Transcript No. 2001/041

Transcript

of

Hon Peter Costello MP

Treasurer

3AW with Neil Mitchell
Tuesday, 24 April 2001

E&OE

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SUBJECTS: Woodside, Shell, Peter Nugent

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MITCHELL:

The Treasurer is on the line, Mr Peter Costello, good morning.

TREASURER:

Good morning Neil.

MITCHELL:

Well the dollar has dropped heavily as a result of this, will it come back?

TREASURER:

There was an initial, well actually before the decision it went up and after

the decision it came down and then it stabilised, but the point about it is…

MITCHELL:

What about the long term impact on the dollar?

TREASURER:

I dont think so Neil. Look the point about this is, the decision I made yesterday

is about the development of Australias largest energy resource and the development

of that over the next 20 or 30 years. And you cant make long term decisions

like that on the basis of whats going to happen in the next 5 minutes, or

the next 50 minutes. Youve got to make a decision based on whats in Australias

interest in the next decade and the decade after that and the decade after

that. And I took a decision, it was a hard decision, I said that yesterday,

its one of the hardest decisions Ive had to take as Treasurer, but I took

the decision in the national interest.

MITCHELL:

Would you deny there is a degree of politics involved in it though? Its certainly

a more popular decision.

TREASURER:

Well I took the decision because I thought it was right. And the reason I thought

it was right was that this is Australias largest energy resource, it could

be our largest export earner for decades. And I was worried that if you didnt

have an independent operator whose sole interest was in developing it to its

full and selling that gas in international markets in preference to sales of

gas from any other part of the world, that Australias national interests would

not be maximised. And I decided we had to maximise our own national interest

and thats why I took the decision.

MITCHELL:

Is it correct that the, I know it was your decision and it was yours alone,

correct?

TREASURER:

Yes. It was mine alone.

MITCHELL:

Was the, was it true that the Prime Ministers view was this as well?

TREASURER:

Well, I hope it is his view…

MITCHELL:

What you dont know?

TREASURER:

Well I hope it is. But he never communicated his view to me Neil. Under the

statute, its my decision and these things are taken to court. I make a lot

of foreign investment decisions and people who dont like them are entitled

to take you to court. And the courts have ruled over and over again, that I

can only have regard to the national interest, that I must make the decision

alone. That nobody else is allowed to make the decision, that not even the

Cabinet can make the decision and so I did, in accordance with the law, I made

the decision, its mine alone, Ill wear the consequences. If you agree with

it, it was my decision; if you disagree with it, it was my decision, Ill wear

the consequences.

MITCHELL:

I understand that it was your decision alone, but you can take advice on it,

I find it extraordinary that you didnt take some view from the Prime Minister.

TREASURER:

The Prime Minister never told me what his view on it was, no.

MITCHELL:

You discussed it with him?

TREASURER:

In general terms, he would say Oh when are you going to make it?. I told

him I would be making a decision on Monday, I think he knew the pros and cons.

I knew the pros and cons. I had to read volumes and volumes of material on

this Neil, you know, and nobody else saw these submissions. Theyre huge submissions

on these things, this is an incredibly complicated commercial deal. I had to

sit down, I had to read it, it took hours, it took days and nobody else apart

from the Foreign Investment Review Board had seen any of that material.

MITCHELL:

Do you accept the interpretation that, you know, the farm has been saved in

effect?

TREASURER:

The way I put it is this, that, what was on my mind was, who was going to operate,

manage and market the liquid natural gas? Youve got foreign investors in there

that have part of the ownership…

MITCHELL:

The Shelf has 4/6 foreigners.

TREASURER:

Yes, Shell has part of the ownership. It did yesterday, it still does today.

MITCHELL:

Its really a majority ownership by foreigners.

TREASURER:

Its already got a majority foreign ownership…

MITCHELL:

Thats right, so whats been saved? Whats been achieved?

 TREASURER:

The question is who operates it. At the moment its Woodside that operates

it. Its the side that puts up the investment plan, it manages it, it extracts

the resource, it goes up to China, it goes up to Japan and it sells North West

Shelf gas. Shell was going to take over the operator so that Shell would have

had a majority of shares in the operator. Shell would have then controlled

the investment, the development and the marketing. Thats what this application

was about, whether there should have been a change in the share ownership of

the operator, manager and marketer. And thats why its not right to say, some

people have said Oh, youre putting up the shutters against foreign investment.

Were not. I mean foreign investors have still got two-thirds of the North

West Shelf but…

MITCHELL:

… inaudible… the money markets thought you were by the reaction of the

dollar.

TREASURER:

Look, Neil, these people take positions on a minute by minute, second by second

basis. I had to make a decision on the basis of decades.

MITCHELL:

Sure, but I guess thats part of the point. Do you, is there, do you accept

that this could make Australia less attractive to foreign investors?

TREASURER:

Not in the slightest. Thats my point.

MITCHELL:

It must introduce a degree of uncertainty.

TREASURER:

Not in the slightest, because anyone who wants to say, Oh well youre closing

the doors on foreign investment, I would say to them, look, yesterday foreign

companies had two-thirds ownership in the North West Shelf, today foreign companies

have two-thirds ownership in the North West Shelf. Nothings changed there.

This is a sole question about the company, the control of the company that

was going to manage, operate and market. I think its in Australias national

interest that that resource, our largest energy resource, is developed to the

full, and I want Australians to know and I want to know, that when contracts

are going for liquid natural gas up in China and Japan and countries all over

the world are competing for those exports that Australias exports will be

pushed in preference to the exports of any other field.

MITCHELL:

Do you think its, well, does it indicate a tighter takeover outlook for the

future?

TREASURER:

Neil, we operate a liberal investment regime. As I said yesterday, by value

we reject 0.1 per cent, but we have in the statute a power on a national interest

ground to prevent a foreign takeover. It is exercised rarely. But every now

and then, it has to be exercised and yesterday was the day to exercise it.

MITCHELL:

Why was BHP different?

TREASURER:

Well BHP is … inaudible… The FIRB havent made a decision on BHP. The way

these things happen is a company makes an announcement, it puts an application

into the Foreign Investment Review Board. The Foreign Investment Review Board

makes a decision…

MITCHELL:

Well do the same principles apply to BHP?

TREASURER:

…hich I can either accept or override. As it turned out in the Woodside one,

the Foreign Investment Review Board didnt come to a concluded decision, it

was split itself, and so I had to make the decision solely.

MITCHELL:

Well do the same principles apply in BHP?

TREASURER:

The BHP bid will be considered on its merits.

MITCHELL:

And is it significantly different to the situation youve considered with Woodside

and Shell?

TREASURER:

Oh yes, its a very different application. Of course it is.

MITCHELL:

Were not to read anything into this?

TREASURER:

Oh no no no. The BHP decision will be decided on its merits. But, you know,

youve seen in the paper, its a very different thing to this. Its a proposal

for a dual listing between two companies. This was a proposal for Shell to

get the majority shareholding in the operator of Australias largest energy

resource.

MITCHELL:

Or theres another one with that Singapore Telecom and Optus, takeover of Optus?

TREASURER:

Im not sure whether thats before the Foreign Investment Review Board, Neil,

but given the … if it is it will be considered on its merits.

MITCHELL:

Given the principles youre espousing though, how would that differ to the

Woodside Shell situation?

TREASURER:

Well, but its before the Foreign Investment Review Board, but I believe Optus

is already a foreign company isnt it?

MITCHELL:

Is it?

TREASURER:

Look, dont take my word on it, but thats certainly my understanding.

MITCHELL:

Okay. Can I just ask you about something else. The death of Peter Nugent overnight.

We only found out this morning, the Member for Aston. Your reaction to that?

TREASURER:

Its a terrible shock and a tragedy and our heart goes out to Carol and his

family. I know that theyll be grieving at this time. I want them to know that

all of Peters colleagues send their support at this time. I know it will be

a shock too to the electors in the Melbourne seat of Aston. Peter was a friend

of mine. I came into the Parliament with him in 1990, I admired him enormously.

I especially admired the work that he did on the some of the social issues.

Hell be a great loss to the Parliament and well miss him.

MITCHELL:

Had he been ill? Or was it a total surprise?

TREASURER:

It was, as I understand it Neil, it was a massive heart attack this morning

and he had no warning.

MITCHELL:

And I suppose in crass political terms, it means a by-election does it?

TREASURER:

Probably does, but look I dont think its the time to think about the politics

of it. It happened early this morning and our heart goes out to Carol and his

family.

MITCHELL:

Id agree with that. Thank you very much for your time.

TREASURER:

Thanks very much Neil.