a poor regulatory regime could be solved by ramping up CSG production under the co-operative model of the US Center for Sustainable Shale Development or by increasing interstate pipeline capacity.

Grattan sees a role for Government to address supply-side failures, particularly as the east coast moves towards a short-term trading market. Wallumbilla Hub will join the Australian Energy Market Operator, the Victorian gas wholesale market and the national gas market bulletin board in providing price transparency and giving customers a chance to benchmark prices. A gas price index, as discussed in the Government’s energy white paper 2012, is on hold.

But the Grattan Institute is against the Western Australian government’s policy on reserving gas for domestic use (despite what the DomGas alliance thinks). They said protectionism might provide some short-term price relief for targeted industries, but ultimately led to higher prices and damaged the economy. Gas is dearer in the west than in the east coast and introducing it the east would make it more expensive, affect existing investments and damage Australia’s business reputation. Protectionism also funds lobby groups at the expense of more worthwhile investments.

Protectionism is warranted only for infant industries, says Grattan, and only according to the Mill-Bastable test (that is they will eventually survive without protection and future benefits outweigh current costs). Though clear and intuitive, the Mill-Bastable Test is hard to apply in practice: the benefits and costs of protection change over time as learning progresses.

But protectionism or no, prices in Australia will rise. High gas prices in Asia are driving the export industry, but it eventually means higher gas prices at home too as the industry finds equilibrium. The biggest losers will be Victorian domestic customers (who use two thirds of the domestic gas) and WA manufacturers (who use the lion’s share of industrial gas). Governments need to grasp the nettle of this crucial industry in the coming decade. Gas-fired power generation is likely to be an increasingly strong part of the energy mix in a carbon-constrained world.

CSG and coal mining National Partnership Agreement produces first report

SBN160412partnershipsThe COAG Reform Council has released its first assessment report under the Coal Seam Gas and Large Coal Mining Development National Partnership Agreement with disagreement between the Commonwealth and NSW the major hurdle.  The National Partnership Agreement report looks at whether participating governments have completed their actions under the agreement which reviews CSG and large coal mining developments and potential impact on water resources.

Of the four states in the agreement – NSW, Victoria, Queensland and South Australia – only NSW has not completed its milestone to publicly release a protocol for referring projects to the new Independent Expert Scientific Committee (IESC). The NSW and Commonwealth Governments have not agreed on NSW’s draft protocol. The report said it remained unclear how NSW would decide which projects to refer to the IESC for advice outside of land it has identified as Strategic Agricultural Land.

This delay may defer the provision of NSW project applications to the IESC for advice until the protocol is published and will also affect the period to which the benchmark to refer all project applications to the IESC. Queensland remains on track having signed the National Partnership on February 14, 2012 (under the Bligh Government) thanks to a one-off $18 million payment from the Federal Government.

Despite complaints from the Newman Government about duplication of regulatory bodies, the new government endorsed the protocol for project referral on October 1, 2012. The protocol requires Queensland government officers to refer a proposal if it is deemed a ‘project application’ (that is, it requires an Environmental Impact Statement) and it is ‘likely’ to have a ‘significant impact on water resources’. However as of October 2012 Queensland has not referred any projects to the IESC, though the Commonwealth has referred several Queensland projects.

The aim of the IESC is to give governments solid scientific advice on the potential effects of CSG and large coal mining developments on water resources. On November 27 last year, federal environment and water minister Tony Burke announced its creation as a statutory body under amendments to the Environment Protection and Biodiversity Conservation Act 1999.  The six-person committee’s role is advisory  and has no responsibility for issuing approvals for projects or recommending whether a project should be approved.

Tony Burke said the Committee was created to provide advice on coal seam gas proposals and large coal mining developments. “The work of this committee will give communities reason to be confident that future decisions about coal seam gas and large coal mining development are informed by the best possible science,” Burke said.

Releasing its first report this month, COAG Reform Council chair former Victorian premier John Brumby said CSG mining was a contentious issue. “Coal seam gas mining has an important role to play in Australia’s future energy security and economic development,” Brumby said. “This agreement aims to improve the community’s confidence in decisions on coal seam gas and large coal mining development by informing those decisions with substantially improved science and independent expert advice.” Brumby said in five years to 2010-11, CSG production increased from 2% to 11% of Australia’s total gas production. “Coal seam gas is an important source of natural gas that has the potential to strengthen Australia’s long-term energy security and to further expand energy exports to meet growing global demand for energy,” he said.

The report found Australia’s CSG profitably extractable reserves have been increasing in recent years to 35,000 petajoules (PJ). Estimates suggest a further 65,000 PJ could become economically viable in the future and there are even larger estimates of inferred (122,000 PJ) and potential (259,000 PJ) CSG resources. The report said the community was concerned about potential environmental impacts of new developments including the volume of water produced as a by-product and possible contamination of aquifers.

It identified three priority areas to strengthen decision making:

1. more closely identifying potential and actual impacts on water resources, and avoid or minimise significant impacts through a transparent process that builds public confidence

2 substantially improving governments’ collective scientific understanding of the actual and potential effects of CSG and coal mining developments on water resources

3 ensuring the best scientific information and expertise underpins all relevant regulatory processes and decisions.

The Surat Basin is one priority area identified for bioregional assessment. The report says the bioregional assessments would analyse the ecology, hydrology and geology to assess the potential risks to water resources as a result of the impacts of coal seam gas or large coal mining developments. “These assessments will provide advice to governments about the water related resources and risks on a region-wide, rather than project specific basis,” the report said.

The National Partnership program will provide $50m over three financial years with 50% to the states and 25% each to according to the relative distribution of coal production and CSG projects.

Commonwealth-referred Queensland projects under consideration by IESC are:

Stanmore ‘The Range’ Open Cut Coal Mine – being considered

Newland Coal Extension Project – being considered

Arrow Bowen Gas Project – advice provided

Santos Future Gas Supply Area Project – advice provided

Middlemount Coal Mine – advice provided

Anglo Coal (Foxleigh) Pty Ltd—Foxleigh Coal Mine Extension – being considered

Hancock Prospecting Pty Ltd—Alpha Coal Project—Mine and Rail Development – advice provided

Aquila Resources Ltd—Blackwater Washpool Coal – being considered

Adani Resources Ltd—Carmichael Coal Mine and Rail Project – being considered

AMCI (Alpha) Pty Ltd—South Galilee Coal Project – being considered

Taroom Coal Project, Surat Basin – advice provided

Collingwood Coal Project, Surat Basin – advice provided

Codrilla Coal Mine, south east of Moranbah – advice provided

Sonoma Coal Mine Expansion, Collinsville – being considered