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Interview

with Anna Bligh, Premier and Minister for the Arts, Queensland Government

18.01.2011 / Energyboardroom

As the Premier of Queensland, it seems that you have made it your mission to act as an ambassador between the coal seam gas industry, the local population, and the international community. To start, can you explain the importance of the coal seam gas industry in Queensland?

In Queensland, we see the LNG industry as an opportunity to create a new generation of employment and prosperity. We have—like every other country around the world—just come out of the global financial crisis, and are still building the recovery. We identified the LNG industry as a very important part of rebuilding, and of creating new industries.

In some respects, the emergence of the coal-seam gas and LNG industry is a natural progression from our gas policy—our energy policy—in the early part of this century. But it is equally true that it could not have reached the stage that it has, as quickly as it has, in the last 8 months, without enormous focus from government. We have changed the structure of government to ensure that the approval process is as smooth as possible, and expedited. There are clear environmental and social concerns, and we have not sacrificed any of those, but we have not let these approval processes sit in people’s in-trays and go round and round in government. We have put in place some centralized decision-making, including a special LNG cabinet committee that is chaired by the treasurer, to, again, ensure that there is not any slowing down. We have done that because we understand the enormous untapped potential that is here for an entire new industry.

For many decades now, Queensland has been supplying energy to the world—predominantly to Asia—in the form of coal. Many of our Asian customers are looking to diversify their energy use, and they are looking for cleaner sources of energy. We find ourselves now in a position where we can meet those new demands with coal seam gas.

The scale of the gas resource here is still being understood. This project is, in both resource and investment terms, as big as the Gorgon Project in Western Australia. It has been brought to regulatory approval and financial decision stage, effectively, within 2-3 years—which is, in world terms, remarkable.

The challenge now, of course, is realizing the potential, and workforce recruitment and skills recruitment is the next big endeavor. Some of that challenge obviously resides in the hands of industry; but equally, our government believes that we need to play an active role. We have put in place a joint $10 million dollar skills program with industry. Since July this year, more than 1800 workers have commenced training, readying themselves to take up these jobs. We are so pleased with the work that we have done on this program, that we have put legislation forward that will create a Skills Commission in Queensland that will be based on this model.

How are you approaching the challenge of building the industry in Queensland in the long term?

We think it is important to be very clear about what the role of government is. We accept that this industry, in our state, is in an embryonic stage, and government has to be very active in facilitating the birth of an entirely new export business.

We see that we have three roles to play. One is developing the industry: facilitating approvals, skills, infrastructure, etc. Secondly, protecting natural environment in the context of new industry: we have, again, a very active, hands-on role in developing the pertinent legislative underpinning. We did not have any legislation governing this industry 12 months ago, and now we have an entire regulatory framework. The third priority for us is recognizing that, as exciting and as big as this industry is, we need to work very carefully with the communities that are affected by it, to ensure that they are prepared for the growth that is about to happen, and that they can maximize its opportunities.
Everything is happening at such a pace that it is a very big challenge, but it is a very exciting one. Some of the communities that are affected—particularly in the gas field area—have been small rural communities in decline for more than two decades. So, this is, on the one hand, an enormous potential for them to grow and develop. On the other hand, there are some growing pains that we have to help them manage.

The international community has been very interested in seeing what has been happening here in Queensland. Over the last few months, there has been some quite promising investment from international companies. What would you say to our readers about the investment climate here in Queensland for foreign companies looking to get into this industry?

International investors can have a high degree of confidence in these projects, and in investing in the Queensland economy. We have, in the last 50 years, established ourselves as very major players in the coal export business, and that is a business that now rests on some of the largest global players in the world. This is an environment with a stable system of law, a stable system of administration, and it is very business-friendly. We welcome investors.

We are a very, very big state—bigger than Texas—but we have four million people. So we are deeply conscious of the fact that our long-term prosperity resides on exports to larger markets, and investment from across the country and across the world.

Australia was looking a little bit shaky for international investment maybe 12 months ago. The situation is different now, with a new federal government in place. How would you describe the situation today regarding the taxation question?

Taxation and royalties are one of those vexed issues that resource companies are always pained by. We worked very hard with all of the major companies here to establish a royalty regime 18 months out from the point at which they would be going to their international boards for final investment approval. We did that because we understood that if we were to see a new industry start, we had to give them certainty. And we have done that. I think that if you talk to any of them, they will tell you that that was one of the critical parts that had to be resolved early on.

There is still a small debate about the federal taxation arrangements. I am very confident that we will see those settled in a way that works for both the taxpayer and the companies. Ultimately, these resources belong to the citizens of Australia, and we believe that there has to be a fair balance between companies making a profit from investing here, and giving something back. I think you will continue to see Australian federal and state governments take that view. Sometimes there will be a bit of an argument about where the balance lies, but I think we are almost through that in this case.

Which do you think will be the biggest challenges for companies in the coming years, as they approach the finalization of their projects?

There are two big phases of this industry. Firstly, the construction phase—and the size and scale of these projects are enormous. Each will be constructing pipelines of between four and five hundred kilometers; they will be constructing production trains; they will be developing new port facilities; and they will be developing gas fields.

So the construction phase, between now and 2014, will be very intense. It will bring with it increased challenges for these companies in their dealings with landholders, and we really now have reached the business end of developing the gas fields. I think it is fair to say that some companies have managed that issue better than others, but I do not think there are any companies, any more, that are not putting significant resources into developing better relationships with landholders—relationships critical to the success of this industry.

The skills challenge for the construction phase is very different from the operational phase. We are talking a massive workforce that will predominantly be accommodated in temporary work camps, so there will be some social challenges to manage.

Because this is a new industry, there is an obligation on the major companies to work very hard to give the public the confidence they need about the environmental issues. Much of these resources are located in or near the Great Artesian Basin, which is a significant water resource, and, quite reasonably, both the government and the public want satisfaction and confidence that these resource industries can co-exist with the water resources and the agricultural sector. So, I think there is a lot of scientific work that the companies have to put in—and a lot of talking to the community about the outcomes, and being very transparent.

The companies do not have an off-take risk, in the sense that they have signed contracts. But the challenge will be for them to meet timetables, going into the second, operational phase, in 2014.

In your previous political roles, you have been the Minister of Education, and also Minister of Trade, Development, and Innovation. How do you think your previous experiences have helped you approach a challenge like this in your role as Premier?

Ultimately, every role you play, particularly in government, prepares you for the responsibilities of leadership. The role of Premier needs to bring together disparate parts of government to bring an industry to fruition. I have already mentioned that this industry requires an expedited approval process—which means you really need to understand the industrial approval process, and the way that mixes with the environmental requirements. But as the former Education Minister, I am also very conscious that you do not develop skills for a new industry overnight, and you need to be working hand-in-glove with industry to develop training packages that are tailored—if you are going to get the people you need, with the skills you need, in the timeframe that you have.

I certainly learned, as Minister for State Development, how critical it is—if you want to make things happen in a reasonable time frame—to bring parts of government together, and to structurally make that happen. Otherwise, companies end up knocking on the door of the Environmental Department, the Department of Mines, the Department of Energy, the Department of State Development, etc. etc., and the process will happen, but it will take a lot longer. So bringing it all together certainly helped get this done in a swift manner.

What would you like your legacy to be in this industry? What would you like to have achieved, if you look back years from now?

I see this industry in two ways. One is driving a whole new level of prosperity for Queensland. So I would like to look back and see thriving communities that have turned around after years of economic decline—where people can aspire to an economic environment where their children can stay and get jobs that are rewarding, satisfying, and long-term; and where there is an economy that is benefitting the whole state.
The potential here is for this industry alone to add one percent to our Gross State Product. That is remarkable! I would certainly like to look back in 20 years’ time and see that happen.

I am also very aware that we play a role in our region. Many of the countries that we are supplying are still developing, and if they can develop a strong industrial base, that builds economic security and prosperity in their nations, and do it in a way that is cleaner, then that will benefit not only the whole planet, but it also has a strategic significance for Australia. We want to see our Asian neighbors improving their quality of life, and growing and developing their economies. They need an energy supply to do that, and our program contributes to that supply.

In 20 years’ time, we would like to look and see the grandchildren of the Asian companies that are signing these deals doing well.

Do you have a final message to our readers regarding Queensland?

Queensland is the growth state of Australia, without any doubt. It is the exciting, go-ahead state where things are happening. If you come to Australia, look north, and you will never regret it!

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