The Kimberley: The Right Thing Or Ka-Ching?
By Geoffrey CousinsJuly 19, 2012
As Western Australia gave its environmental approval to Woodside Petroleum’s plan, executive-turned-activist Geoffrey Cousins gave this inside view of the fight against the project — and a way out.
I am sitting in a nondescript meeting room in the Sydney business district, facing two men. One is Michael Chaney, chairman of National Australia Bank and Woodside Petroleum, one of the doyens of Australian business — some would say the doyen. The other is the then-CEO of Woodside, Don Voelte, a voluble American.
Voelte is running true to form, and words pour forth from him in a never-ending stream about the benefits of Woodside's plans to industrialise the Kimberley and bring rivers of milk and honey to the mouths of the Aboriginal communities who live there. Chaney doesn't speak at this meeting in October, 2010. He fixes me with what I assume is his steeliest gaze. He seems pleased with it.
Even when Voelte (who in late June was appointed chief executive of Seven West Media) launches into a scurrilous and defamatory attack on an Aboriginal leader I have been meeting with, or "getting into bed with" as the good Don puts it, Chaney sits there silently. He doesn't interject; he doesn't question his CEO for describing this person as "a criminal and a drunk". He sits there.
But suddenly the distinguished face comes to life, and a finger is pointed at me, jabbed towards me in fact, with these words almost hurled across the table:
"You are acting unethically."
This comes as somewhat of a surprise. We have never met before, and whilst I wasn't expecting to be presented with Woodside's Citizen of the Year Award, as I am a strident opponent of its planned massive gas hub at James Price Point in the Kimberley, nor was I expecting my ethical behaviour to be brought into question.
Not even at the height of the Gunns battle in Tasmania over its proposed pulp mill in the Tamar Valley, where accusations flowed fast and loose, had this claim been thrown at me — although just about every other negative remark had. Including the then-Tasmanian Premier's comment that I wasn't welcome in his state.
I ask Chaney to explain. He takes up the opportunity with relish.
"You are trying to deny the Aborigines in the Kimberley the benefits we will bring to them," is his response.
Ah, yes. This is the cry of the mining companies wherever they want to go in Australia where indigenous people live or have ever lived. "We will bring benefits that only our activities can bring. These will be employment, health and educational benefits that will help to solve the enduring problems of Aboriginal communities." So the issues the miners put front and centre aren't the obvious environmental risks; it's really all about helping people.
Woodside, and Chaney in particular, have perfected this piece of sophistry; perhaps they've come to believe it. And they are wholeheartedly supported in it by the West Australian government. When Premier Colin Barnett was asked why these benefits wouldn't still flow to the Jabirr Jabirr and Goolarabaloo people if the gas hub was located somewhere in WA other than the sensitive Kimberley coast, he replied, "No. They won't get them unless it's here."
Is there really some government policy that ties royalties or taxes from a particular site to the surrounding region? No, quite the opposite in fact. The WA government's Royalties to Regions programme mandates that funds can be moved to where they're needed. Royalties can be applied to any use the government chooses, which seems self-evident but the policy states it anyway. Strangely, one of the first applications of this initiative is to use royalties from Rio Tinto and BHP's operations in the Pilbara to build the Fiona Stanley Hospital in Perth. According to the Premier, the Kimberley is where the funds are desperately needed, which is true, but somehow they find their way to Perth.
More than 40 years ago, WA Premier Charles Court made comments similar to Barnett's when the Pilbara was opened up to mining: the local Aboriginal communities would be the beneficiaries. Their lives would change for the better.
What then are the facts of Aboriginal life in the Pilbara compared to other areas? This is particularly relevant since the region's largest city, Karratha, is the home of Woodside. If they haven't delivered all these benefits there, I would have thought it's unlikely they'll keep their promises anywhere else.
The Centre for Aboriginal Economic Policy Research, at the Australian National University, published a study in 2005 entitled Indigenous People and the Pilbara Mining Boom. A line of this report reads thus: "Despite 40 years of sustained economic development in the Pilbara region, the labour force status of Indigenous Pilbara residents has barely altered." The report examines in detail aspects of Indigenous health, education and employment in this region and compares them to other parts of WA and the state as a whole. It points out that life expectancy in the Pilbara for males is 52-55 years and for females is 60-63 years (current life expectancy for an Australian male is 79-80 and female, 84, according to the latest figures from the Bureau of Statistics). The ANU report goes on to say:
"If we add to this the fact of relatively high Indigenous morbidity rates commencing in young adulthood and rising throughout the prime working ages, then a pattern emerges of severe physical constraints on the ability of many in the community to engage in meaningful and sustained economic activity."
As far as the promised hospitals and other health and educational facilities are concerned, the report states:
"Among the issues underlying health status, this study emphasises the significance of ongoing backlogs in achieving environmental health infrastructure [and] the need for improved outcomes from education and training."
Even if all of this were not true, it's the fundamental premise that seems false. The concept that you now receive a good education in Australia or adequate healthcare if you happen to live in a valuable mining area, whether you are Indigenous or not, is so preposterous as to appear to need no reply. But perhaps not in the Premier's mind. Nor in the federal minister Martin Ferguson's mind, as he has made similar statements. And obviously not in Michael Chaney's mind.
"You don't understand," he says to me. "My family has been involved with Aboriginal issues for years. My brother Fred, you must know, has had a lifelong commitment."
I do know this. As a federal senator, Fred Chaney had a long track record of involvement in those areas. But my brother is one of the world's leading authorities on the treatment of pain. Few of his patients come to me for advice. I would have liked to quote Michael Chaney these words from Patrick Dodson in his inaugural Mahatma Gandhi Oration: "In the midst of the mining boom many Aboriginal people are finding immediate relief from the poverty besetting many of our communities by gaining employment in the mining industry. But I question whether in the long term our participation in unbridled exploitation is not in fact adding to the diminishment of our custodial responsibilities to humanity, global sustainability and resilience."
These words were not spoken by Pat Dodson until much later — not in fact until January 30, 2012. But they destroy the short-term promises of the mining snake-oil salesmen in two elegant sentences. As the father of Reconciliation and a person who lives these issues rather than reading about them, Pat Dodson may make some modest claim to believability on the matter.
But Chaney presses on. "And my daughter works at Kalumburu — I suppose you've never heard of it?"
I explain that my wife and I had dinner there with the last remaining Benedictine monk a few years ago. I don't say how devastated we were to see the appalling conditions in this place, the most northerly settlement in Western Australia, or to learn that it had been a prosperous and healthy community since its founding in 1908, before the Kalumburu road was dozered through the 270 kilometres to the south to join up with the Gibb River Road. There doesn't seem any point, since Chaney is clearly annoyed I've ever been there at all.
Instead I ask about other matters. Why not build this massive industrial plant somewhere else? It's said to be the largest gas hub anywhere in the world, although in October of 2009, Premier Barnett said, "This is not an industrial complex as someone would try and describe it. It is basically a large refrigerator." Some refrigerator.
The land area for the site is 2,500 hectares, with a further 1,000 hectares of marine zone. Presently, the largest gas hub in the world is Qatargas, which has an output of 42 million tonnes per annum. The JPP project is scheduled to produce 50 million tonnes per annum. It will also produce 39 million tonnes of carbon dioxide each year — more than the annual output of the country of New Zealand. The problem for Barnett is that he also said on April 13, 2010 at an oil conference in Houston, "In every sense the biggest game in town is the development of mega projects for the export of LNG. These projects, both existing and proposed, dwarf any other industrial projects in Australia." Politicians always like to please an audience.
So, why not pipe this gas to the Pilbara, an area already pockmarked by mining excavations and processing operations? Why not use a floating platform as Shell is doing at its Prelude Field in the Browse Basin? No environmental groups have voiced any opposition to this initiative, despite the cry from the mining companies that nothing will ever satisfy them.
Not viable. Not possible. Can't be done. One by one, the negative responses roll out.
But I'm a businessman, not a professional tree hugger, so I'd like to know why? Why are the other land-based alternatives not viable? JP Morgan published a report in 2009 saying there were a number of these sites that were economically viable. Out of date, irrelevant, is the response. Why not the floating option like Shell, as the James Price Point gas is likewise in the Browse Basin? Not possible because of the weather, Chaney replies. Different weather conditions prevail in this area that would make it dangerous for workers.
These responses were puzzling at the time, but more so later. I meet with Shell, and I'm told by the senior executive responsible for their investment in this proposed project that there's no technical reason a floating platform can't be used at James Price Point. I then check the government approval documents given to Shell for the Prelude Field, and find that one of the conditions for development is that the platform must be able to withstand a one-in-ten-thousand year weather event. The weather at the Woodside field must be something to behold.
Then why the insistence on James Price Point as the site? Because the state and federal governments wrote that into the lease renewal documents, the Shell executive says.
Is that common? I ask.
"I've never seen it before," is the response.
Later in 2011, Merrill Lynch publishes a 44-page report on possible alternative sites, including the Pilbara, and also concludes that there are several viable options. The Australian newspaper reports this conclusion.
I meet with the federal environment minister, Tony Burke. I ask him if he has read the Merrill Lynch report. He's never heard of it. I suggest it is a relevant document for a minister to see when it deals with a project awaiting his approval. He asks a staff member, who is attending this Sydney meeting by video link from Canberra, to get a copy. The staff member replies that it isn't publicly available. I point out that the press have already reported on it. Silence from Canberra, followed by a curt instruction from the minister to put the report on his desk the next day.
None of this is encouraging, but plenty of other events are. Unless the local community supports a cause, it's difficult in these environmental fights to win the battle. The Broome community, a magic mix of Aboriginal, Chinese, Malay and European families all melded together, initially seemed to be stunned and uncertain over this issue. The first time I visited Broome to give a view on the subject, they would only meet in the garden of a private home.
But many things have brought a change. When more than 60 riot police, in training for CHOGM, flew in from Perth with the capital city media in tow, the local community was unsettled to say the least. When the riot squad, now travelling with a reality TV show film crew as well, arrived on Manari Road at James Price Point to remove a group of protesters who were blocking access to the construction site, including a number of prominent Aboriginal leaders, the disquiet lifted several notches. Late that day, after the media and the reality television program had left, the riot squad returned, formed a flying wedge and smashed the protesters off the road.
When I visited the site a short time later I spoke to several of these people, including an elderly Aboriginal woman who said she'd been knocked down into a roadside ditch. While we were speaking, we were constantly filmed by private security personnel employed by Woodside. Every car that passes their checkpoint, set up on a public road, is filmed — every number plate, every face. On a public road. In Australia.
Imagine if this occurred in Sydney or Melbourne, or even Perth. Every citizen being filmed and recorded by employees of a division of Halliburton hired by a mining company. The security goons refused to speak, refused to give their names, refused to respond in any way. They followed us up Manari Road in their vehicles with reflective windows, wearing their sunglasses with reflective lenses. Is this Australia now?
I thought not, so when we returned to Broome, I went to visit a senior police officer. Another anonymous conference room, another unfulfilling response.
I asked him why the police allowed these private security people to patrol and film on a public road. He replied, "Well, you can film them, can't you?"
I asked him why they were allowed to block access to public land. The response was, "Ah, yes, well there we are in uncharted waters."
Finally, I asked him whether he had taken paramedics or made any other provision for medical assistance when he escorted the riot squad out to James Price Point.
"Why would I?" was the response.
"Because it's a remote place, and there's no way to get medical help for an injured person. And you knew the riot police were planning to charge them in a flying wedge."
At this point I was asked to leave, not politely but not with any physical aggression either.
The sea breezes of Cable Beach blow away some of the unclean feeling of those encounters, but it's still easy to wake in the night and see those smug faces pointing cameras at me and refusing to speak. Where am I? Haiti?
No, I am on Cable Beach and it's the next day and 5,000 people are there also. One third of the entire population of Broome has come down to the sea to join in a gentle protest against the gas hub ruining their way of life. The Pigram Brothers sing, and Rob Hirst from Midnight Oil, and there's not an unhappy note from anyone.
Except maybe the police, who sit in the sand hills because they don't know what else to do. The singers are on a boat, so technically no one needs a licence to be there. The riot squad has a day off.
What am I doing expending all this time and energy on a place Premier Barnett describes as "a rocky wasteland"? He also says, "James Price Point has a beach, not remarkable". Are these remarks reminiscent of former Tasmanian Premier Robin Gray's description of the Franklin River when the dam protests were on as just a "leech-ridden" ditch? They are to me. If you've rafted the Franklin, you'd never allow it to be dammed. If you've driven or flown or cruised the Kimberley, you couldn't allow it to be industrialised. Not any part of it — rocky, flat, mountainous or otherwise. Not the land or the sea.
And the sea here is as unique as the land. The area off James Price Point is one of the largest migatory areas for humpback whales. Not to mention other remarkable sea creatures, such as dugongs, massive rays, maybe marine life as yet undiscovered. I do mention the whales to Michael Chaney.
"Nonsense, it's not a major whale area," he says.
Really? But what about the Curtin University report that says it is.
"It's rubbish", he replies. "I spoke to the Vice Chancellor. They're ashamed of it."
I try another tack. "How about the report of sightings of whales and calves over many years at James Price Point by the two naturalists who live there?"
"Never heard of it," says Chaney.
It was the Commonwealth Government's Humpback Whale Recovery Plan (2005-2010) that states that a critical habitat for whales in Australia includes "the southern Kimberley between Broome and the northern end of Camden Sound". This critical habitat zone as described in that plan includes James Price Point. I can only assume this document is also unknown to Michael Chaney.
It's a rare talent to be able to dismiss whales with a wave of the hand. Most people can see them pretty easily. Most people who've been to James Price Point have.
If this massive gas hub is built at this site, a port has to be built as well. Because of the extreme tidal movements in the Kimberley, an area of dredging stretching over six kilometres out to sea has to be maintained for the life of the plant — approximately 50 years. Woodside describes the effects of this dredging in its annual report as "temporary". Approximately 1,500 large ships have to come and go each year, and innumerable support vessels. Even the most intrepid whale might be slightly disturbed by this, the constant dredging and the use of sonar devices.
But while the federal government is busy telling the Japanese not to kill whales, it is remarkably silent on this aspect of their procreation, or indeed their simple enjoyment of life. Death, apparently, is what matters. Politically speaking.
So every time I think it's not worth the fight, the facts get in the way. The Kimberley is the last remaining pristine savannah region on the planet. The oceans are the cleanest and have the most complex and rare marine environment on earth. The cultural heritage and rock art are beyond any measure of their worth. It's obvious why you'd try to keep them.
But still people ask. "Do you own land there? Do you have shares in some tourist operation? Are you trying to nobble the government?"
No. No. No. I'd like to ask why these cynical questions are put to me, but I don't. You can't afford to get angry. Let the other side take the anger route. They'll wear themselves out and trip over their own hubris sooner or later. And in this Woodside issue, they are. They've lost the support of the Broome community. Now they lose in court. On December 6 2011, in the Supreme Court of WA, the judge ruled that the WA government has been sloppy in describing the land it is trying to compulsorily acquire for this project and the Court strikes down all of its efforts thus far. The process can, and likely will, start again; indeed in June, another traditional owner of James Price Point lodged a fresh legal challenge, prompting Woodside to pause site works. Last month, it was revealed that four of the five board members of the state's Environmental Protection Authority had conflicts of interest that disqualified them from the deliberation. The minister delayed the release of the decision until this week, when on the say of EPA chairman Paul Vogel, the project was approved with 29 conditions. The Wilderness Society immediately raised the prospect of a legal challenge to the EPA approval. State and federal approvals are yet to come. All of this involves time and uncertainty. The financial markets hate both.
And they express their growing dislike for this project. In January 2012, Macquarie Bank publishes a report about the project headed "Has it missed the boat?" The proposed joint venture partners, including Shell, BHP Billiton, Chevron and BP, have also expressed reservations at various times. So the Woodside CEO tries to head off any further uncertainty by stating that if any of these companies choose not to take up their allocations, Woodside will buy them out.
Really? Just like that? The CEO of a public company would change the entire structure of the biggest non-government industrial project in the country's history, without any reference to shareholders or anyone else? Now that's corporate governance for you.
But what to do if after all this you didn't want to go ahead? If you are the board of Woodside, how could you get out of this project altogether or move it to a more acceptable site, without looking as if you've suffered a loss at the hands of a ragtag group of activists? Would you wait and fight it to the death or seize the day and somehow turn it to your advantage?
Woodside isn't a company like Gunns once was. It is stronger financially; in my opinion it has a more experienced and better credentialed board; it has less political baggage. At the moment. But as I see it, all these strengths are at risk in this one project and can disappear in a surprisingly short time. Once confidence in a company begins to crumble, chairmen can become casualties, reputations can suffer, shareholder value can erode in a flash.
So if you're smart, you move. You take the initiative, you gain kudos for choosing the right path and engage your opponents instead of keeping them at arm's length. You come out of the bunker before the walls crash around you.
This is where Woodside is right now. It's a fascinating dilemma — the sort that is increasingly common in business today. Ignore community concerns, plough ahead with hubris and contempt for contrary views, and you can end up with a new board apologising for the sins of the old before you know it.
But it's a tight-knit community in WA and half a dozen people think they run the country. No one makes this clearer than Premier Barnett when, on February 1 2012, mining magnate Gina Rinehart makes a raid on Fairfax stock. He says, "Little old Wesfarmers bought Coles, Kerry Stokes has bought Channel Seven nationally, now maybe Gina Rinehart's going to own Fairfax." He could have pointed out also that Michael Chaney is the former CEO of Wesfarmers, Kerry Stokes is a major supplier of mining equipment and controls the only newspaper group in WA and Gina Rinehart is a vocal and relentless opponent of many restrictions on mining companies. Instead, Barnett sums up the influence of the group in this way: "The rest of Australia, get used to it: this is where the money is."
So which path would Woodside take? It could select a new site, it could edge away from responsibility by selling down its shareholding, or it could stand up to the government and say that the lease renewal conditions were wrong. In January, the answer comes: Woodside announced an auction would be held for part of its shareholding. In June, Woodside sold 15 per cent of its stake to the Japanese consortium involving Mitsui and Mitsubishi for AUD2 billion. "We have a commitment to take James Price Point through to a certain decision point," Woodside's chief executive and managing director Peter Coleman told the company's annual general meeting the day after the MIMI deal was announced.
Some people think this is the end of James Price point as the site; others aren't so sure.
So what can you do if the owners, irresponsibly, decide to press ahead at James Price Point? Not much really. After all, a lot of people will make a lot of money and the country will benefit from all the taxes and royalties. So say the cynics, but not the people of goodwill who fight these battles to their considerable cost: the lawyers who donate their time to fight the court battles while the companies use shareholders' funds and the governments use taxpayers', or the protesters who camp by the roads or climb the trees and live off hope and a love of wild places, or people in the local communities who risk being ostracised because they might take a dollar or two out of someone's wallet in order to save a way of life, or the volunteers in any number of environmental groups who suffer abuse from many quarters.
Is it possible a major Australian company like Woodside would just walk away from its responsibilities in an issue such as this? It's possible because companies have tried to engineer ways to dodge difficult issues in the past, but I would like to think not here. It is increasingly unlikely that the project will proceed in the Kimberley.
The gas will be piped to the Pilbara or the Northern Territory as logic suggests. So surely Woodside could take the initiative and lead the change. I will applaud them if they do. My main aim for 2012 is to sit across that table again from Michael Chaney and be able to say: "You're acting ethically, Michael. Congratulations."