Introduction
This dissenting report was prepared by the Government Senators serving on the Committee following receipt of a draft committee report circulated by the Committee Chair, Senator Richard di Natale (representing the Greens) on Friday 29 November 2019.
As indicated by the report adopted by a majority of the committee (the representatives of the Greens and the ALP), the committee was unable to come to an agreement with respect to recommendations. Accordingly, both the Greens and the ALP members on the committee are presenting additional comments which may include recommendations. At the time of writing this dissenting report, the Government Senators have not had the opportunity to view those additional comments (just as those Senators have not had an opportunity to read this dissenting report).
The Government Senators do not believe that the majority report (adopted by the Greens and the ALP members of the committee) adequately reflects the spectrum of evidence provided to the committee through submissions or at public hearings. In particular, the Government Senators are concerned that the report does not adequately summarise the compelling evidence in relation to the importance of the resources (including coal, oil and gas), agriculture and tourism industries to our regions and to Australia. This is fundamental for the Government Senators. Accordingly, the Government Senators have dissented.
Government Senators wish to assure all of the communities, organisations, businesses, trade unions, local authorities and individuals who made submissions that their ideas, thoughts and concerns have been heard. Stakeholders who made submissions are encouraged to maintain dialogue with the Government Senators. In particular, recognition should be given to witnesses who took time out of their valuable days to make submissions and/or appear at public hearings.
Government Senators thank the Committee Secretariat, broadcasting and Hansard staff for their work during this inquiry. The support provided to the committee was outstanding.
Defining 'transition'
The word 'transition' is a loaded term which necessarily involves preconceptions around the direction of the Australian economy. The issue surrounding the definition of 'transition' is one of the reasons why the committee could not reach agreement on recommendations.
There has been a failure, both in evidence gathering and in the majority report, to properly define 'transition'. Indeed, some stakeholders were confused by what 'transition' meant in the context of this inquiry.
If no agreement can be reached as to what 'transition' means, how can sensible recommendations be made?
In the view of the Government Senators, the majority report (supported by the Greens and the ALP members of the Committee) inadequately recognises the importance of the existing industries that currently support Australia's regions. This view was articulated by the Rockhampton Regional Council which submitted:
Talk of 'just transitions' away from existing out-of-favour industries is interpreted by many as code for 'we no longer need regional Australia' and its productive primary industries including resources and agriculture.
Government Senators note the evidence from stakeholders that the closure of industries can have a devastating impact on workers and communities. Evidence heard by the Committee in relation to the consequences of the cessation of major industrial activity (for example, coal fired power stations and the car industry) was compelling. Even with extensive planning and support, past experience indicates that only a third of affected workers found permanent, full-time employment while a further third were pushed into insecure casual and part-time employment.
This demonstrates the magnitude of the consequences for the people of our regions if current well-paying jobs in the mining industry are lost through the imposition of extreme policy positions.
Comparisons with the German coal transition
Throughout the inquiry, there has been reference to the so-called German coal transition of around 130 000 workers where it is claimed that no worker was made redundant. However, no detailed analysis of the German experience was undertaken by the Committee.
During the Committee process, in the view of the Government Senators, there was insufficient analysis undertaken with respect to the German coal transition and how different circumstances apply in Australia, including:
the strength of the German manufacturing base and heavy industry base compared to Australia;
the success and importance of the Australian coal export sector;
the sources of reliable base load energy in the German context given its position in the European Union compared with Australia; and
the geographic and population differences between Germany and Australia.
It should be noted that the last of the black coal mines in Germany closed in 2018. This closure was reportedly due to market forces, as the mines could not compete with higher quality, lower cost producers like Australia.
Accordingly, Government Senators are strongly of the view that great care needs to be taken prior to drawing any lessons from the so-called German coal transition and seeking to apply those lessons to regional Australia. In the view of the Government Senators, the notion that an equivalent of the German Coal transition could be replicated in Australia is misguided and dangerous.
The importance of the coal mining and oil and gas industries in Australia
In the view of the Government Senators, the majority report (approved by the Greens and the ALP Committee members) inadequately highlights the importance of jobs associated with coal mining and oil and gas production to the Australia's economy.
The mining and oil and gas industries provide high paying jobs and contribute significantly to Australia's export revenue and tax base. They are vital for a number of our regional economies.
In its submission to the Inquiry, the Minerals Council of Australia noted that the resources sector employs more than 220,000 people in highly skilled, highly paid jobs:
The resources sector employs more than 220 000 people in highly skilled, highly paid jobs – with 57 per cent in remote and regional Australia. Workers in Australian resources industries earn around $140,000 a year on average – more than 60 per cent higher than the average for all industries.
Government Senators believe that the livelihoods of these workers, their families and their communities need to be protected, not jeopardised with extreme policies.
Future outlook of coal and the resources sector
According to the International Energy Agency’s World Energy Outlook (WEO) 2019, coal will remain the single largest source of electricity generation in 2040, supplying 25 per cent of generation globally. Australia is predicted to have a growing share of international coal trade as global coal demand plateaus out to 2040. Australia’s net exports are forecast to grow by around 18 per cent or 65 million tonnes of coal equivalent (mtce).
Evidence of coal exports into the future was provided by the Port of Newcastle’s statements during the Committee’s public hearings in Newcastle:
From a business point of view, our assessment is the next 15 years won't see any significant change. There's a slight uptick if places like Vietnam et cetera keep coming online as strongly as they are. For certainly the next 15 years we expect to see volumes sitting around 160 million and a little bit above.
Under the Government’s stable economic management, the resources sector is booming, generating record exports, royalties and taxes paid by mining companies. New opportunities are being pursued in relation to a range of critical minerals.
In its submission to the inquiry, the Productivity Commission, the Australian Government’s independent research and advisory body, noted the mining boom has made Australians substantially better off in the short and long term and that:
Adjustment from the mining boom is generally not a source of significant disadvantage and does not justify special intervention from governments.
Further, the Minerals Council also noted that 'many mining regions continue to perform well and will likely experience economic and employment gains for decades to come, irrespective of commodity cycles'.
Again, the Government Senators believe that the majority report (approved by the Greens and the ALP) fails to adequately recognise this reality.
Renewable generation is not without problems
Government Senators would like to highlight the issues caused by excessive reliance on wind and solar generation, and the uncertainty of relying on unproven technology.
In Western Australia, the uncontrolled rise of rooftop solar is placing the stability of the Western Australian Wholesale Electricity Market in jeopardy. Indeed, the Australian Energy Market Operator has indicated that from 2022, soaring levels of renewable energy could periodically overwhelm the system and lead to rolling blackouts.
In South Australia, a large proportion of electricity supply is sourced through wind and solar generation. The variable nature of these generation sources means that the Whyalla steelworks needs to consider the additional costs (up to $129 million) associated with 'firming' the electricity grid when making investment decisions about constructing an electric arc furnace. This evidence was not included in the majority report approved by the Greens and Labor representatives on the Committee.
Further, Government Senators are concerned that investments in unproven renewable generation technologies may not result in reliable baseload generation capacity nor solve grid stability issues. For example, the Aurora Solar Energy Project in Port Augusta was highlighted by many stakeholders as a potential baseload electricity generator. However, as the Committee discovered, the original project proponent is not proceeding with the proposed solar thermal plant due to difficulties obtaining finance. These difficulties are associated with problems at a similar plant, the Crescent Dunes plant in Nevada, which has suffered a number of technical outages and, as a result, has a variable production history. Again, this evidence was not included in the majority report approved by the Greens and ALP representatives on the Committee.
Addressing the current needs of regional Australia
In the view of the Government Senators, the majority report fails to adequately recognise that the jobs and industries that currently support regional Australia will continue to do so into the future.
Government Senators note that the term 'agriculture' is only mentioned a handful of times in the majority report and 'tourism' is given comparable treatment.
These industries are important in sustaining regional Australia and stakeholders noted the difficulties in filling existing positions. If effort is not made to support the regions to fill current vacancies, emerging industries have little chance of filling jobs associated with the new industries outlined in the majority report.
In addition, in the view of the Government Senators, there is inadequate discussion of jobs in health and social services in the majority report, even though the National Disability Insurance Scheme is rolling out across Australia and will be one of the main drivers of employment in regional areas. The submission of the Department of Social Services noted:
NDIS is expected to be one of the largest job creation opportunities in Australia’s history, with up to an additional 90,000 full time equivalent (FTE) employees needed by 2023. The department estimates that of the additional 90,000 FTE jobs, around 34% will be in regional and remote areas across Australia.
Investment in infrastructure
Government Senators note that the majority report only mentions infrastructure in the context of supporting the expansion of renewable generation capacity.
Evidence to the Inquiry demonstrates that regional stakeholders are calling for infrastructure to support the expansion of the agricultural sector. What is needed is better access to markets—through air freight, port infrastructure, road upgrades and intermodal rail facilities. Regional communities are looking for investments to diversify production, in food manufacturing and for assistance in developing export markets.
Similarly, Government Senators note that the majority report makes no mention of the water infrastructure needed to secure this vital resource which is necessary to sustain economic activity in Australia's regions.
National Transition Authority
The proposed Regional Transition Authority referred to in the terms of reference is reminiscent of the Labor Party’s election policies during the 2019 federal election. Labor’s ‘Just Transition Authority’ would ‘have the power to implement pooled redundancy and redeployment schemes for workers in coal power stations and associated mines’.
The policy also indicated that Labor would consider the case for the ambit of the Just Transition Authority to be extended to other industries and regions affected by climate and energy policy.
The Government Senators do not support the establishment of any National Transition Authority which dictates to the people of the regions what they can or cannot do.
A top-down, prescriptive and bureaucratic approach to regional development was overwhelmingly rejected at the federal election by the regions dependent upon mining and agriculture to provide jobs.
In the view of the Government Senators, the evidence indicated that the regional communities themselves know what they want and what is practical and appropriate. The Government should support the regions, not dictate to them.
The Government Senators on this committee believe in letting local communities shape their own future. The role of the Federal government is to be supportive.
Government Senators believe that there is a real danger to the regions that a so-called National Transition Authority would seek to impose a world view on the regions which is inconsistent with the views of the local communities – it is the future of their communities which is at stake.
As the Mayor Greg Williamson of Mackay Regional Council contended:
I think you would get a very, very dull reception for the establishment of another authority to lead a transition, when we don't really know where the transition is.
The Government Senators agree with these sentiments.
From the evidence presented to the committee, Government Senators do not believe that a National Transition Authority is required, or desired by regional and rural communities.
Conclusion
In conclusion, Government Senators note that the committee received detailed submissions and evidence from a range of stakeholders, including: government authorities and departments, business, industry groups, universities, non-government organisations, unions and individuals.
There is much work being undertaken to advance the diversification of our regions and to provide job opportunities for the future. This includes in many of Australia’s traditional industries: mining, agriculture and tourism. Examples have been provided of stakeholders in particular regions working together in a sense of optimism.
The Government Senators support the continuation of the industries and further development of the industries which have built our regions, including the resources industry, agriculture and tourism. The Government Senators agree with initiatives to provide support and advice services for regional businesses and to encourage diversification, upgrading, and upskilling opportunities for workers across the spectrum.
The Government Senators support initiatives for the Federal Government to work with States and Territories, industry stakeholders and communities to foster an economic environment conducive to growth, longevity and sustainability. In doing so, the Federal Government should seek to develop new areas of economic activity without jeopardising existing industries which are so important to regional Australia.
The Government Senators support initiatives such as the Government’s National Hydrogen Strategy. In this regard, reference is made to the announcement made by the Federal Government on 23 November 2019.
Government Senators are inspired by the actions being taken by local regions and communities to pursue opportunities. Much of the work being undertaken by the Federal government supports these actions. However, the driving force comes from within the communities themselves; the aspiration, passion and resilience of the people of our regions who are working together to build better places for their families and communities. Government Senators applaud these communities and the actions they are taking.
Senator Paul Scarr
Senator Susan McDonald
Senator for Queensland
Senator for Queensland