News

The Morrison government has awarded $21 million to a fossil fuel company that helped draft the regulatory regime for the gas reserves it intends to exploit. By Mike Seccombe.

Morrison ministers lobbied over Beetaloo Basin

Federal Resources minister Keith Pitt.
Credit: AAP / Lukas Coch

On September 28 last year, an invitation was extended to federal Resources minister Keith Pitt, on behalf of the chairman of Empire Energy, Paul Espie, for a site inspection at the company’s proposed gas mine site in the Beetaloo Basin in the Northern Territory.

The invitation added: “I understand that meetings in Darwin with Northern Territory government ministers are being arranged by Minister Taylor’s office and also a CLP [Country Liberal Party] fundraiser dinner.”

Pitt was unable to make it, but a couple of weeks later, on October 15, the fundraiser went ahead. Angus Taylor, minister for Energy and Emissions Reduction and the driving force behind the Morrison government’s contentious plan for a “gas-led recovery”, was there, along with senior representatives of Empire Energy.

The next day, Taylor and Espie, along with the managing director and chief executive of Empire, Alex Underwood, and 15 others, flew on a chartered plane for the site visit.

Two months after that, Pitt announced a government-funded $50 million Beetaloo Cooperative Drilling Program “to help accelerate development of gas projects in the Northern Territory”.

A month after that, a further $217 million – $173 million from the Commonwealth and the rest from the NT government – was announced for “Northern Territory Gas Industry Roads Upgrades” to enable access to exploration areas.

On July 7 this year, after months of lobbying by the company, Pitt and Taylor announced the first three – and so far only – exploration grants, totalling $21 million, awarded to Imperial Oil and Gas, a subsidiary of Empire.

Two weeks after that, on July 21, Underwood appeared before the senate environment committee, which is looking into the government’s plans to open up the huge gas resources of the Beetaloo.

The chief executive avoided referring to the dinner in Darwin last October as a party fundraiser, and claimed ignorance when Labor senator Malarndirri McCarthy said it was described as such in the letter to Pitt. It was only in written answers to questions on notice released this week that the company admitted it was a party fundraiser: “While we were clearly aware the dinner was taking place, it was not referenced in our invitation to the minister.”

The senate inquiry has gleaned other details as well, such as the full list of passengers on that flight the day after the fundraising dinner. Along with Espie, Underwood and Taylor, there were four other senior executives from the company, Taylor’s energy policy adviser, a couple of conservative politicians from the Northern Territory, a Sky News journalist, and representatives from the oil and gas industry lobby and Macquarie Bank.

The most interesting names on the manifest, however, were Ryan Arnold and Nick Cater.

Arnold is chairman of the Hume Forum, the political fundraising body associated with Angus Taylor. Nick Cater is a former editor of The Weekend Australian and executive director of the Liberal Party-aligned Menzies Research Centre.

Espie has been a director of the Menzies centre for a decade and its chairman since 2019. He and his company also have been generous political donors, having given hundreds of thousands of dollars to the Liberal Party – and smaller sums to Labor. A couple of years ago, he was lauded in parliament by Liberal MP Jane Hume as one of the “doyens of the Liberal Party and titans of business”.

Another big Liberal donor, party life member and sometime factional player, Tasmanian billionaire Dale Elphinstone, also is a major shareholder in Empire.

There is no suggestion that any of these businesspeople has acted inappropriately, but there is much to criticise in the government process around the grants program.

The senate environment committee has taken evidence from Empire Energy that a week before the grants scheme was announced, they discussed it with Taylor without departmental staff present. The committee, chaired by Greens senator Sarah Hanson-Young, has also heard from bureaucrats that the scheme operated on a “first in, best served basis”, allowing Empire to get the jump on other potential applicants. It heard that Empire provided advice to Taylor about the regulatory regime for gas-fracking in the Beetaloo.

There was a lack of consultation with Indigenous owners and a failure to implement recommended environmental safeguards, according to evidence given to the committee. Further evidence suggests there were significant concerns about Empire’s eligibility from the grant selection panel, made up of bureaucrats from Pitt’s department and NT government. One of the three assessors deemed its application “unsatisfactory” on two out of three criteria.

That document is missing some information – the assessor’s comments were redacted – but it does contain a reference to “electorates”. Hanson-Young’s office is seeking more detail from the government, with the senator saying she sees unsettling parallels between the administration of this grants process and those for sports rorts and commuter car parks.

“It seems the Morrison government can’t manage a grant program or spreadsheet without rorting public money,” she says. “Only this time they are ripping off the climate, too.”

This Tuesday, Hanson-Young’s committee will release an interim report on the government’s management of the Beetaloo. On Thursday – subject to the vagaries of parliamentary timetabling – the Greens intend to move a disallowance motion in the senate, which would scrap the whole $50 million Cooperative Drilling Program.

The Greens think the senate crossbench will vote with them. If Labor does, too, Empire will lose its money. This is far from certain, however: Labor voted against another disallowance motion when it was moved by independent MP Zali Steggall. It’s understood there is division on the issue, exacerbated by the evidence of maladministration highlighted by the senate committee.

Thursday looms as a test of Labor’s commitment both to due process and to the environment.

It is not just about Empire Energy, either, but about a much larger issue: the subsidisation by government of fossil fuel projects.

Around the developed world, governments are rapidly moving to withdraw this support. The action has been strongest in relation to coal, which helps explain the Australian government’s pivot to its “gas-led recovery”. Most advanced countries now have clear time lines for phasing out domestic coal production and generation and are focusing on measures to stop the financing of fossil fuel development in the developing world.

After its meeting in May, the leaders of the G7 countries released a communiqué pledging an “end to new direct government support for unabated international thermal coal power generation by the end of 2021, including through Official Development Assistance, export finance, investment, and financial and trade promotion support”.

Some countries are going further. At the end of last year, Britain’s conservative government announced it would scrap all export finance, aid-funding and trade promotion for crude oil, natural gas and thermal coal projects. Over the previous four years, these subsidies had cost the country £21 billion.

Just this week, the Biden administration in the United States announced it would use its considerable voting power in the World Bank and other multilateral development banks to oppose most new fossil fuel projects around the world. The so-called “guidance” from the US Treasury was firmest on coal and oil. It allowed limited exemptions for the use of gas, but would oppose financing for new production.

But in Australia, the government continues to give massive amounts of money to fossil fuel companies. In a report in April The Australia Institute found government subsidies to coal, oil and gas totalled some $10.3 billion last financial year.

Most of that came from the Commonwealth. One tax break alone, on fuel excise, was worth $7.8 billion. State governments of both political persuasions spent a combined $1.2 billion, mainly through subsidising exploration, refurbishing coal ports, railways and power stations and in the pursuit of “clean coal” research.

Last month, Bloomberg New Energy Finance released its Climate Policy Factbook, a detailed comparison of the responses of 20 advanced nations to climate change. It found Australia was going in the “wrong direction”.

Over the five years from 2015 to 2019, Australian spending on fossil fuel subsidies increased by 48 per cent, the most of all 20 countries, the report found. Most of the increase was in the form of tax breaks to oil and gas producers. Total spending was $US38 billion ($52 billion).

And the Morrison government continues to go proudly in the wrong direction. Last week – on the day the latest report from the United Nations Intergovernmental Panel on Climate Change came out – Morrison again refused to commit to net zero by 2050.

He chose not to mention the decisive moves by other advanced nations to cut fossil fuel use and subsidies, and instead focused on the efforts of the developing world.

He noted: “The developing world accounts for two-thirds of global emissions, and those emissions are rising. That is a stark fact. It is also a clear fact that China’s emissions account for more than the OECD combined.”

In support of his excuse, he misappropriated the words of the United States special envoy on climate, John Kerry.

Morrison recited a small grab from Kerry – apparently lifted from an interview with The Washington Post on April 21: “If China went to zero tomorrow with the United States, we would still have a problem. So every country has to come to the table. This is the single biggest multilateral global negotiation the world has ever known.”

Having read this, Morrison said: “I agree with that.”

“But,” he continued, “the thing that solves it is not political commitments. It’s real technology. That works on the ground.”

This was a gross simplification of what Kerry said. Although Kerry also talked about technology, he talked about different technology: advanced battery storage capable of running the grid for weeks, zero-emissions green hydrogen production, direct air carbon capture. None of these things are on Morrison’s list.

Kerry stressed the need for countries to not only set a net zero goal but to set more ambitious interim carbon reduction targets – something else Morrison has not done.

Equally importantly, the US climate envoy spoke about plans to redirect government finance away from fossil fuel projects and into renewable energy sources. This government is doing the opposite.

“Let’s not kid ourselves,” says Richie Merzian, climate and energy program director at The Australia Institute. “They have no interest whatsoever in Australia doing anything to curb its fossil fuel addiction.”

Government policy is being driven, he says, “by people like Matt Canavan”.

Nationals senator Matt Canavan was, of course, the person who attempted to use the Taliban’s takeover of Afghanistan to make a case against cutting greenhouse gas emissions this week, saying on Twitter: “Does anyone know whether the Taliban will sign up to net zero?”

He was widely condemned for his glib insensitivity, but Canavan’s tweet was the logical extension of the Morrison government’s justification for its lack of ambition on climate change: other countries, poor countries aren’t doing their bit.

On Tuesday, the New South Wales Environment minister, Matt Kean, gave a powerful speech, calling for governments to “move beyond a politics focused on vested interest” and “act decisively on climate change”.

He said, “Australia should not be a climate laggard” and called on “our leaders get on with it, or get out of the way”. Kean called on Australians to express themselves at the ballot box.

“We need to send a message to all leaders, in every part of our society, that failing to deliver on the promise of what we can be is not an option,” he said. “Complaining that it is too hard is not a solution. Saying it is up to others to come up with a plan is a copout.”

There was no doubt he was talking about the Morrison government, which is remarkable given that Kean is also a Liberal.

While this is happening, though, the Morrison government continues to ignore the science of climate change. Its ministers continue to cosy up to mining executives, inventing new grant programs to subsidise projects such as Empire Energy’s gas mine in the Beetaloo Basin.

This article was first published in the print edition of The Saturday Paper on Aug 21, 2021 as "Exclusive: Morrison ministers duchessed over Beetaloo Basin".

A free press is one you pay for. In the short term, the economic fallout from coronavirus has taken about a third of our revenue. We will survive this crisis, but we need the support of readers. Now is the time to subscribe.

Mike Seccombe is The Saturday Paper’s national correspondent.