Doorstop Interview - Linc Energy Diesel Dash 

  E & OE

QUESTION:            Minister, Tony Windsor has come out and said that it was a mistake for the Government to announce the carbon tax and that they have put the cart before the horse, what’s your response to that?

FERGUSON:           Look, Tony is a member of the MPCCC, clearly he’s got an opportunity to express his view not only publically but also discuss those views at the next meeting of the MPCCC. But you know we’re at the start of a long process. We basically announced a framework with a view to actually having more detailed discussions, not only with the MPCCC, but also with the broader community, about first our need to front up to actually putting a price on carbon, but also to actually work out the details of the nature of the final system we put in place. There’s a lot of work to be done yet.

QUESTION:           Would you support advertising the carbon tax?

FERGUSON:          The Government hasn’t considered those issues, we haven’t made a decision as to whether we’ll spend money on advertising or not, but I also understand our need to actually argue this issue out in the broader community irrespective of whether we actually embrace an advertising campaign. No one’s ever said that this is going to be an easy debate because in many ways it’s easy to actually run a scare campaign, but when you are actually making tough decisions, and I’ve seen that in a variety of opportunities in my working life including as a trade union official in a range of very tough disputes, you’ve got to stick to your guns but you’ve also got to have on your mind is it an appropriate outcome that is fair to the community from an economic point of view but also produces the necessary environmental gain.

QUESTION:           Wayne Swan says you need to get the information and the facts out there, you mightn’t have made a decision about advertising, but the question was would you support advertising even if it’s an information campaign?

FERGUSON:          The government, if need be will have a discussion or a debate about whether we should advertise at some point in the future. As the Prime Minister has said, she hasn’t ruled it in or out, but what we’ve got at the moment is a major debate about the potential framework as at this point in time, and let that debate go on.

It’s easy for the Opposition to run a negative campaign, but as the Minister for Energy I suppose I’m probably the Minister most confronted by actually resolving a price on carbon, because at the moment I’m not getting the necessary investment in new electricity generation capacity in Australia because you can’t  bank a project. And that’s a real problem because if you actually look at the Australian Energy Market Operator’s report of last December, it shows over the next five to ten years in Queensland and New South Wales the need to actually get new investment in electricity generation capacity in Australia.

And if you think a debate about a price on carbon is tough, I’ll tell you what, there’s an even tougher debate over the next five to ten years if we don’t resolve this issue, because the last thing a community wants is shedding or difficulties with the operation of the electricity system because you want to be able to go home from work each evening and turn the lights on and cook a meal. Or alternatively, you actually want to be able to get up in the morning and go to work and turn on the machines or turn on the computer. Getting that investment is the key to a strong economy, and we must resolve the issue once and for all of whether we are going to determine if there’s a price on carbon, what is the nature of that system

QUESTION:           What is the industry saying to you about the price on carbon? How it would operate compensation, etc?

FERGUSON:          Look, there are a variety of views out there at the moment, not only from the electricity sectors point of view but also the energy intensive trade exposed sector, the aluminium sector, the steel producers, the cement producers, but also households. You’ve got to make sure that whatever you do you sufficiently compensate those in the community who need the greatest assistance because of cost of living pressures. And we’re talking about low income families, pensioners, people on fixed incomes. The Government understands the dynamics of this debate and each sector presents a challenge, but business is also saying to me it’s got to be resolved, we can not continue with this uncertainty. You actually can’t bank projects in Australia to maintain the reliability of our electricity system, because you don’t know what the price on carbon is.

You’ve got existing generators in the coal-fired sector who can’t enter into long term contracts to actually supply electricity because you don’t know what the price is going to be in three, five, eight years time. That’s why the uncertainty is a real problem to Australia. We’ve also got to make sure that in sorting this out we don’t make Australia uncompetitive compared to other nations and in doing so see the loss of jobs out of Australia. So the balance is what really confronts the Government, and I suppose that’s what Tony Windsor was actually talking about last night. We’ve got to also educate the community and take it with us.

QUESTION:           Is the Government failing to sell the message that a carbon tax is needed, and do you think that community support for a carbon tax has dwindled or action on climate change in particular has dwindled?

FERGUSON:          Look I understand that the community wants Government to take action, but it’s like everything else. It’s a bit like renewable energy, everyone wants renewable energy but as soon as you start talking about a wind farm in their backyard they don’t want renewable energy. Everyone wants us to resolve a price on carbon but when you start thinking about ‘geez that might increase the cost of electricity’, they don’t want to know about it. These are tough political debates. It’s no different, I think, to when I was president of the ACTU. The decision by Australia to actually reduce tariffs, to expose ourselves to globalisation, was a tough debate. We had to work out how we transform the economy, and we made it stronger, and that’s why we are such a strong economy at the moment, the envy of the OECD world. You know unemployment at 5 per cent, in my own portfolio of Resources and Energy, a pipeline of investment which is beyond belief. Our challenge is actually managing the growth of our economy at the moment, at the same time, and when best to do it, when you’ve got a strong economy, when you’ve got good employment, to actually work out how you resolve these tough debates. So you know I’d sooner do it now, than like other countries who are still in the process of recession. We are best positioned as a nation now to have this tough economic and community debate.

QUESTION:           You’ve talked about uncertainty for businesses, not being able to invest, by announcing a carbon price but not saying what the price is or who will be compensated, haven’t you added to that uncertainty?

FERGUSON:          No, they’re actually saying, clearly, you’ve got to set out for discussion the parameters. Then, we actually have to debate what is the potential price on carbon, how you actually phase into a trading system over time, and in doing so create the certainty. But in electricity you also are trying to think about how you determine a price on carbon but also create an opportunity to actually retire some of the older, high-emitting coal-fired power stations in Australia. That creates the investment opportunity, not only in terms of certainty for a price on carbon but also the market opportunity in the future, for example, to actually invest in gas, because you know you can take the risk, because there’s going to be a market opportunity with a coal-fired power station actually going out of operation which guarantees you a share of the market. No different to the Renewable Energy Target, you can actually bank renewable energy projects in Australia at the moment because you know by 2020 we have to achieve 20 per cent of our energy being from renewable sources. It’s all about a market driven process.

QUESTION:          Just on Ningaloo Reef, how important is it to set up a national regulator before any sort of development would happen by Shell there?

FERGUSON:          Ningaloo Reef, clearly, is an important environmental area. But firstly, in terms of Shell’s proposal, which is yet to receive proper consideration from an environmental perspective, so it’s a proper process underway and I’m not going to actually discuss or seek to interfere with the nature of that process.

We have, as established by the Montara Inquiry, a strong regulatory regime. Our objective is to even strengthen that regulatory regime. I’ve announced my determination to put in place a national regulator with stronger powers including additional environmental responsibilities. But you also look at what I’ve done over the last six to twelve months. Every time there’s been a question of issuing new exploration rights, I’ve added even stronger regulatory requirements, be it BP in the Great Australian Bight, or a variety of other ones, which are currently being considered by Government. You know, unlike other countries, such as the US, we’ve been able to maintain a viable, strong industry in Australia, and we need to because this is about our energy security. We’ve got a trade imbalance at the moment on petroleum products of $16 billion. We’ve actually got to try and work out how we overcome that problem, because it’s potentially going to grow out to $30 billion by 2015, but do it in the, I suppose, the most rigorous fashion from a health and safety point of view, because that’s about people’s lives in the petroleum industry, and from an environmental point of view. 

QUESTION:           Do you support a commercialisation of the industry we’ve seen here today?

FERGUSON:          I’m very committed to actually, as part of the Energy White Paper process, to a proper focus on alternative transport fuels. As Peter said, I’ve been following this project for a long period. I first started to focus on it in Opposition because I knew then where we were heading on petroleum products. This road trip proves its technical capacity from a diesel fuel point of view. The question is getting to a point by which we can get the major investment, get the refinery in place, and then commercialise it. We must support projects such as this and we’ve got a small R and D grants program in universities already under operation. We’re in the process of establishing a biofuels centre at James Cook University. To me, this is bread and butter, it’s about our future transport fuel security and I wish the venture well.

QUESTION:           Just on the process though, there are community concerns about groundwater being polluted. Are you happy that that’s not the case?

FERGUSON:          The main concerns to date have actually been with coal seam methane. On this particular project, in Chinchilla, to the best of my knowledge, we haven’t had those difficulties. But I have told the coal seam methane LNG companies in no uncertain terms that they must pay more attention to community issues, not only from a ground water point of view, but also a proper process of engagement in discussion with affected farmers. You know, this is about your community licence to operate in Australia. From offshore petroleum, I’m focused on it in terms of the operation of NOPSA and my ambition is to create a stronger national regulatory agency. But I also have a view that both industry and government, especially at a Queensland Government level, has direct responsibility for this industry. You can not in any way diminish your focus on the responsibilities of these projects.

QUESTION:           What’s your reaction to farm groups who are calling for a moratorium on further development until the Queensland Government fully understands the impacts and can regulate the industry?

FERGUSON:          I point out that each of the projects that have gone to final investment decision, and there are two to date, and there has been an environmental approval for a third, have gone through a rigorous federal and state environmental process under the Environmental Protection Biodiversity Act - a publically accountable process. The issue is now making sure that the monitoring requirements, the adherence to the conditions are actually properly attended to by the companies in question.

QUESTION:           Should the Queensland Government be more supportive, given that the petrol prices are rising?

FERGUSON:          I think the Queensland Government is very much focussed on the importance of this sector. It’s going to create a lot of jobs, and I think it’s going to bring a substantial revenue stream to the Queensland budget over time. But on the price of oil at the moment, let’s be clear, neither the Queensland Government nor the Commonwealth Government has any influence over the price of petrol at the moment. The instability in the Middle East and Northern Africa is having an international impact on the price of oil and the sooner we get, I suppose, some stability in those regions then hopefully the premium that’s been created because of this uncertainty in the price of petrol actually comes off to the benefit of consumers.

                                Thank you.