Strategic Land Use

Introduction:

Patron Professor Ian Plimer, Minister Chris Hartcher, Sir Eric Neal, Managing Director of Symposium Kerry Stevenson, fellow speakers and ladies and gentlemen.

I come to this Symposium as a sixth-generation Australian farmer from north-western NSW who understands farmers attachment to land, and who hopes that deep commitment is reflected in the stewardship of the small corner of the country I have responsibility for.

I have also had a great interest in good public policy, born of my days as a student in the 1970s.

That was a time of stagflation, rising unemployment and great political unrest, largely driven by the serious oil crisis of the early seventies.

At that time, I came to believe that as a nation we had to lift our game.

Better economic management, more productive industrial relations, and serious policy responses to what we all saw as the inevitable loss of cheap energy in a world torn by new political alliances with regard to the supply of oil; these became real motivators to me as a young Australian and as a young farmer.

I count myself extraordinarily privileged to have had the chance to serve at the heart and centre of a reforming government even if it did involve the agonising grind and slog of tasks like the Razorgang! A strong and productive economy then gave me the opportunity to initiate programs such as FarmBiz and establish Farm Management Deposits.

I had the chance to secure better water property rights for farmers, and to have spearheaded the allocation of a very large amount of money to help cap and pipe thousands of the open bores that had depressurised two thirds of the Great Artesian Basin and protect this vital resource for future generations.

I’m thankful for those opportunities, and for many more.

It was my great hope when I left public life, that I’d helped in some modest way to not only achieve better outcomes for land owners in this country, but even more importantly, to raise the level of dialogue surrounding the importance of both agriculture and resources to the Australian economy and Australian way of life.

I’ve now been out of public life for some time, and in many ways, am thankful to be more shielded from the public spotlight, thankful to be back in the solitude of the Australian bush.

It’s therefore with some hesitancy that I leave the farm again, to come and address you today. I don’t make a habit any more of talking publically about issues so bitterly contested and riven with political debate.

But I came today because I m concerned.

I m concerned about the quality of discussion that’s occurring around the issue of strategic land use.

I m concerned about the entrenched positions that people are occupying.

And I’m concerned about the level of misinformation that exists.

For the mining industry to work together effectively with the farming community, we need a spirit of genuine trust and cooperation. We need to not just speak up about our own apprehension, our own fears, our own interests, but listen openly to the concerns and interests of others. These are in fact qualities that have always characterised this nation in times of trial and imminent danger.
I’ ve always held the conviction that a calm, civil discourse is the only way of arriving at outcomes that are in the national interest, and at building that trust.
The more controversial the issue the more important that both sides engage in honest and open debate.

It’s my hope that I can make a modest contribution to that discourse today.

Defining the problem: Food security in a resource-constrained world

The first point that I’d like to pick up on today is the claim that gas mining threatens agricultural productivity, and in turn food security. This is a claim that it is of vital importance to understand.

There are three important trends to notice:

First, the population of mankind on this earth is growing rapidly. Our best estimates predict that population growing to roughly 9.3 billion by the middle of this century.

Second, there is an important dietary shift taking place as a middle class emerges in India and China and other increasingly wealthy states with the income to afford better food. The World Health Organisation projects that demand for meat will increase by 200 million tonnes by 2050.

These factors combined, lead to a reality in which we need an increase of total food output of 70% by 2050. Experts say that we will need to double the amount of food we’re currently producing, if there is to be a decent diet for everyone on earth.

This poses staggering challenges and is seriously exacerbated in light of the third trend I want to draw your attention to.

We are rapidly losing agricultural productive capacity. Between ongoing urbanisation, disturbed weather patterns and a concerning allocation of agricultural capacity to non-food production such as biofuels, we have very little space to expand the amount of land we use to service the increasing demand we face.

We can see the beginnings of where these trends will take us already.

World grain reserves are precipitously balanced, food riots are in danger of erupting in 33 countries around the world, and roughly 100 million people have been driven deeper into poverty as a direct result of rising food prices in the last 18 months. The economic and humanitarian toll of this problem will only grow unless we act decisively.

But what does any of this have to do with agriculture and the link to resource extraction? For many the link is counterintuitive.

It is beyond reasonable debate that the miracle of technology has been the handmaiden of agriculture in feeding the burgeoning multitude. Farmers have responded to supply constraints by innovating, and building industrial scale machinery to revolutionise the volume with which we can produce and harvest agricultural product. A single gallon of fuel used in harvesters, reapers, tractors, can replace up to one hundred man hours of old fashioned labour. And that’s not to mention the crucial contribution of oil to fertilisers, pesticides and plastics that are so important to those who work the land.

But here the important part both our existing technological capability, and all conceivable technological innovation in the short to medium term, are dependent upon a supply of cheap and readily accessible fuel. And we’re running out of it. Both oil and coal supplies are finite, and we are currently receiving the mother of all price signals that ready access to them should not be taken for granted.

All of this sets up the fundamental context for a discussion about land use. With a growing population, demanding more and better food, in a situation where we are running out of the land and water we need to expand agricultural input, and the hydrocarbons we need to improve agricultural productivity, we are teetering on the edge of a cliff.

Herein lies my essential belief: if we don’t find a sustainable solution to the declining availability, and the rising prices of hydrocarbons, our agricultural industry and its ability to feed and clothe people will be compromised more than it will be by concessions of land access to the resources sector.

Policy alternatives to this problem so far, have taken the form of the politically convenient and the expedient. They don’t require compromise. We can exploit the point of least resistance and buy time for another government, another day; that would be all too easy in the current parlous political environment. Renewable energy and biofuels are two obvious examples, both have obvious limitations.

Renewable energy will for the foreseeable future lack the capacity agricultural producers require. Solar energy is a long way off being able to power a tractor, and wind energy can’t be turned into fertiliser.

Most biofuels present real problems and in the end will simply not deliver anything like the necessary quantities of fuel we are likely to need. Apart from having a personal difficulty with diverting productive land into producing fuel for commercial jetliners rather than food for people stomachs, I would be very concerned if farmers in the developing world started to convert part of their small acreages to fuel rather than food production. Such a development if it continues to gather pace really will threaten global food security.

Neither of these solutions, supported as they are by the policy arrangements of much of the western world provide an answer to our energy demands in the volume we need, of the type we need or within the timeframe we need.

But if the question of food security isn’t a question we can walk away from as being too challenging, what then, is the answer?

A move to unconventional gas:

The most unexpected development in the last few years has been the staggering development of shale gas and condensate in the United States. Notwithstanding controversy over some of the related issues, the industry is revolutionising America energy outlook, and therefore the worlds. Indeed, the International Energy Agency believes that America will shortly become the world’s major producer of hydrocarbons once again.

These new sources of hydrocarbons will refuel a resurgent US manufacturing sector and dramatically reduce costs for farmers. For example, new nitrogen fertiliser plants being built all over the US, taking advantage of newfound, freely available, and low cost gas will dramatically reduce American farm input costs and raise farm output.

Australia would be mad to deny itself the same opportunities. As the vice president of the National Farmers Federation Duncan Fraser acknowledged in Adelaide just last week, there are farmers and farming communities in QLD and NSW recognising that done properly, unconventional gas such as CSG can be and will be an asset to their economies and their communities.

As I see it there are three clear imperatives for the timely development of the potential of Coal Seam Gas in Australia.

First, from a policy perspective, the NSW Energy and Resources minister Chris Hartcher has noted that this state desperately needs gas for its electricity production. The choices in NSW are stark, and pressing. We can embrace CSG, we can build new coal fired capacity, or we can face an energy crisis that will mean you can’t just flick the switch on whenever you want, because of power rationing, and it will cost even more when you do, due to higher electricity prices.

Secondly, there is an economic imperative. The Australian economy has run up a cumulative trade deficit over a substantial period. Exporting energy resources to regional trading partners can help us build wealth, and also help countries in the region develop the spending capacity to become attractive export markets for agricultural and other goods. Farmers have a particular interest in helping lift people out of poverty in the region: one Australian farmer feeds six hundred people, but only one hundred and fifty of them are in Australia. Four hundred and fifty of them are overseas, according to the National Farmers Federation, and frankly as a farmer I not only want them to be able to eat, but I’d like them to be well enough off to buy my product.

Finally, the exploration, investment in and extraction of unconventional gas presents a significant opportunity for farmers, as many are already discovering. It has the potential to reduce farmers input costs significantly, and build stronger communities around additional employment opportunities, especially for young people. Investment and jobs equal regional development, something I’ ve been passionate about for decades.

I am convinced, that whatever challenges developing Coal Seam Gas may involve, it can be done responsibly, and will be a vital part of our future economic landscape. It represents an opportunity to contribute to preventing poverty on a global scale as the worlds 4th largest exporter of food, and a chance to secure for ourselves greater growth, greater energy security and greater opportunities for families in rural Australia.

Call to action: What needs to be done

Four stakeholders need to come to the table to ensure that we don’t snatch defeat from the jaws of victory on this issue: Government, Industry, Farmers, and the Media.

Governments have a very difficult time ahead. It will be genuinely challenging to ensure the law finds a balance between encouraging investment and preserving both peoples rights and the environment. Margaret Thatcher once commented that, There’s nothing more obstinate than a popular consensus.

I know how hard it is, how much political courage will be required to legislate on these controversial political issues. Vision, strong leadership and clear articulate communication that insists on scientific facts and not self-serving hyperbole is the only path forward on such matters, and the only hope the government has for productive leadership.

Industry must work to engender real trust with farming communities around the country, not just consent on a case by case basis. This trust can only be earned over time, and will depend on three things.

First, they must be of the highest integrity. Industry must be open about their operations, keep their commitment to impeccable health and environmental records, and minimise the cost and damage of any mistakes that are made.

Secondly, they must keep channels of communication open with farming communities, even ones whose land they aren’t yet operating on. Being present to hear the concerns of farmers and addressing those concerns earnestly, and with all due respect is vital to a trusting relationship.

Finally, industry can and should do more to better compensate farmers, and ensure fair and generous recompense for land access. This should be a combination of upfront payment, in kind works, and some level of annuity. With integrity, communication, and compensation, industry will go a long way to building the necessary trust and cooperative spirit that is vital for sharing land use in this country.

We farmers need first and foremost to understand that critical as our role is, we are interdependent on other industries. We need to engage with the resource sector, and with scientists and economists to understand our position in the bigger national picture. I’m a Director of the Crawford fund, the sole objective of which is to create a world in which people are sustainably fed. It brings me into contact regularly with scientists who despair at the current debate. As one said to me recently, You can’t do anything in our modern world without energy, let alone feed people.It’s this kind of understanding, this level of information and dialogue that will help us make the best decisions, not just for ourselves, but for our children and our country.

It’s also vitally important that farmers not just recognise challenges, but acknowledge opportunities. There are cutting edge farmers who are recognising great opportunities in the field of unconventional gas reserves on their property, but feel too intimidated to do so. In response to one such farmer who spoke out on ABC radio, the chairperson of the NSW Farmers Association, Fiona Simpson has stated that the Association needs to respect and properly cater for those farmers who want to pursue opportunities to negotiate with energy companies. This is an important point. If the current land use negotiations in NSW are not carefully managed, cutting edge, innovative farmers will find themselves held back. They may even find their rights being unreasonably restricted.

Finally, it’s incumbent upon farmers to avoid listening to hyperbole or engaging in it. I am aware of three quite significant claims of environmental damage supposedly caused by the energy sector, which on closer examination proved to not be caused by extraction processes but by farming processes. These discoveries will have been lost upon the activists who have been using farmers as a human face for an agenda that is removed from those same farmers interests. In my opinion, farmers need cheap energy, and unconventional gas provides an opportunity to source that energy. They need to be careful of aligning themselves with movements that are passionately opposed to cheap energy and the lower cost fertilisers, chemicals and plastics that are vital to farming and derived from cheap energy.

The media, as the intermediary for all of the above stakeholders, and as the party responsible for keeping the public informed on the matter, must commit to facilitating an educated and civil debate. Sensationalist rhetoric, or the consistent exposure of one particular entrenched standpoint will only serve to unhelpfully swing the debate away from the mutual aims of all parties, and towards the entitled self-interest of one side. We cannot afford to follow in Europe footsteps, where we expect everything to be given to us, without laying the economic framework to provide the growth and prosperity that will enable a better standard of living for all. The consequences of that behaviour are becoming painfully clear as we speak.

Conclusion:

The importance of civil discourse on all issues with strength, with courage and with wisdom to avoid the wages of comfortable compromise and indecision, which we see so clearly being played out in Europe and elsewhere, is obvious.

Unfortunately, the debate over unconventional gas in this country reflects, in my view, a broader drift away from the civil discourse that has been so critical in building the free and prosperous society we take for granted.

Every one of us should do what we can, to raise the level of debate for our children and grand children sake. This is a question of tremendous imperative, that needs a courageous answer, but we will only ever arrive at that answer together.

Thankyou for your time today;

 

©2018 - Precious Metals Investment Symposium

Precious Metals Investment Symposium