WA holds the key to Australia’s emissions goals. Can a government so committed to gas deliver?

Environmentalists fear premier could legislate away regulations and undo progress toward net zero at the stroke of a pen

On 12 February 2019 the premier of Western Australia, Mark McGowan, attended a dinner with the board of Woodside – just a few weeks before two highly controversial decisions that would be worth billions for some of the biggest players in the WA gas industry, including Woodside.

At the time, WA’s Environmental Protection Agency was finalising an important policy on offsets for the oil and gas industry.

It released the policy on 7 March, declaring that large new projects must offset all their carbon emissions.

If emissions were to go to net zero, the logical first step was to stop adding to the problem, the EPA argued.

Industry opposition was instant and frenzied, led by Woodside’s then chief executive, Peter Coleman, and Kerry Stokes’s The West Australian.

A week later, the EPA, which is set up as independent of the government of the day, withdrew the proposal for “further consultation”.

Midway through that consultation, the minister for mining, Bill Johnson, announced a new policy – an “aspiration of net zero by 2050” rather than a target, which allowed proponents of major projects to propose their own targets and timeframes.

The Australian Financial Review’s report was headlined: “WA moves to muzzle emissions watchdog”.

The second decision related to a series of environmental approvals Woodside needed from the EPA to make its $15bn Scarborough/Burrup hub gas project a reality.

The project involves opening up the Scarborough gas field off the west coast of the state, with a new pipeline to bring the gas to the Burrup peninsula, near Karratha. It would extend the life of the Pluto LNG terminal, which has been servicing other gas fields.

Environmentalists have warned it would be Australia’s most polluting fossil fuel project and would make it almost impossible for WA to meet its stated aim of becoming a net zero emitter.

‘Really alarming’

The Burrup peninsula, which First Nations people refer to as Murujuga, is also home to the most extraordinary gallery of rock art. The petroglyphs carved into the reddish brown rock are thought to be 40,000 years old, but are already showing the effects of acid rain, which is caused by industrial activity at the site, including gas processing.

On 1 July 2019, the EPA approved a key part of the project – extensions to the use of the Pluto and Northwest shelf gas terminals.

The approvals were made under provisions in the WA Environment Act to deal with minor amendments, and no environmental assessment was required.

But the Environmental Defenders Office, which is challenging the decision in the WA supreme court on behalf of the Conservation Council of WA, says the approvals are far from minor and would have the effect of extending the life of the facilities for 50 years.

The council’s director, Piers Verstegen, says: “This is the most polluting fossil fuel project ever to be proposed in Australia.

“It’s astonishing to think that a project of that level of international significance has been given backdoor approvals by the state government without any consideration or assessment or consultation with stakeholders,” he says. “It’s really alarming.”

The case was heard over three days just before Christmas, with a decision to come within weeks.

But in November McGowan said he would not let the ruling affect industries if the environment approval was found to be invalid.

“We can’t have scores of industries close down because of a court ruling, so the state government will do what it has to do to make sure industries stay open,” the premier said.

Asked whether McGowan would be prepared to change the environmental laws or pass special retrospective legislation for Woodside should the environmental groups win the case, a spokesperson for the premier said: “The matter will be handled by the state solicitor. As the matter is before the courts we are unable to comment.

“The Environmental Protection Authority is independent, it is not subject to direction by the minister, and its advice to government is public. EPA members are not public servants.”

McGowan has declined to comment on his attendance at the Woodside board dinner.

“The McGowan government is committed to reaching net zero emissions by 2050 and is developing a credible pathway to get there.

An unhealthy history

Should we be surprised that the premier of WA was invited to dinner with the Woodside board? Isn’t rubbing shoulders with the state’s biggest employers and wealth creators what premiers do?

That perhaps depends on one’s perspective on the role of our elected representatives. When it comes to projects with enormous economic, environmental and social impacts, perceptions of independence and the maintenance of public confidence in government impartiality are critical.

In WA, the close relationship between elected representatives and businesses that form the economic engine of the state is so familiar it almost goes without comment.

But the chumminess has not always been healthy.

Under Labor’s Brian Burke, the WA government in the 1980s became enmeshed with a cohort of businessmen, including Alan Bond, Laurie Connell and John Roberts, who had become major donors to the ALP.

The resulting scandal, known as WA Inc, led to a royal commission, which found some practices “were such as to place our governmental system at risk”.

“Unfortunately, some of that conduct and some of those practices were peculiar to Western Australia; but there is no reason to believe that many of the fundamental questions raised by our inquiry were unique to this period or to this State,” the commission found.

The McGowan government’s interactions do not involve investment of taxpayers’ money in ventures, as Burke’s did, nor is there any suggestion of improper conduct. But the deep connections between the fossil fuel industry and government raise legitimate questions about how relationships with business are managed.

Revolving door

Four of the past five WA premiers have had staff who worked for the Australian Petroleum Production and Exploration Association (Appea) before or after their positions as advisers to the premier.

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One of McGowan’s key political advisers, Kieran Murphy, spent nine years at Appea.

McGowan’s former chief of staff of nine years, Guy Houston, departed in June 2021 for a job with WA’s dominant media owner, Kerry Stokes. Before working for McGowan, he was corporate communications and media adviser to the US energy company Chevron – a key player in the WA gas industry.

At the March 2021 election the state’s treasurer and Aboriginal affairs minister, Ben Wyatt, an ally of McGowan, left politics and joined the boards of Woodside in June 2021 and Rio Tinto in September 2021.

Wyatt’s appointments came as the state government prepared to introduce the revised Aboriginal Heritage Act – which Wyatt helped draft as the responsible minister – and ahead of a final decision by the environment minister on the Scarborough LNG project.

There is no suggestion that Houston, Murphy or Wyatt have done anything wrong by making such career moves.

From the companies’ point of view, Wyatt joining their boards was a coup. Rio was under pressure over its destruction of the Juukan Gorge heritage site; Woodside was on the brink of receiving an approval for Scarborough.

Wyatt told the ABC at the time his work with Rio Tinto was not likely to cover mining operations, but instead focus on building relationships and making sure the organisation met community expectations.

Wyatt acknowledged that the entire board was responsible for decision-making, but said “good governance practices allow directors to declare conflicts of interest and excuse themselves from deliberations on particular matters”.

He said he did not make representations to former government colleagues and senior public servants on behalf of the companies, as both employed senior people to undertake government relations.

“I decided to become a director of five organisations, all of which have very close and enduring relationships with Aboriginal people in the arts, health, sport and resources sectors. Prior to the tragedy of Juukan Gorge, Rio Tinto had a strong reputation for Indigenous affairs. I am determined that Rio restore their role as industry leaders in respect of relationships with traditional owners of the country on which the company operates.”

But both appointments raised questions about whether a minister – or a senior staff member – should be permitted to move into jobs that potentially overlapped with immediate past portfolio responsibilities.

The risks around confidential information and managing the relationship with former colleagues in such circumstances are obvious.

WA, like NSW and the commonwealth, has restrictions on staff and ministers becoming registered lobbyists, but not on going to work for companies themselves.

The 2021 WA ministerial code says only that ministers leaving government “should exercise care in taking up employment or business activities in the period immediately after leaving government”.

It warns of accepting employment with companies with “which the departments or branches of government are, as a matter of course, in a special relationship”.

It also warns about using confidential information gained during office and taking care to ensure that preferential treatment for the new employer or the business is not obtained by the use of contacts and personal influence by the former minister.

A spokesperson for McGowan said: “All state government employees, including ministers, are expected to follow the guidelines and code of conduct provided by the department of premier and cabinet.

“This code of conduct requires employees to act with integrity in the performance of official duties and declare any perceived or potential conflict of interests so that it can be managed accordingly.”

Wyatt said: “I exercised due caution before I took on all five board roles that I hold. It is important to note that these are not executive roles. As governance roles they do not involve regular interactions with government.”

Major donors to both sides

Resources companies are regular donors to both main parties in the west, as elsewhere in Australia.

The most recent data, for 2020-21, shows that Woodside gave the Liberals $82,000, the Nationals $42,000 and Labor $108,350. The donations, totalling more than $232,000, were spread between the federal and WA branches of the parties.

Appea was also a major donor to both sides, contributing $107,00, while Chevron donated $74,650, also spread across the political spectrum.

In previous years, the gas industy’s support for the WA ALP has been less direct, with donations going to the Perth Trades Hall Council, which then supported the WA ALP, and to the federal branch of the ALP. The federal ALP then rebated money to the WA branch.

Data on the last six months, when several important decisions in relation to Woodside and the gas industry were taken by the McGowan government, won’t become public for another 12 months.

A spokesperson for McGowan said: “Political donations are managed separately by the party.”

The Waitsia decision

In WA few people hold as much sway as Kerry Stokes. As the owner of the only daily newspaper and the highest rating television network, the website Perth Now and a stable of regional and community newspapers, Stokes has an outsized voice in WA politics.

He also has substantial business interests beyond media. Seven Group Holdings owns the Australian Caterpillar franchise and Stokes has interests in oil and gas, through Beach Energy, which is developing the Waitsia onshore gas project with Japan’s Mitsui.

In 2020 the McGowan government, fearing a shortage of domestic gas and rising prices, moved to tighten its domestic gas reservation policy. It required onshore gas to be sold in the domestic market, but made an exception for the Waitsia stage two project in the state’s midwest.

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It was permitted to sell some of its gas to the more lucrative LNG export market for a short period.

McGowan abruptly ended a press conference in August 2020 when asked if he had discussed the Waitsia exemption with Kerry Stokes or his son, Ryan.

Chief executive of Seven Group Holdings, Ryan Stokes, defended the Waitsia exemption as “absolutely” good for WA and employment, and put it down largely to a long-running engagement between Mitsui and the state government.

McGowan also defended the exemption.

“The Waitsia Gas Project Stage 2 in the midwest provided urgently needed jobs, royalties and economic stimulus for the region and the state, a spokesperson said in a statement to Guardian Australia.

“The domestic gas arrangement enabled the project to get off the ground and in the long term deliver large volumes of domestic gas to support the state’s economy, assisting with the Covid-19 economic recovery.

“From 2029, all remaining Waitsia reserves will be made available to the domestic market.

The next Adani?

But it is the Scarborough/Burrup LNG project that threatens to become the biggest focus for opponents of McGowan’s gas plans.

The Conservation Council WA was once almost the lone voice of opposition, but since BHP and Woodside formally gave the green light for the massive investment in November, environmental groups around the country have begun mobilising against it.

They say it will be Australia’s largest fossil fuel project and more polluting than Adani’s Carmichael coalmine.

If CCWA wins its case before the WA supreme court, Woodside would probably be required to resubmit the environmental approvals for the gas terminals via a more comprehensive process involving detailed environmental assessments and public consultation. That could delay the project for a year or more, assuming Woodside gets its approval.

That’s why McGowan is hinting at overriding an adverse finding for Woodside with legislation.

Because of the project’s size, scale and forecast lifespan it means Australia’s progress toward net zero emissions by 2050 could be undone in a stroke of a pen.

For now, McGowan enjoys wildly high support in his home state, thanks to his Covid strategy and a booming economy.

But such a move could turn Scarborough into the next Adani, attracting national and international attention.