The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Peter Costello

Peter Costello

Treasurer

11 March 1996 - 3 December 2007

Transcript of 24/04/01

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.