Turnbull turns on unions

PRIME Minister Malcolm Turnbull could not resist having a crack at unions on the eve of LNG18 in Perth last night, while conceding his own government needed to do more than just welcome foreign investment to ensure the huge amount of newly installed capital was efficiently utilised. By Peter Milne
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Turnbull told the CEO-laden crowd that his government understood "Australia's openness to foreign investment has been critical to unlocking our natural resource wealth".

"Record investment of over $400 billion is now translating into increased production capacity and the real resources and energy capital stock is four times higher than it was before the boom," he said.

However, he conceded that his government must do more than simply welcome foreign investment to ensure this.

"That is why we are reducing regulation; speeding up the process of environmental approvals; making the workforce more efficient and reducing production costs through skills and migration initiatives," he said.

Noting that firms operated big resource projects here under an "implicit social licence", Turnbull said the government would "continue to ensure that our taxation system encourages investment, entrepreneurship and job creation. And at the same time we will continue to ensure that every business - large or small - pays their fair share of tax in accordance with the law".

After addressing the issue of getting the regulatory and taxation settings right, Turnbull turned to industrial relations, saying that re-establishing the Australian Building and Construction Commission was an important lever to secure the nation's prosperity.

"An efficient construction industry is absolutely vital to our transition to the new economy," he said.

"The additional costs of construction in Australia due to industrial disputes and often standover tactics by militant unions are a serious handbrake on economic growth."

Turnbull's focus on the union's effect on construction efficiency contrasts with the Deloitte's The good, the bad and the ugly: the changing face of Australia's LNG production reported in Energy News yesterday.

Deloitte interviewed 10 Australian "LNG leaders", their insights revealed that "companies did not define the scope well', ignored the high probability that major projects in the same area would drive up costs and had a "view that hitting schedule was more important than managing expenses".

Deloitte noted that the high LNG prices at the start of the LNG construction boom cultivated this view.

It was not lost on Turnbull, however, that the world had changed, with prices for Australia's key commodities exports including LNG haing fallen materially.

"Resource construction activity has fallen from an unprecedented level of nearly 8 per cent of GDP to around half that," he said.

Turnbull visits China later this week, where he says gas consumption is expected to more than double by 2030.

His interest in China corresponds with the thoughts of Origin Energy managing director and LNG18 national organising committee chairman Grant King, who told media at the conference yesterday that China and India would shift the dial unbelievably in terms of global demand for gas and for LNG.

International Gas Union president David Carroll also reinforced that the industry's focus had moved.

"The challenges probably are related more to the security of demand rather than the security of supply, we have a lot of supply," he said.

Turnbull also visited Chevron's Gorgon project earlier in the day and recalled giving Gorgon its final environmental approval in 2007, as then-Prime Minister John Howard's environment minister.

Nine years on, he praised the project's efforts to "compress this project to just over 300 hectares, a tiny footprint by industry standards, ensuring the least possible disturbance to the flora and fauna."

Turnbull noted a unique aspect of Gorgon, which he said was the world's largest greenhouse gas mitigation initiative - separating carbon dioxide from the gas and injecting it into a saline formation up to 2km underground.

More broadly, he was supportive of the environmental benefits of LNG, acknowledging that gas can produce 50% less emissions than a typical coal-fired power plant and "has a pivotal role in delivering energy with lower carbon emissions".

"We need to support the transition to renewables by providing peaking power and fill the gap from intermittent renewables when the sun is not shining, or the wind is not blowing," he said.

On east coast LNG sector, Turnbull said it had "gone from being a beginner to being a world leader in CSG knowledge"; though the conflict between anti-fraccing concerns and the industry's need for continued additional land access to feed gas to Curtis Island was not mentioned.