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2011 NSW Parliament
Inquiry into Coal Seam Gas

Affected Mid North Coast Councils

Upper Hunter Shire Council

Thomas Davey, Tourism Advancing Gloucester

MidCoast Water

New South Wales Farmers Associations Dairy Committee

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Beef cattle farmer

Steven Robinson, Psychiatrist

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AGL Gloucester Milk Experiment
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Fracking near Gloucester homes under AGL’s latest coal seam gas plans

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AGL buys up Hunter Valley vineyards

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for deceptive & misleading conduct 2013

A matter of trust: – letter to Gloucester Advocate

Coal Seam Gas


Gloucester | Pilliga | Camden | Northern Rivers | Wollongong | Bentley
Woop Woop March | Aussies Against Fracking

GENERAL PURPOSE STANDING
COMMITTEE No. 5 27 MONDAY 31 OCTOBER 2011

MICHAEL JOHNSEN, Councillor, Upper Hunter Shire Council, sworn and examined:

CHAIR: Before commencing questions, would you like to make an opening statement?

Mr JOHNSEN: Yes, thank you. First, I would like to thank the Committee for holding public hearings around New South Wales and for the opportunity to be able to provide evidence. I appear today both as a resident of Scone and as a councillor on the Upper Hunter Shire Council.

My evidence and recommendations are taken from the Upper Hunter Shire Council's submission to the inquiry, No. 326, and my own submission to the inquiry, No. 732. In providing my submission and participating in the formulation of the Upper Hunter Shire Council's submission I bring to the table my membership of the Hunter Gas Project Community Consultation Committee.

That community consultative committee covers petroleum exploration licences Nos 4 and 267, covering a geographic area from the lower Hunter to the upper Hunter. The petroleum exploration licences cover the Cessnock, Singleton, Muswellbrook and upper Hunter local government areas.

CHAIR: Who is the proponent of the petroleum exploration licences?

Mr JOHNSEN: AGL. Additionally, I have participated extensively in research visits to gas fields in the Dalby and Roma areas of Queensland, and Camden, Gunnedah and Narrabri in New South Wales.

During those visits my fellow councillors and I have had the opportunity to meet with local government authorities, farmers, shopkeepers, general community members, coal seam gas companies and environment groups— although not all groups were visited on all occasions.

On the basis of the current State Government's policy of obtaining full environmental, water and agricultural impact statements prior to the granting of an exploration licence, the Upper Hunter Shire Council and I submitted views that may be recognised as potential "gaps" in the processes of the eventual granting of a production licence to any company or individual seeking to extract coal seam gas.

It is important to allow any new policy to demonstrate its value. Therefore my submission is limited to those particular items mentioned. Additionally, with appropriate structural policy improvements, many of the issues covered in the terms of reference will logically follow on.

I strongly believe in balance and that by providing the appropriate legislative framework our society can utilise natural resources for lifestyle benefits, as it has done for hundreds of years, whilst encouraging innovation in technology to improve production and efficiency of resources and, most importantly, protection of our environment.

To me it is all about chosen lifestyle as an individual, family unit or the community as a collective. As humans our instinctive drive for improvement and natural curiosity for invention and the "need to see what's out there" will not go away, and governments need to facilitate that in a responsible way.

Thankfully many of our forefathers had the "exploration mentality". Without that we would not have had many of the items and comforts we now enjoy as food, clothing, housing and transportation.

Probably the most important areas of innovation we hold dear are health and education. They have benefited from the natural curiosity of humans to explore the boundaries, be they physical or otherwise.

The key issues to the Upper Hunter Shire Council and me are: the effect on ground and surface water systems; the legal rights of property owners and property values; local government, including the provision of local regional infrastructure and local planning control mechanisms; a strategic land use policy; community engagement and consultation; and the impacts on the local economy and the labour markets.

CHAIR: I take it that coming from that particular council, even though you are on the northern rim of what one would call the large coalmining area in the Hunter Valley, your council has probably had to deal with a number of those issues with some of those mines and other mines that did not go ahead.

It has been said to us that the Mining Act is somewhat more balanced in relation to its treatment of landholders and the mining companies than is the Petroleum (Onshore) Act. Does your council have a position on specifically how you would like to see the legislation relating to property rights improved, changed, increased or whatever?

Mr JOHNSEN: The council itself has not necessarily come across a position on that.

CHAIR: Do you have some personal views?

Mr JOHNSEN: Yes, most certainly. In fact, I made some specific recommendations about the legal rights of property owners and property values and the reasons for them. There is significant angst amongst our community—there is no doubt about that—over the potential for explorers essentially to ride roughshod over the landowner. The balance of power seemed to lie with the explorer, importantly, on behalf of the Crown.

Perception or reality, this needs to be clarified and certainty needs to be provided for all parties. I have specific recommendations: that the Crown restore royalty rights to freehold landowners; and any landowner going to mediation be allowed to have legal representation as a matter of course at the hearings.

A solicitor specialising in this area told a community forum that the Upper Hunter Shire Council held over two days recently that a landowner is not allowed to have legal representation at the point of mediation. To me, that is just a basic flaw.

CHAIR: Gun to the head stuff, isn't it?

Mr JOHNSEN: It could be seen as such. Any landowner should be allowed legal representation at the hearings. In fact, they should not be allowed in unless they have it.

Any compensatory agreement should require minimum standards of remuneration and remediation to the landowner throughout the whole process, from exploration to the completion of production.

An example we had on our visit to Roma, in particular, was that there were landowners who were happy to accept $500 per annum per well and other landowners who received a minimum of $5,000 per annum per well. It was cynically or otherwise explained to us that those people who were for some reason happy to accept $500 per annum per well thought that that was a reasonable amount of money based on their own position.

We all know that in reality they were being ripped off. That needs to change. There needs to be a minimum level and a minimum standard and if there are further increases in remuneration negotiated between the landowner and whoever the explorer is, so be it.

CHAIR: I take it you recall that the Upper Hunter Shire Council was involved in the wind farm inquiry at the same time. Similar issues occurred there.

Mr JOHNSEN: Correct.

CHAIR: The numbers were much higher but the issues were similar. Would you say that mandating a standard set of legal parameters—a standard access agreement—might be one way to go?

Mr JOHNSEN: I think it is a critical way to go. If there is not a base minimum standard and there is not an open process within that standard all it does is serve to further the community's feeling of dislocation and that they have no real influence in the decision-making process, and they should have.

Whether that comes through a local council or directly through a community consultative council or the landowners, there must be a minimum structural set of standards so that everyone can rely on a base minimum level of information.

Again, if a particular landowner is fortunate enough, for one reason or another, to negotiate a higher price than that, good luck to them. It is an open market; we do not live in a society where we are restricted to the point where we cannot earn any more than we thought.

The Hon. JENNIFER GARDINER: The Upper Hunter has had quite a few mentions at this hearing today. Are there any lessons for communities dealing with the opening up of new mining projects that could be learned from the Upper Hunter and applied to an area that is not quite as exposed as the Manning Valley and potentially in the Gloucester Valley?

Mr JOHNSEN: You may or may not be aware that the Upper Hunter Shire was involved in a process for the Bickham Coal operation and assisting the thoroughbred industry. For those of you who do not know I will get a plug in here: we are the horse capital of Australia, and second only to Kentucky.

CHAIR: So we heard.

Mr JOHNSEN: Good. The Premier at the time, Premier Keneally, came up and made the announcement that the Bickham Coal open cut operation was not to go ahead. That did not exclude underground mining but it did put a stop on the open cut progress.

We arrived at that because the community got together, led very well by the thoroughbred industry, and had a collective will.

It was involved in many parts of the process, whether they were public meetings, most of which were facilitated by the Upper Hunter Shire Council, or individual or collective submissions.

Most people agreed there was too much risk—in fact, everyone agreed— for this particular operation to go ahead because everyone essentially had the same concerns. It was about water, and to some degree the amenity, and the risk it would have for agricultural production, whether it be thoroughbred breeding or cattle breeding or whatever the case may be.
From that and our discussions on visits to south-east Queensland and other gas fields it is important that we recognise that this industry has some credibility. There is no reason why this industry could not go ahead.

However, you legislators need to make sure that we get the legislation and the regulation correct before you allow the somewhat unfettered explosion, which seems to be the case in Queensland in particular, and learn from those experiences and get the community involved.

Make sure you do not let things go ahead before regulation is properly in place and agreed to by the majority of the community. I talked before about the processes of getting the community involved.

If your local government is not spun centre to this whole process, being the micro community representative, the industry itself and the State will be allowing this development to occur because these are Crown assets.

The explorers and extractors of coal seam gas or coal or any other mineral are only taking out what you allow them to take out. You need to make sure that they do it in an acceptable manner with the risks properly mitigated and with 100 per cent local input from day one. You need to make sure that the councils and local communities are front and centre in any piece of legislation.

Issues such as aquifer interference policy and so forth are all very well but how many people actually understand what that means? In my experience, when you talk to people about an aquifer they conjure up an image of a pool of water below the ground. Nothing could be further from the truth.

 I suppose in some parts there are pools of water but it is generally not the case. We are talking specifically about coal seam gas. I have a small property with a well and a bore on it. The water we use runs through gravel and it is only 20 feet down or in some cases 50 feet down.

Coal seam gas companies, as I understand it, are going to go through a process I have never gone through, and nor have any of my neighbours, to extract water from the ground in the first place.

We need to make sure that if the community is involved and the information is out there this industry can go ahead, but it needs to do so properly and to be well regulated and well monitored.

One of the things that we should be looking at is a mineral resources Ombudsman, an independent body that can impart information to everyone. That Ombudsman would be someone the community can rely on.

 We should also use universities as much as possible for any form of peer review. The more independent it is, the more likely there will be a lot less angst in the community.

The Hon. GREG DONNELLY: On page 4 of your submission No. 732 under the heading "Local Government", there are four dot points. What is the background to their development? Are they your reflections or the council's reflections? How have they come together? There are some interesting points in there that we have not been exposed to before.

Mr JOHNSEN: Essentially it is both. It has come about from my experience as a councillor on the Upper Hunter Shire Council. It is clear with regard to coal seam gas that from the initial seismic testing to fullon production there are impacts on local infrastructure.

My understanding is there is no recourse for local government to draw compensation specifically to assist in paying for any additional impacts, whether they be truck movements or any work that needs to be done on behalf of the local community.

This goes back to the issue of compensation. It is not just individual landowners who should receive compensation but the community at large.

The recommendations include that local government should be given the right to charge a nominal contribution from the explorer based on the actual indexed costs per annum times the expected time frame from prospecting to complete production. This would be paid at least annually and by the licence holder at the time.

So, in other words, if the initial explorer was granted a licence to do so and developed it to a point where they sold it to another company for the purposes of production, whoever held that licence from time to time right through to its completed production, there was at least compensation for direct costs, and they are quite easily identified.

The Hon. GREG DONNELLY: That was my question about the costs. Can you just describe what costs you are referring to there?

Mr JOHNSEN: It is essentially around the road networks. You mentioned before the wind farm debate or discussion in the Upper Hunter. There will be significant impact on local roads during the period of phase-in construction.

It is quite easy to determine the state of the road prior to any work being done and it is also quite easy to monitor the state of the road on an ongoing basis. Local government needs to be able to be given the clear provision to be able to recover those costs.

The Hon. GREG DONNELLY: Your next point about the community infrastructure fund, you would envisage that that would be something that would be established by a piece of State legislation through the Parliament and would prescribe some formula of sorts that is calculated to provide for a fund in each local government area?

Mr JOHNSEN: Correct, or wherever the exploration and/or production were to occur. The reason we came up with that was because a big theme that came through from local government in Roma and Dalby was that there were significant monetary benefits that could go to the local community that were not seen in New South Wales.

If it were mandated that there was some form of community infrastructure fund—I do not mean for this fund to be utilised for the purposes of road maintenance but it is meant to provide additional capital for the new and/or improving wider community facilities.

I gave an example of a swimming pool. If you needed a community swimming pool, that could be funded out of such a fund. It does not really matter what it is, whether it be a library or swimming pool, it is essentially about providing new infrastructure for the benefit of the whole community.

CHAIR: Councillor Johnsen, are you aware of the legislative framework in Western Australia where 25 per cent of all mining royalties are hypothecated against regional communities? Provided one has a framework for distributing that where it is needed, is that something you consider you would be looking at?

Mr JOHNSEN: I am aware of the Royalties for Regions program in Western Australia; I am not aware of the actual detail. Whatever you would like to call it, I do not really care. As long as there is an opportunity in those local government areas for direct input of money into a community infrastructure fund.

CHAIR: In a lot of those communities, within the communities themselves you have two-speed economies—that was pointed out to me at Gunnedah in relation to the coming mines there. If all of a sudden all the housing in the town is taken up by people who will pay $600 a week, you run out of community housing and community housing could be provided by local government to make up the shortfall. Is that the sort of thing you are talking about?

Mr JOHNSEN: I suppose potentially it could. Personally, I am a little reluctant to have local governments investing in housing, I do not think that is its role. However, where you do have this so-called twospeed economy, I do not see that that could or should necessarily be excluded.

CHAIR: But it is local government that has to pick up the cost of the dichotomy in the local economy, is it not?

Mr JOHNSEN: Yes.

The Hon. JEREMY BUCKINGHAM: Thank you, Mr Johnsen. Obviously this submission focuses primarily on adaptation and mitigation and I think this reflects the experience you must have in the Upper Hunter. I can see the ambitious recommendation there on page 5, that "the Crown restore royalty rights to freehold land owners"—good luck with that.

You state on the last page: I believe a whole-of-Government approach should be consistent with ensuring that first and foremost the local community not only feel part of the decision-making process but have the ability to provide meaningful input into the industry's activities.

Is not the most meaningful way that a community can have input into the decision-making process is to make the decisions themselves? Is not the most meaningful way for them to have input for them to determine what happens in their community? Should we not consider giving local government or groups of local governments a role in local environmental plans or bioregional plans and a role in determining what mining happens where?

Mr JOHNSEN: Thank you for the question. I will go back to the beginning of it where you said that the community having the ability to make the decision is probably the best way. I respectfully put it to you that, if that is the case, what are we doing here in a State Government inquiry?

The Hon. JEREMY BUCKINGHAM: I am all for regional governments.

Mr JOHNSEN: I think through the regional organisations of councils—and it is well recognised that there is, in the Hunter councils, a plethora of examples of good working models of regional organisations of councils—there is no reason why, collectively, a local government area should not have input as well. I am not aware of anything in the current rules that prohibit that from happening now. For example, why did the Hunter councils not make a submission to this inquiry—or did they? I do not know.

You do have the triple Cs—the community consultative committees. On those triple Cs you have local government representatives and community members of no particular background who simply have an interest in ensuring that the processes that take place—in this particular case with regard to coal seam gas—are carried out properly, transparently and essentially to the benefit of the community.

The Hon. JEREMY BUCKINGHAM: Should not councils be able to say no to mining? Should councils have the right to say no because at the moment, with new planning legislation State significant development, division 4.1, a higher level of legislation can overrule a local environmental plan. The Planning Assessment Commission makes a determination based on a recommendation from the Planning Department.

Should councils be given more weight—a right of veto—in the decision to bring a State significant development, a mine or coal seam gas, into the community?

Mr JOHNSEN: Until the State is prepared to hand over the assets of the Crown to local government, I do not see how you are going to make that work.

The Hon. SCOT MacDONALD: Can I go on from what the Hon. Jennifer Gardiner said before?
What would the Upper Hunter and Scone look like without mining?

Mr JOHNSEN: You may not have been there but we do not have any mining within the boundaries of the Hunter shire.

The Hon. SCOT MacDONALD: Any more.

Mr JOHNSEN: Any more. We do not—simple as that.

CHAIR: Was Dungog in your area?

Mr JOHNSEN: On the boundary. We have drawn a demarcation line. We do have a desire, as a council, to exclude as much of our shire as possible from open cut coalmining in particular. Please do not misrepresent that in any way to believe that coal seam gas or other extractive industries could not operate. In fact, in the submission the council put together, there is a map which effectively provides some indication of potential exclusion zones that are for open-cut mines.

I am the Chair of the Economic Development and Tourism Committee of the Upper Hunter Shire Council. We market ourselves quite successfully as the oasis from the working day in the mines, because they are only 20 kilometres away.

People do want to go and work in the mines. Generally it is because they like the money. Let us face it, it is 2½ times the average annual wage.

Who would not want to go there and work and earn a very good living? But they also do not necessarily want to live in the middle of them. They want to live in the horse capital of Australia.
CHAIR: Councillor Johnsen, thank you for coming and giving us both those presentations. They are both very informative and it is good for the Committee to get an idea as to how some of these issues have been handled by a local government organisation.

(The witness withdrew)

(The Committee adjourned at 5.11 p.m.).

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