Luke Simpkins (Cowan, Liberal Party) Share this | Hansard source

I also rise to speak on the Foreign Acquisitions and Takeovers Amendment Bill 2009. From my travels through my electorate, knocking on doors and meeting people, I suspect there is no greater industry in Western Australia than the commodities sector, from which people gain and benefit so much in our state. The downstream benefits are substantial. Yes, it is true that not everyone is involved in the commodity sector but the influence is substantial and, particularly in the new suburbs of Cowan, the number of people who remain in fly-in fly-out positions is substantial.

As the parliamentary secretary just said, there is no doubt about the importance of foreign investment for our state of Western Australia. But there always remain some concerns, and I will deal with some of those concerns in my contribution today. What I would like to begin with is that I do not consider Australia to be the lucky country—I think Australia is a country that has always worked hard to achieve success. We have done well because Australian businesses and Australian people on the whole have been committed to that success and have not been afraid to work very hard, commit a lot of their time and effort, and their sweat—and tears, occasionally—to that success.

I mentioned fly-in fly-out positions before, and there are a number of families that are affected by the fly-in fly-out situation. It is financially of benefit, though socially more challenging, but in any case those are the appropriate decisions that individual families have made, and, of course, we wish them all the best. What I would also say is that the success of this country has been achieved through collective and personal means. So it is not just that there are businesses that have been successful; individuals have been successful. We realise that there is nothing wrong with hard work to achieve greater benefit; we should certainly encourage that. If people want to work hard and achieve that benefit, that is good.

It is the case that the ability of businesses in Australia to expand here is due in some way to their abilities to raise capital. However, at times, foreign acquisitions of businesses or increased shareholdings may occur, and sometimes that can be good and positive for Australia—in most cases I would think that is the case. It is also good for those who are employed here. But sometimes we are not quite sure how good or positive this can be. But I welcome this opportunity to speak on this bill.

The bill will require foreign investors to notify the government where there is considered to be a possibility that proposed investment in, or acquisition of, business enterprises will deliver influence or control over an Australian company, now or in the future. It is a complex world these days. The location from which capital originates has changed, and the way in which it can be wielded has also changed. The influence of foreign-controlled funds and businesses are worthy of our careful examination. They are, without doubt, potent economic players. But we should be clear about this: some of these organisations are backed by foreign governments, and we must at least be wary of them.

Before I speak specifically of the Chinese involvement in Australia, I would like to first speak of what is happening with Chevron Australia and the Gorgon project. About 50 kilometres south of Karratha and some 25 kilometres out to sea there is Barrow Island where Chevron has been operating for 40 years. Barrow Island will be the site of the Gorgon liquefied natural gas plant, a three-train, 15-million-tonnes-per-annum LNG plant. In subsea pipes, gas will be piped from the Jansz field, which is 140 kilometres from Barrow Island and some 1,300 metres below the surface. One hundred and eighty kilometres of mains pipelines and 180 kilometres of service pipelines will be required. The Gorgon field is some 70 kilometres from Barrow Island and 250 metres under the surface. It has been estimated that the Gorgon project will employ 3,000 personnel over at least 40 years. The partners of Chevron are ExxonMobil and Shell. It is also an interesting fact that, through the liquefaction process, the volume of the gas can be reduced by 600 per cent, thereby making it economic for storage and shipment, in this case from the 2.2 kilometre jetty that is planned.

I received word that Chevron has recently passed the $7 billion mark in the awarding of contracts for Gorgon, and I would note that strong and successful Cowan local civil engineering firm Ertech Pty Ltd in Wangara has been awarded a contract for site development and the WAPET Landing on Barrow Island. An excellent local company, Ertech are going from strength to strength and I would like to congratulate Executive Chairman Jim Giumelli and Managing Director James Giumelli for their efforts. It is appropriate to spend a little time speaking about Ertech because the head office is in Cowan, located just off Ocean Reef Road and on Motivation Drive. From a distance, it looks very much like many of the businesses in Wangara. You might think when you were driving past that it was just another one of the many small but vibrant businesses in the local area. But when I visited I found it had around 250 employees, most of whom are not on the Wangara site but located on project sites around the state.

The success of Ertech is demonstrated by the story they tell of their involvement at Port Hedland. As I understand it, in 1996 Ertech received an $80,000 contract from BHP to carry out works in the area. For two years, Ertech worked under the expanded requirements of BHP and in the end received additional works and earnings of $14 million for their efforts—a big difference from the $80,000 original contract—for the work they did over two years. Similarly, in 2004, Ertech commenced the site works contract at BHP Billiton’s Ravensthorpe site and that contract expanded to $270 million of work over the next 4½ years of the contract.

With regard to Gorgon, involved on Barrow Island since 2001, Ertech has been awarded the large job 922, which requires preparing the construction camp, the construction of 300,000 square metres of sealed roads, the setting up a desalination plant to provide water for construction and the provision of a seawater intake tower for the desalination plant. It will also undertake works, including the reticulation of water and sewerage mains, the electric mains, navigation beacons, improvement of the landing craft offloading areas, the creation of a diesel fuel storage area and also the construction of a communications tower.

Through ongoing business development and through these latest and future Gorgon opportunities I look forward to the continued expansion of Ertech. I look forward to their creating more employment for my constituents and I wish them every success in the future. I am very glad that they are in the electorate of Cowan.

Before moving on, I would just like to mention the value of natural gas for a cleaner world. The influence of production and then use of Gorgon gas, if substituted for other energy fuel sources, has the capacity to reduce global greenhouse gas emissions by about 45 million tonnes per year. As Chevron suggested, that would be equivalent to removing two-thirds of all vehicles from Australian roads. Natural gas, therefore, is the cleanest-burning fossil fuel, producing around 50 per cent of the carbon dioxide that coal produces. Clearly, as the population of the world grows and nations develop, the opportunities for economic returns for Australia grow, as does the opportunity for cleaner air, particularly in developing nations. Anyone who has been to China, India or even Thailand knows that the substitution of coal by natural gas will help reduce pollution in the air.

It would of course be wrong of me not to mention Pluto, since I have just spoken of Gorgon. The Pluto project is being undertaken by Woodside, the nation’s largest publicly listed oil and gas exploration and production company. The gas field is 185 kilometres from Karratha. Woodside has set something of a record with finding the Pluto gas field in 2005 and it is estimated that the first gas will flow around the 5½ year mark. Given it is estimated that the global demand for gas will double by 2020, the future for this $12 billion project is looking very solid. Another advantage for Woodside is that the CO2 level in the gas is very low, thereby reducing processing and removal costs.

I want to speak about some of the specifics of some of the acquisitions that have taken place in Australia in the last two years. But, before I do so, I would just like to say that there is a certain level of unease amongst my constituents who work in the commodity sector about the ability of Chinese companies to buy into mines and infrastructure in this country. Another concern of my constituents is that they know that cashed-up Chinese companies often contain sovereign funds. We know that Australian firms investing in Chinese businesses or assets do not have the same opportunity under anything like the conditions that we permit in this country. It is therefore very important that we exercise extreme care in considering foreign acquisitions.

I have just spoken about Chevron, which, of course, is a foreign company. Given that, there obviously needs to be a degree of balance with that. Everyone in my area believes that foreign investment is necessary, but behind some of the concerns that people have expressed to me are the difference in the methods and experiences that people have had in their employment and their contacts with certain companies.

It is worth noting that the figures for 2008 that I have seen certainly do not rate China right up there at all in terms of foreign direct investment. Certainly, when we look at the top end of the scale, the UK and the United States, the top two nations at around 20 per cent each, represent in excess of $50 billion. That demonstrates that the level of direct foreign investment is certainly coming from the Western world and not the Eastern world. After that comes Germany, Japan and also Hong Kong, which are putting billions of dollars into Australia.

That said, I would like to look at some of China’s involvement in Australia. I note that, on 8 May 2009, the Treasurer approved an additional shareholding for Anshan Iron and Steel, also known as Ansteel, of up to 36.28 per cent of Gindalbie Metals Ltd. At that time, Ansteel was already a 50 per cent joint venture partner with Gindalbie in the greenfields $1.8 billion Karara iron ore project in the mid-west of Western Australia. While the Treasurer placed conditions on this acquisition, including the development of infrastructure, the essential point is that the Chinese stake in the Karara project is now substantial. If you look at the figures you will see that its involvement in the project certainly appears to be in excess of 50 per cent.

Interestingly, Karara and Gindalbie are linked to the Oakajee Port and Rail Project and it is of concern, particularly to some in Western Australia, that the Chinese influence in the mid-west is too great. Some may say that Ansteel or, as it is also known, the Angang Steel Company is publicly listed; however, it is worth noting that that is supervised by the State Council of the People’s Republic of China.

On 23 April 2009, the Treasurer also approved the application by China Minmetals Non-Ferrous Metals Co. Ltd to acquire some mining assets of OZ Minerals Ltd. Essentially, the conditions imposed on this acquisition were to operate the acquired mines as separate businesses and with commercial objectives; to operate the mines using companies incorporated, headquartered and managed in Australia, under a predominantly Australian management team; to maintain or increase production and employment at Century, Rosebery and Golden Grove mines; to pursue growth in Century and Rosebery mines; and to reopen the Avebury mine and develop the Dugald River mine, subject to economic conditions.

The Minmetals revised proposal is for Golden Grove, Century, Rosebery, Avebury and Dugald River mining operations in Australia. These produce zinc, lead, copper and silver, which are priced with reference to the London Metal Exchange. What do we know about Minmetals? It is a state controlled corporation, engaged in both the production and the trading of minerals and metals, including copper, aluminium, tungsten, tin, lead, zinc and nickel. The list of Chinese companies or Chinese government related bodies involved in the commodity sector has been necessary to further investment and development of our commodities, but we must always be extremely vigilant. Certainly, the Chinalco acquisition, of up to 14.99 per cent of the shares of Rio Tinto’s London-listed arm, received the support of Colin Barnett, Premier of Western Australia. However, when Rio Tinto joined BHP to exclude the Chinese, that was opposed by the state Premier.

As has been stated by most Australian leaders, these decisions are best taken with the strongest consideration of the national interest to either allow or reject the foreign acquisition. It is certainly the case that there will be occasions when foreign investment is necessary to achieve the strategic objectives and to ensure the capital exists to get the job done.

In concluding, I appreciate the need for this bill. I would, however, say that we should be very careful about every increase in stockholding and control by foreign businesses, and particularly careful when sovereign funds are involved. We have seen not only the different ways various countries operate and deal with people in their direct foreign investments in this country, as I mentioned before, but also that so much of the investment that has come from the bigger investors in this country—the US, the UK, Germany and Japan—is very much from private enterprise. We should always be very careful when we have the involvement of sovereign funds, or when bodies, organisations or businesses are closely controlled or connected with governments of foreign nations; we should be very careful about looking at the detail of where they invest and how they invest. So I welcome this bill and I welcome the changes that may be required in the future, which will make sure that we are always protected and that the national interest is always protected.

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