Chapter 2
Key issues
2.1
This chapter examines the evidence, both for and against the bill, received
by the committee in submissions to this inquiry.
2.2
Submitters who supported the bill argued that a ban on coal mining in
the Galilee Basin would have a number of positive effects for the environment
locally, more broadly across Australia, and globally through mitigating climate
change. These submitters also commented that proponents of mining projects in
the Galilee Basin had overestimated the economic and employment benefits that
could stem from new mines in the area.
2.3
In contrast, submitters who raised concerns with the bill argued that all
proposed projects in the Galilee Basin, including the proposed Adani Carmichael
mine, are subject to environmental and other assessment approval processes
under Commonwealth and Queensland laws. Further, it was contended that the bill
does not recognise the economic importance and the benefits that will accrue for
local communities, Queensland, and Australia of thermal coal mining in the
Galilee Basin.
Evidence supporting the bill
2.4
Much of the evidence provided in support of the bill pointed to positive
effects for the environment and public health outcomes that would arise from
the prohibition on coal mining in the Galilee Basin. This included that the
bill would:
- make a positive contribution to addressing climate change,
including assisting Australia to meet its commitment to the Paris Agreement;
- have a number of other positive environmental effects in the
Galilee Basin, and more generally for the Great Arterial Basin, and for the
Great Barrier Reef; and
- improve health outcomes for in Australia and internationally through
reduced coal burning emissions and coal dust from transportation.
Mitigating climate change
2.5
A number of submissions suggested that the bill would mitigate the
effects of climate change, particularly as it would reduce carbon emission
levels from the burning of coal for energy production.[1]
2.6
For example, Doctors for the Environment set out how reducing mining
activity in Australia could contribute to global efforts to address climate
change:
Calculations of Australia's fair share of the global carbon
budget means that 90% of Australian coal reserves need to stay in the ground to
limit climate change to below 2 degrees. In short, no carbon budget is left for
new coal mines in Australia, and even existing ones will need to be retired
before being fully exploited. As the Climate Council estimated, if all the coal
from the Galilee Basin were burnt it would cumulatively emit an estimated
705 million tonnes of carbon dioxide (CO2)
every year. This equates to more than 1.3 times Australia's current annual
emissions, and if a country in its own right, would rank amongst the top 15
greenhouse gas emitting countries.[2]
2.7
Some submitters noted that the Commonwealth has ratified the Paris
Agreement targets to reduce greenhouse gas emissions to assist limiting global
warming to 2°C, and argued that continued coal mining in Australia stands in
direct contradiction to this commitment.[3]
Benefits for particular species or ecosystems
2.8
The committee received evidence that a ban on thermal coal mining would
have positive effects on a number of ecosystems and species, both in the Galilee
Basin and more broadly.
2.9
The Black-throated Finch Recovery Team submitted that the bill would
ensure the preservation of Black-throated Finch in the Galilee Basin as mining
operations present a direct threat to the finch's habitat. While approvals for the
Adani Carmichael mine provide for offsets, it was argued that these are inadequate
with many on sites approved for future mining projects.[4]
2.10
Regarding the use of water by extractive industries, the committee
received evidence that a ban on coal mining in the Galilee Basin could prevent
potential negative effects on the water table, not only in the Galilee Basin
itself but also the Great Artesian Basin.[5]
2.11
Submitters noted that the Great Artesian Basin supplies water to
Queensland, the Northern Territory, New South Wales, and South Australia, and
added that any damage from extractive industries could have widespread effects
not only for local communities, but also for industries that require a supply
of clean water, including agriculture and tourism.[6]
2.12
In this, some submissions suggested that the Queensland Government had
insufficiently scrutinised the 60-year unlimited water use licence granted to
Adani for their mining in the Basin area. It was also stated that the
Commonwealth should maintain strict oversight to ensure that approval conditions
are met, should these projects proceed.[7]
2.13
Regarding the Great Barrier Reef, some submitters argued that the bill
would mitigate the negative effects of climate change on the Great Barrier
Reef, noting that rising ocean temperatures were perhaps the most significant
stressor on the health of the Reef. Others noted that the increased shipping
needed to export the coal mined in the Galilee Basin would be accompanied by
greater damage to the Reef, including from dredging, spillages, and increased
pollution from transportation.[8]
Agriculture
2.14
Some evidence received by the committee argued that coal extraction in
the Galilee Basin would have negative effects on the farming and agricultural
sector. Farmers for Climate Action suggested that 'human induced climate change
is already having a negative impact on the productivity of the agricultural
sector', and that there should be a transition towards a 'clean energy future'
rather than the use of fossil fuels.[9]
2.15
Moreover, a number of submitters were concerned about potential damage
to the water table from Galilee Basin mining.[10] Farmers for Climate Action suggested recent research has shown 'the inadequacy
of current understanding of risks posed to ground and surface water systems as
a result of extractive industries in the Galilee Basin', and so argued:
...that the sustainability, profitability and integrity of
Australia's food and fibre production systems must not be compromised in the
name of short term extractive industry growth. This includes ensuring that
there is no net decline to the quality or quantity of water available to the
agricultural sector as a result of extractive activities, nor detrimental
impacts to the global climate.
For these reasons, Farmers for Climate Action urges the Committee
to address the growing disconnect between science and policy, and advance
alternative, sustainable and resilient economic development opportunities for
the Galilee Basin and surrounds.[11]
Human health
2.16
Submitters contended that the proposed prohibition on thermal coal
mining in the Galilee Basin will result in improve air quality: not only will coal
dust be reduced in areas through which coal is transported but also coal
burning emissions in countries that would import Galilee Basin coal.[12] Doctors for the Environment stated:
In India, where coal from the Adani mine is destined to be
burnt, coal fired power stations contribute to the air pollution that that
leads to the premature death of an estimated 1.1 million people per/year and
affects many more with minor or serious illnesses.[13]
2.17
The Australia Institute submitted that assessments of the economic
effects of coal production in Australia usually omit consideration of 'its
substantial impacts on human health', including the healthcare costs that come
from air pollution and its effects on water resources.[14]
Economic effects
2.18
Some of the evidence received by the committee suggested that the
economic effects of the bill would be minimal, particularly given the declining
demand for coal internationally, Australia's already large coal production
capacity, and the overstated economic benefits of the Adani project and the
mining sector more broadly.
2.19
It was argued that the projected economic benefits of coal mining had
been overstated. Submitters pointed to the declining demand for coal
internationally due to developed and emerging economies turning to renewable
sources of energy and stated that this had not been factor into projections for
the Adani development.[15] Others suggested that Galilee Basin coal was 'significantly lower quality than
the benchmark Australian export coal', which meant that actual profits may not
achieve forecasted estimates.[16]
2.20
Some submissions suggested that the employment estimates for the
proposed new Adani mine, as well as the traditional mining sector more broadly,
had been greatly overstated, meaning that benefits for local communities would
not be as large as expected.[17]
2.21
Other evidence suggested that the number of jobs in the mining sector
had been overestimated, and that the Commonwealth Government should increase
efforts to grow the renewables sector. For example, the Environment Council of Central
Queensland Inc. argued that:
Not only must we not allow any greenfields fossil fuel
projects such as the Galilee Basin to proceed because of the effect on global
temperatures, but we must also begin to train real people for real jobs to
transition us away from existing fossil fuel industries. Governments
consistently talk about jobs when talking about mining, but ABS figures show
that while mining is a big earner, it employs very few people compared to other
industries.[18]
2.22
Some submissions also contended that the environmental damage caused by
emissions from burning coal could exacerbate the global effects of climate
change, and subsequently threaten the large number of jobs in the Great Barrier
Reef-related sector. Some estimates put the number of Reef industry jobs at
approximately 69 000.[19]
2.23
The Australia Institute submitted that the 'economic impact of the bill
would be minimal'. Noting Australia already produces a large quantity of coal
from existing mines, The Australia Institute estimated that a moratorium on all
new coal mines would have the following impacts on the Australian economy:
- GDP is affected by just 0.6% in 2040 [when
the economy is projected to total $3 trillion, around twice the current GDP]
- Difference in employment peaks at 0.04% in
2030
- Reduction of export value of around 1% in
2040.[20]
Evidence against the bill
2.24
Submitters who opposed the bill noted particularly that all resource
industry proposals are subject to Commonwealth and state environmental
evaluations processes, including all proposed mining projects in the Galilee
Basin. Moreover, it was argued that the bill's ban on thermal coal mining in
the Galilee Basin would:
- have damaging economic effects on local communities and the
Australian economy more broadly, including through lost employment
opportunities and tax revenues from mining;
- create regulatory uncertainty and sovereign risk for Australia,
by creating uncertainty for potential foreign investors in our resource sector;
and
- fail to make an effective contribution to Australian and
international efforts to address climate change.
Commonwealth and Queensland
Government approvals processes
2.25
The Queensland Resources Council and CFMEU Mining & Energy Division
Queensland (QRC and CFMEU) submission argued that the bill 'ignores all the
public and regulatory scrutiny that has already been applied to projects in the
Galilee Basin at the State and Commonwealth level'.[21]
2.26
In this, the QRC and CFMEU noted that the Commonwealth and Queensland
Governments had stringent regulatory standards that must be met by any proposed
resources project, including those in the Galilee Basin:
The
primary responsibility for regulating resource development sits with State and Territory
governments and the Commonwealth Government's main
role is to ensure compliance with
Australia's international commitments and
national legislation, such as the Environment
Protection and Biodiversity Conservation Act (1999). It is true that major projects, including coal mines, have
a number of impacts, both positive and
negative. each of different scope and duration. This is why–despite the risk of duplication and overlap–that
these projects are assessed and regulated by both State
and Commonwealth governments.[22]
Strong international demand for
quality Australian coal
2.27
It was also argued that the bill would not reduce the current
international demand for thermal coal, as some supporters of the bill had put
forward.[23] For example, the QRC and CFMEU drew on International Energy Agency figures
that suggested:
Given the current and forecast investment in coal-fired power
generation, demand for thermal coal in the global market will remain, particularly
in the Asia Pacific. If the Galilee Basin is not developed, the coal to fire
these power stations will be sourced from elsewhere. Were it to be developed,
the Galilee Basin would be only one of many thermal coal producing regions in
Australia-and even then, around 80% of the world's thermal coal exports are
supplied from outside of Australia.[24]
2.28
The Minerals Council of Australia (MCA) stated that a reduction in the supply
of high-quality Australian coal for international markets may have unintended adverse
environmental outcomes as importers would switch to poorer-quality coal from
other countries. The MCA added:
The proposed Bill will ensure that thermal coal is not
extracted from the Galilee Basin. In this case, and given the strong demand for
thermal coal, Asian markets will obtain thermal coal from other suppliers such
as Indonesia which generally have lower grade of thermal coal than Australia.
Therefore the proposed Bill may have the perverse outcome of encouraging the
use of a less energy efficient and but more emissions intensive source of coal.[25]
Poor economic outcomes for local,
state and national economies
2.29
The committee received evidence that a ban of coal production in the
Galilee Basin, as proposed by the bill, would have poor economic outcomes for
local communities, the state of Queensland, and for Australia's economy more
broadly.
2.30
Several submitters noted the profoundly negative outcomes that the bill
would create through lost employment opportunities. It was argued that this
would be most pronounced in small regional areas in which job opportunities are
limited, but would also effect employment levels across Queensland more
generally[26]
2.31
For example, Townsville Enterprise Limited outlined the benefits of
mining for regions in Queensland where unemployment is high and opportunities
for growth limited:
The recent announcement that the Adani Group would provide
the finance for the Carmichael Mine and Rail Project after eight years of
approvals was also welcomed by our local community. The project, to commence
imminently, would deliver more than 1,500 direct jobs in the initial
construction phase, a boost of confidence to the 11,000 people looking for work
and to a private sector that remains cautious despite the level of Government
investment committed. This generational project will be the first new coal
basin opened in Australia in 50 years.
In addition, there are six mines that could proceed in the
Galilee Basin potentially generating more than 15,000 direct jobs according to
the Queensland Government's Co-ordinator-General. The Galilee Basin would
generate more than $40 billion in taxes, helping to fund more schools,
hospitals and public services. The Adani project will be the catalyst to the
realisation of all six mines.[27]
2.32
The Resource Industry Network pointed to the significant flow-on
benefits from resource sector projects, even outside mining areas:
The resource sector contributes $3.4 billion in direct
expenditure to the Mackay, Isaac, and Whitsunday businesses or community
organisations and creates the flow-on benefit of an additional $4.9 billion
with expenditure from the supply chain and employee spending.
In particular, while the Mackay region doesn't have any coal
mines in its local government area, it has the largest regional economic contribution
from resources across the state, evidence that the flow-on effect from the
industries that support mining is just as significant as the direct
contributions.[28]
2.33
The QRC and CFMEU noted that a successful resource sector not only
benefited local communities through lifting employment rates, but also provided
benefits throughout Queensland through mining royalties:
At a time
when Queensland's unemployment rate is the highest in the notion, the
development of the Galilee Basin can provide a welcome increase to the
employment opportunities for Queensland's regional labour force. According to
the Office of the Chief Economist; if they were to all proceed as currently
configured, the six major coal projects in the Galilee Basin would have a
combined cost estimate of $48.4 billion and would support 18.275 jobs during
construction. The jobs created in mining are typically highly skilled,
high-tech. high-paying jobs that support local communities across Queensland.
The
economic benefits aren't limited to regional Queensland. The royalty payoff
from developing the Galilee Basin will support Queensland Government services.
Even if only one quarter of the coal capacity in the Galilee (as identified by
the Office of the Chief Economist) is developed, QRC estimates the royalties
paid to the Queensland Government would reach approximately $290 million each,
year. At today's rates, that could pay the annual salaries of over 4,000
teachers, police constables or registered nurses.[29]
2.34
This was supported by evidence from the Resource Industry Network and Greater
Whitsunday Alliance, which informed the committee that:
With the Office of the Chief Economist estimating that
Galilee projects will result in 14,533 direct jobs this could equate to the
flow-on benefit of 72,000 additional full-time jobs. Nearly double what
currently exists in our region at present, and provides job and economic
security for regions in regards to existing mines that have an end of life in
the next 20 years.
The significant indirect jobs that are attributed to mining
will not only ensure the sustainability of the region with economic benefits
from procurement and wages spend in the community, but with the predicted
economic costs of Australia’s aging population, the revenue benefits for
governments in increased payroll and income tax are vital to ensure the country
can continue with the standard of living we are currently experiencing for all.[30]
2.35
It was also noted that there would be a significant opportunity cost
from prohibiting coal mining in the Galilee Basin for the Commonwealth and our
national economy. For example, the QRC and CFMEU cited the Productivity
Commission's inquiry that found that:
...major projects are a vital source of Australia's future
prosperity. They lift national income, create employment opportunities, raise
productivity and generate revenue for governments through royalties and
taxation, thereby helping to fund government programs.[31]
2.36
Similarly, regional stakeholders pointed to the contribution of mining
to the economy. For example, the Rockhampton Regional Council submitted:
Mining of Australia's resources, including the mining of
coal, is critical to our national economy and remains essential to securing the
future prosperity for all Australians. The income raised directly and indirectly
from the resources sector contributes strongly to the nation's capacity to
provide a wide range of services which are of benefit to the entire population.[32]
Regulatory uncertainty and
sovereign risk
2.37
Some submissions noted that the bill would create regulatory uncertainty
for projects in the resources sector, which would pose a significant sovereign
risk for Australia. The MCA noted that the bill would set a 'poor precedent',
as it:
...undermines the thorough approvals process at the state and
Commonwealth level that major mining projects must adhere to. Additionally a
blanket ban of mining in a region of Australia will have a significantly
negative impact of investors' sentiment in Australia's broader resources
sector.[33]
2.38
Additionally, the MCA stated that the bill could potentially be
unconstitutional, as it unfairly discriminated against Queensland:
The constitutionality of the Bill needs to be carefully
considered, especially in relation to Section 99 of the Australian Constitution
where ‘The Commonwealth shall not, by any law or regulation of trade, commerce,
or revenue, give preference to one State or any part thereof over another State
or any part thereof’. In effect the Bill discriminates against Queensland and
its regional communities which can cause undue economic harm to Queensland.[34]
Committee view
2.39
The committee recognises that a properly managed and successful
resources sector is a key part of the health and viability of our national
economy. This sector provides a number of benefits to local communities,
particularly by lifting the number of employment opportunities available for
Australians, often in areas where these opportunities are limited.
2.40
More generally, the resources industry provides substantial revenues to
Commonwealth and State and Territory Governments through royalty and tax
regimes. This revenue contributes to ensuring the sustainability of the
services Australians expect, including in health and aged care, education,
policing and other essential social services.
2.41
The bill proposes that all mining of thermal coal in the Galilee Basin
be prohibited, and suggests that this would create a number of positive
outcomes for the environment, both in Australia and globally.
2.42
On environmental outcomes, the committee is assured that projects in the
resource sector must meet all necessary environmental approvals from
Commonwealth and jurisdictional governments before they can proceed. Mining
projects proposed for the Galilee Basin are no different, and must meet the
standards of the Commonwealth, including under the Environment Protection and Biodiversity
Conservation Act 1999, as
well as all relevant State Government environmental approvals.
2.43
Submitters supporting the bill also argued that the economic effects of
the bill would be 'minimal', asserting that proponents of mining projects have
overstated the benefits of Galilee Basin coal mining for local, Queensland and
national communities. It was also suggested that proponents of new coal mining
projects in the Galilee Basin had not fully taken into account a declining
demand for coal internationally due to a shift to renewable sources of energy,
which would make these mines less profitable than forecast.
2.44
The committee does not support the arguments that there will be minimal
economic effects should coal mining in the Galilee Basin be prohibited. It was
clearly articulated by some submitters that there would be substantial
opportunity costs for Australia resulting from a ban on mining in the Galilee
Basin. According to this evidence, no mining of thermal coal would mean no new
jobs in communities that already struggle to access ample employment
opportunities. No new projects also would mean wider economic losses across the
state, in businesses that service the resources industry and its supply chains,
and those directly providing goods and services to workers in the mining
sector.
2.45
A move towards banning thermal coal mining would create regulatory
uncertainty and a significant sovereign risk for Australia's economy well into
the future, by making foreign investors more reluctant to support Australian
projects. Further, the committee is concerned that the bill presents a
constitutional risk. Namely, that the bill would lead to the expropriation,
without just compensation, of property rights held by those currently
developing the Galilee Basin. This could potentially leave the Australian
Government liable for substitutional compensation payments, and in the view of
the Committee, this is an unacceptable risk.
2.46
For all these reasons, the committee recommends that the bill not be
passed.
Recommendation 1
2.47
The committee recommends that the Senate not pass the bill.
Senator Jonathon Duniam
Chair
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