Minister, welcome to Lateline Business.
MARTIN FERGUSON, MINISTER FOR RESOURCES: Good evening and thank you, Ali.
ALI MOORE: You’ve today raised the issue of tax barriers to large downstream gas processing plants in Australia. Do you believe tax concessions would really make the difference to investment in those sorts of projects?
MARTIN FERGUSON: Well, in the tough competitive world at the moment, to actually attract investment, we’ve got to seriously look at the necessary investment regime to actually get further downstream processing in the oil and gas industry in Australia, take frontier exploration and development – it is deep sea, it is highly expensive. Other countries have got similar incentives in place. We can not allow that investment to escape, because it’s not only about our exports it’s also about our domestic energy security.
ALI MOORE: At the same time, though, the three projects that you mentioned today: Georgian, Brown and Sunrise, which in your words are struggling to get off the ground. When those in the industry talk about those three projects, they don’t talk about tax concessions, they talk about access to getting the right geographical location for their plant: access to resources, infrastructure, the sheer logistics of the problem. Tax concessions would be nice, but there are really far bigger issues, aren’t there?
MARTIN FERGUSON: There are a range of issues. Obviously, access to infrastructure and all those associated issues are exceptionally important, but I can assure you that they are actually talking about potential incentives. And it’s no different to what we did just over 24 years ago with respect to the North West Shelf when it was a sunrise industry and they had very good assistance from the governments, successive governments over a period of two decades. We have got that as a now a mature, successful, profitable outcome. We’ve got to look to the future. I don’t accept two major LNG projects over 20 years as good enough. We’ve got to go out of our way, because it’s about bringing on potentially successful investments in what is a major industry. We want to continue to be a major oil and gas hub. It’s no longer just the West Coast. We’ve also got significant coal seam methane opportunities in Queensland which are attracting a lot of international attention at the moment.
ALI MOORE: Indeed they are. Are they the sorts of projects that you’d be looking to target for tax concessions?
MARTIN FERGUSON: Well, what we’re doing through the Henry Tax Review and it arises from the budget process is to actually have a look at the current system and see whether or not alternative methods of encouraging investment are required. There’s no pre-determined outcome. I will continue to engage with industry in association with the Treasurer to make sure that we as a nation not only attract investment that we in Asia are the key to resource security for other developing countries such as China and also mature companies such as Japan, whilst at the same time securing adequate energy domestically, which is very important given the interruption of supply and gas at the moment in Western Australia because of an unfortunate accident.
ALI MOORE: But Minister, can we wait for the Ken Henry review? Because of course, these tax concession on big projects are going to be part of the review. But, that’s going to take at least 18 months, possibly even years. The lead times for these projects are huge and decisions surely need to be made more urgently?
MARTIN FERGUSON: Well, the lead time is exceptionally long, but these companies are actually working in terms of potential project development at the moment. They are raising issues with me and my department and no doubt with the Treasurer.
ALI MOORE: But if you’re gonna wait for the Henry review, you can’t answer them now, can you?
MARTIN FERGUSON: No, no, the Henry Review is an ongoing process as the Prime Minister and Treasurer have said. Let’s also be clear. You’ve finally got a Government that’s actually prepared to do the serious work. Companies wanted this done over the last decade and the previous Government neglected yet again, what is very important to actually secure energy futures for Australia. It’s about domestic and export opportunities – we can do both. And finally, they’re saying to me, “At least we’ve got a Government that is prepared to sit down, talk through the issues and seriously debate what is potentially necessary with no guaranteed outcomes, actually have a debate about what might help.”
ALI MOORE: Well, of course, you mentioned earlier the tax break for the North West Shelf project which of course was axed in the Budget, saving some $2.5 billion. Are you looking to hand all of that $2.5 billion back to a new generation of projects?
MARTIN FERGUSON: The Government’s actually looking to see through proper consultation what is potentially appropriate. That’s about detailed work, not only in my department, but also my department in association with other departments such as Treasury and the involvement of the Minister for Finance and the Treasurer.
ALI MOORE: Well, Minister, you’d be aware of the comments made today by Marius Kloppers the head of BHP Billiton. He’s made it clear that in his words, “if the objective is to encourage private sector investment infrastructure, overly regulated infrastructure or a hovering threat of regulated mandated access to existing infrastructure, is clearly not the way to go.” He’s obviously referring to his dispute regarding rail access in the Pilbara. Are you going to provide both BHP and Rio with some relief on that front?
MARTIN FERGUSON: I understand the issues raised by Marius. They have attracted my interest for some considerable period, both in Government and in Opposition. There is clearly a question of a balance between competition and also, a logistic regime which is probably most – one of the efficient in the world, our iron ore provinces in WA, both Rio Tinto and BHP. That is a matter for ongoing consideration, not only by myself, but a range of other Ministers such as the Treasurer.
ALI MOORE: Well, BHP for one, wants the trade practices Act modified to protect them against third party access. Will you rule that out?
MARTIN FERGUSON: Marius’ views are well known to Government and they will be considered in a proper way, the same way in which the views of Rio Tinto and FMG. It’s about getting the balance right which secures investment, whilst also enabling others to increase their export opportunities.
ALI MOORE: But what’s the time frame for this? Because this case is already about to go to appeal to the High Court, it’s also before the Australian Competition Tribunal. It’s been going for years?
MARTIN FERGUSON: That’s an ongoing process, both from a legal point of view and from a regulatory point of view and it is a matter that will be appropriately considered by Government in the course of the normal appropriate timetable.
ALI MOORE: And what would that be?
MARTIN FERGUSON: Well, obviously there are a range of issues from legal consideration in the High Court and also applications by FMG. They’ll be considered, as is required by ministers, in accordance with the regulatory timetables.
ALI MOORE: Well, Minister, of course, you are also Minister for Tourism and the latest figures show the number of overseas visitors to Australia has slowed to a halt. What can you do?
MARTIN FERGUSON: Well, there is, in terms of our tourism industry, a very rough period ahead and I’m not going to hide from that fact. We have got to manage not only a strong dollar, but perhaps an oil crisis. And we are seeing a major rationalisation of the airline industry, not only domestic, internationally. We are going to do what we can in association with the private sector and State and Territory Governments to put together a strategy, and I have announced that commitment about supply side issues, whilst also reshaping our international travelling – international advertising campaign.
ALI MOORE: Well, the Australian Export – Tourism Export Council says hundreds of small businesses face failure. The piece de resistance was a decision in the last Budget to raise the departure tax and other taxes and charges. They want direct financial assistance and they point out you’ve still got $200 million in the kitty from the so-called “over-collect” from the Ansett levy?
MARTIN FERGUSON: I appreciate the concerns in industry at the moment.
ALI MOORE: But are you going to give them any relief on taxes and charges?
MARTIN FERGUSON: I will engage, not only with ATECH, but also the other major tourism operators in the industry. It’s more than a increase in the passenger movement charge. This is clearly a problem because of the strength of the Australian dollar and a major oil crisis. They are the crux of the problems confronting Australia at the moment, and in terms of actually assisting small and medium sized businesses, there are a range of issues including supply of labour, question of improving infrastructure and also, trying to get Australians to actually have a holiday. It is …
ALI MOORE: But do you rule out direct financial assistance? Is that a “no” to direct financial assistance?
MARTIN FERGUSON: There is no way that you throw money at a serious problem. You’ve got to sit down in a proper way and consider how we go forward. I am not going to make decisions on the run because I know this is a far more complex problem than increasing the passenger movement charge and so do the great majority of people in the industry.
ALI MOORE: Martin Ferguson, many thanks for talking to us.
MARTIN FERGUSON: Thanks very much, Ali.