Life on the West Island - Low lying

This week, West Island MHR Andrew Wilkie released thousands of pages of documents he had obtained from within the coal mining industry. Speaking in the House of Representatives, Mr Wilkie said:

I bring to the Parliament’s attention another brave whistleblower, an executive from the Australian coal industry who has provided me with thousands of documents that prove Australian companies have been lying for years about the quality of our coal. And that’s important because the fraud is environmental vandalism and makes all the talk of net zero emissions by 2050 a fiction. It could also be criminal, trashing corporate reputations as well as our national reputation.

In essence Speaker, coal companies operating in Australia are using fraudulent quality reports for their exports, and paying bribes to representatives of their overseas customers to keep the whole scam secret. And this has allowed them to claim, for years, that Australian coal is cleaner than it is in order to boost profits and prevent rejection of shipments at their destination.

This shocking misconduct includes exports to Japan, South Korea, China and India, and involves companies including Terracom, Anglo American, Glencore, Peabody and Macquarie Bank.

The misconduct also includes the ALS company, which has already been forced to admit its fraudulent testing to the ASX when it conceded that ‘approximately 45-50 per cent of the certificates of analysis were manually amended without justification.’ [ALS advertises that ‘for more than 40 years, ALS has provided comprehensive testing solutions to clients in a wide range of industries all over the world. Our adoption of state-of-the-art technology and innovative methodologies – coupled with the strength of our international teams – ensure that we deliver the highest quality services using local expertise and personalised solutions.]

Moreover the other key coal testing company in Australia, SGS, also commits fraud and at a similar rate. For example, in the draft results in this SGS coal test the moisture content is 16.7 per cent, which is pretty damp and won’t burn well.

But here, in the final version of the SGS document, the same testing puts the moisture content at 15.9 per cent which is drier and burns much cleaner. And that represents hundreds of thousands of dollars in extra profit from the relatively small shipment to Japan and ensured it wouldn’t be rejected on arrival.

The coal executive whistleblower also alleges that global accounting firms such as Ernst and Young are aware of all this and choose to ignore it because the coal companies are lucrative clients.

Speaker, as a result of all this I call on the Government to establish at least a parliamentary inquiry into the matter, one where the witnesses of this misconduct, including the whistleblower I’m in contact with, can safely present their testimonies and evidence, and where the industry can explain itself.

For years, both major political parties, but most especially the conservative coalition, have maintained that West Island coal is cleaner than that from other exporters, and thus that our nation is helping to lower carbon emissions in the use of thermal coal. The documents tabled in parliament by Mr Wilkie claim that this is a self-serving lie. The Sydney Morning Herald concluded that our coal exporters are allegedly faking data to make their coal look cleaner so they get more money for it, in a scam involving two laboratories, accountancy firms and an investment bank.

The Australian Financial Review reported that laboratory giant ALS admitted that half its coal data had been ‘manually amended without justification’ for almost 13 years, but last week ASIC said it’s not going to do anything.

The major coal producers have issued a limp denial of any wrongdoing, without actually disputing the figures tabled by Mr Wilkie. But at the same time, they have launched a broadside at the federal government’s attempts to close the gap between workers’ pay and rampant inflation, claiming that increasing wages would bring the industry to its knees. This is blatant hypocrisy, given the huge increases in mining company profits, which are up by around 50% this year, while wages have risen a measly 3.1% and inflation is close to 8%. Meanwhile, executive salary packages have ballooned so that many chief executives are taking home pay and benefits in the order of $10 million a year.

Yet the Reserve Bank retains its laser-like focus on bringing inflation down by jacking up interest rates, which notionally do not increase inflation because they are excluded from the Consumer Price Index. But ask any consumer whether higher interest rates are weighing on their cost of living through higher mortgage or rent repayments, and the answer is an unequivocal “yes.”

Economic journalist Michael Pascoe attended the latest speech by Reserve Bank governor Philip Lowe, and was scathing about the bank’s strategy:

So the old central bankers’ blunt instrument of interest rates is not working. So why is the RBA promising to keep bashing us with it? Because, Dr Lowe said, the board’s priority is to return inflation to its target over time. ‘It is resolute in its determination to make sure that this current period of high inflation is only temporary.’ Given the rest of his speech, that’s a bit like saying we’re determined the operation will be a success whether or not the patient dies.

The West Island is ill served by regulators like ASIC refusing to investigate the blatant lying and profit gouging of the coal companies and the Reserve Bank with its counter-intuitive monetary strategy. They are setting the nation on paths to continue to deceive the world about our action on climate change and to an ongoing cost of living crisis.