Energy policy plays second fiddle to Coalition politics

Speaking at the annual upstream oil and gas jamboree in Perth this week was always going to be a challenging gig for Ian Macfarlane.

It wasn’t because the federal Industry Minister hadn’t done it before. He is a veteran of the Australian Petroleum Production & Exploration Association’s conference, both as a former Coalition minister and while in opposition during the Rudd/Gillard era.

The challenge for Macfarlane was to say something meaningful to 3,578 delegates from 1,000 companies at a time when all of the important energy policy balls being juggled by the Abbott government are up in the air.

An objective judgment is that the veteran farmer-turned-MP sailed through the test. He said enough to keep the audience from gritting its teeth and said nothing to create hassles for the government as it wrestles with writing an energy white paper, pursuing a renewable energy target inquiry and doing what it can to deal with the east coast domestic gas muddle created by the states.

Sensibly, Macfarlane kicked off by saying nice things about his predecessor-bar-one, Martin Ferguson, who is hugely popular with the petroleum sector and is now an adviser to APPEA.

"Martin and I worked far more co-operatively than outside observers might expect," said Macfarlane.

Tackling the sensitive topic of coal seam gas, Macfarlane managed to jab the O’Farrell government in New South Wales, the petroleum sector’s least favourite government by some distance, without creating awkward headlines.

"New South Wales should look to the example of Queensland, where gas companies and farmers have been working together for a decade," he said, pointing to 4,900 wells drilled north of the Tweed and 230 in O’Farrell’s territory. More importantly, he also pointed to an estimated 29,000 direct and indirect jobs created in Queensland versus 200 in NSW.

No doubt conscious of the Coalition’s farmer audience back east, Macfarlane added that the situation in New South Wales had changed in terms of community reaction. He told the gas industry to get its mind around a "new reality".

As he pointed out, the state faces a gas shortage in 2016, with significant consequences for manufacturing and other business sectors relying on gas as well as for jobs.

But it also faces a situation where farmers and gas producers have to come to a new landing.

Probably also aware that Santos and AGL Energy have come in for some stick behind the scenes for signing an agreement with landholders not to go on to farmers’ land without permission, Macfarlane said this was "an inelegant solution to and intractable problem."

Ideally, a written agreement shouldn’t be necessary, but "something had to give".

Now that the agreements have been signed, court actions on access shouldn’t be necessary, he argued. He gave a serve in passing to "small interest groups and, in some cases, anarchists" who have "swamped" rural communities with genuine concerns.

One way of looking at Macfarlane’s comments is that he is putting the whole NSW circus -- farmers, producers and government -- on notice. Perhaps he is saying that they need to get on with resolving this imbroglio; another interpretation is that he is carefully distancing a well-intentioned federal regime from the almost inevitable car-wreck in the state.

The behind-the-scenes view at the APPEA conference is that there is a nasty problem of high gas prices, actual shortages of supply, job losses and a political bunfight in New South Wales. The only real question is how far O'Farrell can suppress an almighty public row before he goes to the polls at the end of March next year.

One view of that election outlook is that the Coalition may go backwards in the lower house. It has a huge working majority, but it has a chance of winning a majority in the Legislative Council, thus changing the governing dynamic as the state heads towards a 2016 winter of discontent as the gas crisis finally bites.

Apart from talking up LNG prospects (no burden at a conference where a continuing development outlook is being strongly canvassed) and repeating the Abbott government’s commitment to slashing red and green tape, Macfarlane needed to talk about the energy white paper without getting ahead of his cabinet colleagues, who have yet to receive a word of advice.

He did so with the straightest of straight bats, promising an "integrated approach to resource management".

The address was a polished performance by a politician who likes to give a rural veneer to his public profile but is among the most experienced and astute of the Abbott cabinet. However, it hasn’t taken the debate about energy one step further forward in reality.

For this, we have to wait on the energy green paper now being jigsawed together behind the scenes in Canberra and, not least, the outcome of the separate exercise to review the renewable energy target among much green-side choking and spluttering.

The RET review issues paper was released as Macfarlane flew back across the breadth of the country to Perth to front APPEA, having done the whole thing the previous week, too, while Abbott and his cabinet put on a pre-Senate byelection show in the West.

You can read anything you like into the RET issues paper, but APPEA and the rest of the energy sector will have many sleeps to go before they gain a clear idea of the Coalition’s views of their future. Then there is still the issue of how the Senate will want to play the game.

Keith Orchison, director of consultancy Coolibah Pty Ltd, publisher of the This is Power blog and editor of OnPower newsletter, was chief executive of two national energy associations from 1980 to 2003. He was made a member of the Order of Australia in 2004 for services to the energy industry.