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Speech: Ian Macdonald and NSW Labor

Speeches in Parliament
Lee Rhiannon 14 May 2013

Adjournment debate, Tuesday 14 May 2013

Senator RHIANNON (New South Wales) (21:06): On 4 February 2009 journalist Alex Mitchell wrote:

NSW Primary Industries Minister Ian Macdonald is standing by the poker machine waiting to pull a jackpot for the coal mining industry. But who will get the prizes?

This was 16 months before Mr Macdonald resigned and well before he was summoned to appear before ICAC. But already a question mark hung over his conduct as an MP and questions were being asked about whether the Labor minister was delivering the goods. The New South Wales corruption watchdog is now providing an insight into how lucrative those goods were.

I was a Greens MP in the New South Wales Legislative Council when New South Wales Labor was becoming increasing associated with dubious activities that were undermining public confidence in the New South Wales planning process, our democratic system and the Labor Party itself. I and some of my colleagues put in submissions to ICAC about potentially corrupt activities we had become aware of. One of the ministers that my office received many complaints about was Mr Macdonald. He held various ministerial positions. It was in his role as minister for mineral resources that had people most worried. The complaints go far beyond what has been covered by the recent ICAC hearings.

Working closely with the right and left factions of his party, Mr Macdonald was involved in a range of activities which need close examination. It seems clear that Mr Macdonald played a role in bringing the financial muscle of the mining industry to the cabinet table. While the former Labor Party member is becoming known far beyond New South Wales borders for alleged corrupt allocation of mining leases, it was not just a favoured section of the big end of town that benefited from Mr Macdonald's largesse. The New South Wales government also picked up mining money in unusual ways. BHP Billiton paid $125 million for an exploration licence on the rich black soil of Caroona on the Liverpool Plains and China Shenhua paid $300 million to operate in neighbouring Watermark.

Prior to these payments, the highest fee for an exploration licence my office could find was $10 million. Why the sudden increase? What long lunches were held to smooth out these deals? What promises did the former minister make in return for this money being paid to the New South Wales government? Mr Macdonald's role as architect of this new engagement with the mining industry warrants a close examination. These funding streams would have made him popular in cabinet and may help explain why for so long Labor headquarters stood by him and why he was kept on as minister. Meanwhile there was growing community concern with his activities.

I had enormous concerns about the implications of the government taking multi-million dollar fees from mining companies for exploration. The conclusion many fighting these mining plans came to was that full-scale mining was a done deal once the money was handed over. The arrangement with China Shenhua, a Chinese government company, was seen as highly unusual. In August 2008, former Minister Macdonald granted an exploration licence for five years over about 190 square kilometres of prime agricultural land on the Liverpool Plains. In return this company, the largest coal mining enterprise in the world, agreed to a $300 million payment to the New South Wales government and an additional $1 million annually for five years to a new regional community trust. On top of that, China Shenhua agreed to invest $175 million for transport infrastructure and an additional $200 million if a mining lease was eventually granted.

In the New South Wales parliament on many occasions I questioned Mr Macdonald about his portfolio and spoke about my concerns. At the time it seemed clear to me that his responses were facetious and evasive. We now know that they were also misleading and at times dishonest. Mr Macdonald had regular lines he would rely on and use bombastically. He would boast about what he called 'rigorous' environmental conditions imposed on mining companies. In a media statement issued when China Shenhua were granted an exploration licence, the former minister said:

There is strict environmental regulation, which ensures that exploration does not have any significant impacts on aquifers.

And he would make out that all the licence covered was exploration and it would not necessarily lead to full-scale mining. However, his deals on the Liverpool Plains with some of the world's biggest mining companies suggest that these companies had a clear understanding that exploration was the first stage in expanding to full-scale mining.

Mr Macdonald was never able to explain why China Shenhua, on top of paying the $300 million upfront fee, put up $175 million for transport infrastructure. Within a year of handing over this money, the Chinese government company was purchasing prime agricultural land in the Watermark area, where it had exploration rights. This suggests that China Shenhua, a company known for operating its own railways, ports and power plants in association with its mining operations, was very confident that it would be granted the right to mine on the Liverpool Plains. Why else would the world's largest mining company put so much money into activities clearly designed to assist local mining operations before it had approval to open a mine?

These deals with mining companies where Mr Macdonald gained more than half a billion dollars for the New South Wales government in just two mining exploration projects reveal what a cash cow the former minister had created for the then New South Wales Labor government. Meanwhile the planning and approval process for New South Wales coalmines was becoming a farce. At this time Mr Macdonald, in his capacity as a New South Wales minister, made five work-related trips to China—one in 2005, one in 2007 and three between January 2008 and July 2009. Very few details about agreements reached on those trips with the Chinese authorities and the Chinese government owned companies were ever released. Considering the cloud that now hangs over the former mining minister, all materials associated with these trips—his diary and meeting notes, and documents about agreed areas of cooperation—should be made public.

In 2009 when I moved the Greens Mining Amendment (Safeguarding Agricultural Land and Water) Bill, a majority of our upper house MPs indicated their support, but it was voted down 20 votes to 19. Farmers, particularly from Gloucester, the Liverpool Plains and the Upper Hunter, waged a strong campaign in support of the Greens bill. A couple of hundred took buses to Sydney on the day the bill was to be voted on to rally in support. This community action put pressure on all parties to support the Greens bill. The Nationals were the first to come on board, indicating that the coalition would vote for the bill.

At the same time, Mr Macdonald was engaged in lengthy negotiations with the Shooters MPs. In meetings with farmers, the conservative crossbenchers indicated that they supported the bill, but in the House they stated that they would not vote in favour as it was a Greens initiative. I do not know if Mr Macdonald and Mr Brown, leader of the Shooters Party, did a deal on that day. Certainly that is what many suspected. The ongoing support the Labor government provided to shooting associations, the funding provided to the New South Wales Game Council and the watering down of gun control measures certainly delivered on the Shooters' priorities.

I first saw the questionable relationship between Mr Macdonald and Mr Brown on display in the New South Wales upper house on 10 May 2007. During the 2007 election there had been growing concern amongst some residents in the Southern Highlands that the Shooters and Labor had done a deal about the proposed Hill Top regional shooting complex. On that day in May, the first sitting week after the 2007 state election and the first opportunity the Shooters' MP had to ask a question, Mr Brown asked Mr Macdonald, as Minister representing the Minister for Sport and Recreation, about the project. Despite the fact that the planning process for the project had not been finalised, Mr Macdonald confidently answered that approval would be in by the end of June that year and set out considerable details about how the project would proceed. The approval did go through, but why was the minister so confident at this time, before the shooting range plan had been properly assessed?

The New South Wales government put up $10 million of public money and allowed the range to take over 10 square kilometres of Crown land. However, the minister should not have been so confident in his response to Mr Brown's question. Two years later, the local community that opposed the shooting range had a major win in the Land and Environment Court, when Justice Biscoe upheld the appeal by the Hill Top Residents Action Group and revoked the minister's approval.

But then came a move that came straight out of the handbook of how conservative governments handle court decisions that thwart their agenda. The then Minister for Planning, Tony Kelly, amended the state environment planning policy to allow a shooting complex in an environmental zone. The Hill Top shooting range, despite the fact that it had undergone more than a tenfold increase in shooting operations, placing enormous noise pollution on locals, was then issued with a new approval to bypass the court's original ruling. This pattern of changing the law to head off prospective legal challenges, particularly with regard to critical environmental matters, became a hallmark of the Carr Labor government with the first examples happening soon after they were elected in 1995. In 1997 Labor did this on three occasions within one year to sidestep possible adverse court decisions. One was a Japanese consortium plan to reopen the Port Kembla copper smelter, another was an approval for the Bengalla mine in the Upper Hunter, and the third covered the expansion of the Kooragang Coal Terminal at Port Newcastle.

In 2008, with the backing of cabinet, Mr Macdonald rushed a bill through parliament to amend the Mining Act in order to sidestep a decision of the New South Wales Court of Appeal. The mining industry lobbied for the changes. Speaking in the Legislative Council on the bill, I identified the benefits it set up for the mining industry over landholders, the problems with retrospectivity, and identified Felix industries and White Mining as having 'some good allies' in the government. What I did not know at the time was that the two mining executives associated with these companies, Travers Duncan and Brian Flannery, jointly received $1 billion because of the change to the legislation. The coalition voted with Labor to pass the amendments that Mr Macdonald had introduced to the Mining Act. The Greens opposed the changes.

In 2010 Mr Macdonald was at it again, using legislation this time to overturn a community win in the court. Farmers, with the support of country and city folk alongside the Greens, did have some breakthroughs in their work to protect farming land. A standout and historic action at the Rossmar property on the Liverpool Plains involved local farmers in a 615-day blockade to prevent BHP Billiton conducting exploration. When these farmers took their case against the exploration activities of BHP Billiton to the Supreme Court, it was recognised that for years mining companies had failed to uphold landholder rights. BHP Billiton lost the case.

Responding to the litigation, Mr Macdonald did not act to ensure mining companies upheld the law. Instead, in 2010 he introduced legislation, the Mining and Petroleum Legislation Amendment (Land Access) Bill, that removed the obligation on miners to notify all landholders of their exploration plans and robbed the ability of landholders to take legal action against miners if they breached their exploration licence conditions. Responsibility for this bad decision did not just rest with Mr Macdonald. He was one minister in a government that regularly put the interests of mining companies above communities, food security, water and the natural environment. The Nationals again showed that when the chips are down they also put mining companies before farmers' interests. The coalition voted with Labor to change the land access bill.

In 2009 I questioned Mr Macdonald in the New South Wales upper house about his work with Mr Eddie Obeid, another former New South Wales Minister for Mineral Resources. In September 2008 Mr Macdonald had announced that the Bylong Valley would be opened up for coal exploration. His answer to my question about Cascade Coal's proposed exploration near Bylong and any conversations he may have had with Mr Obeid were misleading. Mr Macdonald's reply to my question was:

The process was done entirely by the department ... I delegated all authority.

When I again asked the former minister a similar question in May 2010 about his conversations, he said that the first he knew about this mine was when he read about it in the Australian Financial Review.

On 31 January this year, Mr Moses Obeid, the son of Mr Eddie Obeid, told ICAC that Mr Macdonald had given him information in mid-2008 that the Department of Primary Industries would open a tender for coal exploration in the Bylong Valley. Mr Eddie Obeid had helped set up a meeting for his son Mr Moses Obeid with the then minister. The information about a new coal exploration licence was again conveyed by Mr Macdonald to Mr Moses Obeid in a phone conversation in July 2008. Coal mining in this area has been identified as being worth at least $75 million to the Obeid family.

Despite having passed on this inside knowledge to a local landowner and personal acquaintance, in the New South Wales parliament Mr Macdonald gave disingenuous information on his involvement in response to the two questions I put to him in 2009 and 2010. In the New South Wales upper house, when I moved in 2010 for the release of documents relevant to communications between Mr Macdonald in his capacity as mineral resources minister with representatives of China Shenhua about coal exploration in the Gunnedah Basin and plans for a new coal fired power plant in New South Wales, Mr Macdonald won the support of the Shooters and Fishers Party MPs and Reverend Fred Nile to defeat the motion. Transparency was again limited.

Interestingly, the debate and vote on this motion showed the double standards of the Nationals. They would not support any call for documents on coal exploration in the Gunnedah Basin, only for documents on a coal fired power plant. Coal exploration and mining approvals under Mr Macdonald were already under a cloud by this stage. There was growing opposition by farmers to the mining plans, but the Nationals regularly failed to vote on any measure that put pressure on mining companies.

The controversial Doyles Creek was also already in the news. We now know that the exploration licence for this mine was granted on Christmas Eve of 2008 without going to a proper tender. But the Nationals, despite strong lobbying from farmers, voted with Labor and the conservative crossbenchers to keep under wraps the dubious deals unravelling between mining companies and NSW authorities.

My colleague in the New South Wales upper house Greens MP Sylvia Hale in May 2010 called on the then Premier, Kristina Kenneally, to request that ICAC investigate the potential conflict of interests that existed between the Labor MP Eddie Obeid and his family property holding in the Bylong Valley and whether Mr Obeid had been given any inside information on the expression of interest process initiated by the New South Wales Department of Primary Industries to bid for a coal exploration licence in the Bylong Valley. I would like to pay tribute to Ms Hale who, in her capacity as the Greens New South Wales spokesperson on planning, displayed enormous courage in taking on Labor ministers and exposing their dishonesty. The years of hostile accusations that former planning minister, Tony Kelly, threw at Ms Hale as she pursued him over his questionable activities on projects such as Killalea, Currawong and Wollongong became symptomatic of the depth of Labor's problems and highlighted why an inquiry into allegations of corruption in planning decisions was needed.

When a New South Wales upper house inquiry into allegations of corruption in planning decisions was held in September 2009 Ms Hale asked Sydney property developer, Ron Medich, if he had any involvement in the murder of Michael McGurk.

I will continue these comments in a later adjournment speech, thank you, Mr Acting Deputy President Ludlam.

Adjournment debate, Wednesday 15 May 2013

Senator RHIANNON (New South Wales) (19:38): Tonight's adjournment speech continues the comments I made last night in the Senate about recent activities in New South Wales. When a New South Wales upper house inquiry into allegations of corruption in planning decisions was held in September 2009, Ms Hale, who was a member of the upper house at that time, asked Sydney property developer Ron Medich if he had any involvement in the murder of Michael McGurk. Mr Medich was subsequently charged with Mr McGurk's murder. Ms Hale was extensively targeted at the time by conservative Labor and coalition MPs for asking the question that had to be asked as it was deeply relevant to understanding and combating the systemic corruption that had become part of doing business in New South Wales in those years. Michael McGurk and Graham Richardson had both worked for Ron Medich. It is widely recognised that Mr Richardson orchestrated Mr Eddie Obeid's entry into the New South Wales upper house. In Mr Obeid's inaugural speech, delivered on 13 November 1991, the first person he thanked of all his supporters was Mr Richardson.

It was 2008 that marked the height of many of the Labor scandals that ICAC is now investigating. In the week before Christmas that year, the Australian Financial Review reported that Mr Richardson transferred $1 million from his Swiss bank account to a Beirut account. Mr Richardson, amongst his many titles, is now recognised as a mentor to Mr Obeid, and this story about a Beirut account has fuelled speculation on the nature of the relationship between these two dominant Labor figures. For those commentators attempting to grapple with what is happening to Labor, it is a serious mistake to try to dismiss Mr Obeid as a lone operator. Like Mr Macdonald was a creature of the left Labor faction, Mr Obeid was a creature of the right Labor faction.

Mr Carr's role in promoting Mr Obeid also needs to be remembered. While it is true, as the current foreign minister likes to remind us, that he forced Mr Obeid out of his ministry, Mr Carr elevated Mr Obeid to the prized position of Minister for Mineral Resources in 2003 and he often praised this upper house Labor MP for his massive fundraising efforts undertaken for Labor.

Mr Macdonald also had a dubious connection with the strange case of the Young abattoir that went into receivership in 2010 with debts of more than $20 million, leaving its 300 workers out of a job. Money that should have been put into workers' entitlements and superannuation, along with company stock, went missing. The public purse is down $2 million, as the Commonwealth has to cover workers' entitlements when a business collapses. There is no suggestion that the former minister was involved in this bad business deal, but he did fail to act on clear advice about previous fraudulent activities of the company owners, Grant Edmonds and Kim Noble.

In 2005, when Mr Macdonald was Minister for Primary Industries, he was advised that the Young abattoir owner, Grant Edmonds, had been the subject of an internal Commonwealth Bank investigation into fraudulent conduct when he was a bank manager at the Auburn branch. Mr Edmonds' partner, Kim Noble, at the time of the investigation was a bank clerk in the same branch of the Commonwealth Bank. Ms Noble also had a major interest in Burrangong Meats, owner of the Young abattoir, as she was the financial controller. Banking analyst Bruce Ford provided this information to Mr Macdonald when he became aware that the minister had appointed Mr Edmonds to the chair of a committee overseeing the National Livestock Identification Scheme. The email Mr Ford sent was acknowledged with a confirmation that it was received by the minister's office. Mr Macdonald denies he was aware of the issue. Ministers do receive a great deal of correspondence; we all know that. However, it is hard to believe this issue would not have been considered in Minister Macdonald's office. At the time this email was sent, Mr Macdonald's chief of staff was Tony Hewson, a former mayor of Young, a former senior manager for Mr Edmond and a one-time director of one of the Burrangong group of companies. Mr Hewson would have been aware the information supplied by Mr Ford to his boss was significant. Mr Macdonald has made trips to China with both Mr Hewson and Mr Edmonds. I referred this matter to ICAC when I was in state parliament and I maintain my view that this warrants investigation.

News Limited also deserves a mention in the saga of the damage Mr Macdonald has wrought on New South Wales. Former News Limited CEO John Hartigan was a member of one of the former minister's many committees—in this case the New South Wales Wine Industry Research and Development Advisory Council, which became notorious for spending $150,000 on long lunches and top accommodation. News Limited was again standing with Mr Macdonald in backing one of his pet projects, the car race Sydney did not want—the V8 Supercar Championship Series at Sydney Olympic Park. This event, with a price tag of $90 million of public money, required legislation to override the environmental regulations designed to enhance the green credentials of the Olympic precinct.

Then there are the former minister's unexplained actions with the NRL. In March 2010, as Minister for Major Events he pledged about $50 million over 10 years to the NRL, including $45 million in cash and $5 million in kind. Much of the annual $3.5 million payment had no conditions attached. News Limited, with its newspapers, pay TV rugby league and financial ties to two clubs—100 per cent ownership of the Melbourne Storm and a 68 per cent stake in the Brisbane Broncos—would have a clear interest in the NRL gaining financial support. A strong NRL means more followers and viewers, more people looking for news on the game and their club. The NRL is an important and popular sport. It warrants support. But there are a lot of important sports and a lot of public schools and hospitals in need. Why did Mr Macdonald, with the support of the NSW Labor cabinet, single out the NRL for such favoured treatment?

Part of the motivation appears to have been to save New South Wales Labor's political bacon by preventing the bid of the then Queensland Premier, Anna Bligh, to have NRL grand finals played in Brisbane. Was something expected in return? The actions of Mr Macdonald, an AFL Essendon fan, in throwing millions of dollars at the NRL are curious. With the way Labor and the coalition parties have pandered to media moguls and their empires in recent history, these questions need to be considered. Maybe the former Monash La Trobe University student activist turned New South Wales Labor minister hoped for some media cooperation for himself or his party. Stranger things have happened in this tale of the rags-to-riches hard man of politics.

When Mr Macdonald resigned in May 2010 over misuse of his travel entitlements, I called on the then New South Wales Premier, Kristina Kenneally, to broaden the inquiry to cover other allegations of ministerial misconduct, as our previous calls for ICAC to investigate had not been taken up. Ms Kenneally did not broaden the inquiry. In March this year, speaking on the ABC's 7.30, she stated that Mr Macdonald had been a competent minister and that is why she put him back in the ministry after he had been sacked by former Premier Rees. The ICAC hearings are shedding light on whom Mr Macdonald was competent for—for himself, for some close colleagues and for business executives. Considering the range of dubious activities the former minister was involved in, there is a strong case for the ICAC investigation to be widened to include the issue of the Young abattoir and whether New South Wales government ministers gave guarantees to proponents of developments, including coalmines, prior to the approval process being finalised. A danger for all of us is that minimal lessons are learnt from these widespread abuses by prominent public figures.

What I witnessed in New South Wales state politics suggests that a dangerous 'whatever it takes' culture dominates in the New South Wales Labor parliamentary wing. This behaviour, I find, damages all sides of politics, as people become cynical about the democratic process. The road to recovery needs to concern us all. For members of this parliament, I believe it is a clear reminder that a national ICAC is urgently needed.

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