Senator Rex Patrick (South Australia) Speech in Parliament 13/11/2018




Mining Industry


Tuesday, 13 November 2018

 Senator PATRICK (South Australia) (21:03): Tonight I rise to raise a number of concerns about South Australian constituents who, as investors, have been financially affected by the passing of the Mining Amendments (ICAC Operations Jasper and Acacia) Bill 2014 in the New South Wales parliament. The passing of that bill essentially cancelled the exploration licences held by NuCoal Resources, disallowed any compensation rights for innocent shareholders and cleared the New South Wales government of liability for the conduct of the ministers and employees that had acted corruptly in the grant of the licence. In August, my colleague Senator Griff and I wrote to the New South Wales Premier about the issue, and the response gave us no joy and little information. It did, however, contain a commitment that the current New South Wales government position of not compensating NuCoal Resources shareholders for the cancellation of the coal exploration licence would stand. All up, more than 3,000 shareholders have been affected, including 184 from my home state of South Australia.

This travesty unfolded as follows. In 2010 NuCoal purchased Doyles Creek Mining, which owned exploration licence No. 7270. NuCoal intended to use this licence to establish a coalmine at Doyles Creek. Consequently, shareholders continued to invest in the company. Importantly, NuCoal reports that its due diligence process found that the licence had been granted legally to Doyles Creek Mining. In 2011 the New South Wales Independent Commission Against Corruption, the NSW ICAC, investigated the granting of the exploration licence and found in February 2013 that it had been granted corruptly. In December 2013, the New South Wales ICAC made recommendations that the licence be expunged and that any legislation to that effect be accompanied by a power to compensate innocent persons affected by the expunging, such as shareholders. In response to the ICAC investigation and recommendations, the New South Wales government introduced the Mining Amendment (ICAC Operations Jasper and Acacia) Act 2014. Significantly, the New South Wales parliament was never told that the ICAC had recommended that shareholders be compensated. Indeed, claims have been raised in the New South Wales Legislative Council that the parliament was deliberately told the opposite by the then Premier Barry O’Farrell.

In February this year, the Hon. Dr Peter Phelps MLC clearly recalled what occurred when he voted on the ICAC Mining Amendment (ICAC Operations Jasper and Acacia) Act 2014. Dr Phelps said:

After being called back to a sitting of this House at urgent notice by Premier O’Farrell, this House passed the ICAC bill which allowed for the expropriation without compensation. Why did we do that?

Members of this House were told that we did that because it was a recommendation of ICAC.

The following day Dr Phelps expanded on his remarks, saying that at the time of the ICAC inquiry NuCoal had a capitalised value of $400 million. He told the House:

That capitalised value of $400 million at the time of the ICAC inquiry that led to the expropriation was reduced to $20 million. In other words, it was a 95 per cent cut in the capital value of that company because Barry O’Farrell introduced legislation under the false claim that he was giving effect to the findings of corruption, which we now know in this instance at least, to have been substantially false, or at least highly compromised by the activities of the ICAC itself.

It is to Dr Phelps’ credit that he is prepared to call out his own party on the issue. He finished his speech by saying that he will not be silent until shareholders get justice.

Meanwhile, NuCoal is proposing that the New South Wales government appoint a retired senior judge to

consider the facts and circumstances of the cancellation of exploration licence 7270 in 2014 and to recommend compensation for the innocent shareholders affected by the cancellation. With the New South Wales state election just months away, NuCoal is understandably urging those affected to contact their local New South Wales and federal MPs to highlight this unfairness. Senator Griff and I are more than happy to oblige. As I’ve mentioned, we wrote to the New South Wales Premier about the issue in August. We stated that we were particularly concerned that the legislation cancelling the licence did not implement the New South Wales ICAC’s recommendation to allow for the awarding of compensation to innocent parties. In the interests of fairness and equity, we implored the Premier to consider the effect the enactment of the legislation has had on the innocent shareholders of NuCoal and ask that she look favourably on its proposal to have a retired senior judge investigate the circumstances of the matter and make recommendations for the award of appropriate compensation. In the response from a departmental representative we were advised that the original decision was not taken lightly and that the government’s position remained unchanged to that reached in 2014. With a state election looming, we can but hope that sanity may prevail and that a policy shift might yet emerge on all sides of New South Wales politics before polling day.

Either way, for two reasons this situation cannot be allowed to stand. The first is that it’s fundamentally unfair. Under section 51(xxxi) of the Australian Constitution, the Commonwealth can acquire property on just terms from the states or any person. In contrast, state parliaments have the power to take property without paying any compensation at all. Indeed, during the constitutional conventions that led to the federal Constitution, representatives from the states specifically advocated to preserve the power to take property without paying compensation. It’s the sort of power one might expect to find in a communist state, where the state just takes what it wants. New South Wales has actually passed legislation in respect of ‘just terms’ compensation, but because it doesn’t have a constitutional origin the provisions of other acts can specifically carve out the will of the New South Wales parliament. In the case of NuCoal, shamefully, the New South Wales government has used the provisions in an act to remove a fundamental right.

The second reason is that of the very serious allegation that the New South Wales parliament was deliberately misled when voting for the bill in 2014. In 1956, Baron Denning, considered to be among the greatest English judges of modern times, famously said:

No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything.

If the New South Wales parliament was deliberately misled in 2014, as has been alleged, then this is surely one of the greatest frauds in the history of that parliament—the defrauding of $400 million. Accordingly, the more we pick at it, the more it quickly unravels for all to see and the more the injustice will stand out.

In closing, I call on the New South Wales Premier to show leadership on this. Premier, the response you gave me and my colleague, Senator Griff, was perfunctory at best. It showed a lack of compassion for your own constituents as well as for ours. It showed a lack of social integrity. It showed a lack of moral foundation. It showed a lack of judgement. It showed no appreciation for what is just. Madam Premier, you need to fix this.

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