Forestry chief Bob Gordon and Forestry minister Bryan Green
Context:
On a read of the collective life experiences and background of the fifteen members of the Legislative Council it is clear that there is limited personal exposure to commercial activities, negotiations and relationships.
I have been fortunate enough over the past 35 years to have been intimately involved in some large commercial activities in the petroleum, resources, pipeline and water industries.
This note briefly outlines the primary lessons that I derived from those commercial interactions with the intent that those lessons might be used to judge the robustness and benefits of the TFA.
Lesson One: BHP Export LPG Contract
In the late 60’s BHP signed an export contract with Bridgestone LPG (now Mitsui LPG) for the long term supply of LPG from Bass Strait to Japan. The price agreed was relevant to the price of the day.
In 1972 the Yom Kippur War resulted in a six- fold escalation of oil prices world- wide.
The then Chairman Sir James McNeill advised Bridgestone that BHP would honour the existing contract terms for the 15 year duration of the contract. Bridgestone Founder and Chairman Mr Ishibashi politely rejected this stance and indicated that a renegotiation of the price to the then higher level was necessary.
This contract stated Mr Ishibashi was not about price or cost it was about a relationship. What was important was a long term and stable relationship that would allow both parties to prosper.
The contract was negotiated and export sales have continued since then
Lesson 2: North West Shelf LNG Sales and Purchase (SPA) Agreement
In the mid 80s the six participants in the North West Shelf Project executed an SPA with eight buyers in Japan including Tokyo Electric, Tokyo Gas, and Chubu Electric for the supply of six million tonnes of LNG over twenty years – a contract worth tens of billions of dollars.
The SPA was simplistic in approach and drafted in both Japanese and English. While the contract contained broad references to delivery, timing and price (far less detailed and voluminousthan the domestic gas contract signed about the same time with the State Energy Commission of Western Australia) the prime focus of the contract was “Social Responsibility”.
This concept was vital to the contract framework and underpinned the relationship between Buyer and Seller, and both parties were committed to fulfilling that responsibility.
As suppliers of energy to the Japanese community and industry, the Buyers had an obligation to act to benefit society at large, and the Sellers had to fulfil their part.
[In the Japanese context Social Responsibility is a duty every individual or organization has to perform so as to maintain a balance between the economy and the ecosystem. A trade-off always exists between economic development, in the material sense, and the welfare of the society and environment. Social responsibility means sustaining the equilibrium between the two. It pertains not only to business organizations but also to everyone whose any action impacts the environment. This responsibility can be passive, by avoiding engaging in socially harmful acts, or active, by performing activities that directly advance social goals].
This substantive clause was the most important one in the contract and perhaps the last to be agreed and understood.
Lesson 3:
During 1994 the North West Shelf Gas Venturers endeavoured to disaggregate the existing Domestic Gas contract with the State Energy Commission of Western Australia (SECWA). This required negotiating direct contracts with Alcoa, AlintaGas, Western Power, Hamersley Iron (RTZ) and Robe River. The total volumes of these Take or Pay contracts was 414 terajoules a day for a period of 20 years, with a value of some $5billion plus.
Not an easy task with major players in both the resources and energy sectors.
The deadline for completion was 31 December 1994. The final accord was completed at circa 1130pm that evening with the last company signing with the comment – “ We would have liked a better deal but at the end of the day it is about the long term benefit to the State of Western Australia and the community. We have achieved that and I am proud of the outcome”
Lesson Four:
During the late nineties Chevron Australia led a project group that was endeavouring to create the PNG to Queensland Gas Pipeline from the Western Highlands of PNG to Queensland.
This necessitated the negotiation of a pipeline corridor across Torres Strait, down the length of Cape York to facilities in Townsville, Gladstone and Brisbane. Some 20 different indigenous groups lay across the pipeline route, many who were not talking to each other and had differing agendas and cultures.
With the support of some indigenous leaders (notably Noel Pearson), a Heads of Agreement was executed by all but one of the groups detailing pipeline route, employment and business opportunities and education support – an historic first in indigenous dealings in Australia.
In a moving ceremony in Cairns,Noel Pearson made this telling comment – “We have demonstrated our ability to negotiate with strength and commitment for a positive outcome for all aboriginals. This is about a better future for our children and our grandchildren”
Due to economic and other factors this project has now been restructured as the PNG LNG Project under the guidance of ExxonMobil.
Lesson Five:
For over 100 years the Wimmera Mallee region of Victoria relied on an open channel system to supply water for domestic and stock consumption. The channels, some 18,000 kilometres in length, flowed northwards from the Grampians, covering an area of approximately 37,500 square kilometres (Tasmania is approx. 68,000 sqkms).
During any years some 120,000 megalitres of water left the Grampians to deliver a total of 17,000 megalitres with about 103,000 megalitres lost in transit due to seepage and evaporation. IN the late 20th century this was not sustainable environmentally, economically or socially.
In 1980 discussions commenced on replacing the channels with pipelines, in 2005 agreement was reached with the Federal and State Government for pipeline construction funded one- third Federal, one-third State and one-third Community. In 2010 the last of some 9000 kilometres of pipe was completed.
The debate lasting almost 30 years was acrimonious, sometimes divisive and always strident, with many of the community wanting status quo = “ I do not want to lose my dam, where will the yabbies go, wetlands will be lost, birds will disappear, it will cost too much,etcetc”.
The drought of 2001/3 focussed the mind, the system was built, water has returned to Lake Hindmarsh and the Wimmera River, communities are once again buoyant and living . As stated by one of the campaigners – “Pipe-it or Perish -This for our kids”.
The community is now united.
Question for the Legislative Councils:
I have espoused five principles that emerged from the five commercial activities described, viz:
• What was important was a long term and stable relationship that would allow both parties to prosper.
• A trade-off always exists between economic development, in the material sense, and the welfare of the society and environment. Social responsibility means sustaining the equilibrium between the two.
• We would have liked a better deal but at the end of the day it is about the long term benefit to the State of Western Australia and the community.
• This is about a better future for our children and our grandchildren
• This for our kids.
I would ask the members of the LegCo:-
“Does the TFA have the capacity to deliver or meet any of these five Principles?
Because if it does my view would be that you have a moral and ethical obligation to support the legislation – “government of the people, by the people, for the people!” – not special interest groups.
Footnote:
I must declare a vested interest in the passage of this bill as I have been debating the need for the protection of the Coupe BA388D adjacent to my property on the ground of the high conservation value of the area – European and Indigenous Heritage, and protected and endangered species.
TT: John Powell’s painful saga (includes all articles)
Under the TFA this coupe would, I believe, be designated a World Heritage Area.
JLP
04 December 2012
