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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.
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
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
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
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
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
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.
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.
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
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
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
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
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.
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
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
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
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.
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
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
CHAIR: So we heard.
Mr JOHNSEN: Good. The Premier at the time, Premier Keneally, came up and made
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.
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
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
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.
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
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
This goes back to the
issue of compensation. It is not just individual landowners who should receive
compensation but the community
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
The Hon. GREG DONNELLY: That was my question about the costs. Can you just
costs you are referring to there?
Mr JOHNSEN: It is essentially around the road networks. You mentioned before the
debate or discussion in the Upper Hunter. There will be significant impact on
local roads during the period of
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,
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
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
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
CHAIR: Councillor Johnsen, are you aware of the legislative framework in Western
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
CHAIR: In a lot of those communities, within the communities themselves you have
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
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.
do have the triple Cs—the
community consultative committees. On those triple Cs you have local government
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?
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
Should councils be given more weight—a right of veto—in the decision to bring a
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
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
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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