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Policy and Research – Incorporating BITRE, Estimates Hearing February 14th, 2012

Estimates & Committees
Scott Ludlam 11 Apr 2012

 

Policy and Research - Incorporating BITRE

 

Topics covered:

  • Peak Oil
  • Leaked BITRE Report 117
  • Aviation projections

 

 

(An exchange with Senator Edwards is included as he also raises the Missing BITRE Report 117)

 

CHAIR: I welcome officers from Policy and Research. We will go straight to questions from Senator Edwards.

Senator EDWARDS: I have a few questions concerning recent media reports about a report conducted by BITRE. Did the department complete a report entitled, Report 117: Transport energy futures, long-term oil supply trends and projections?

Mr Williamson: The draft report you are referring to was not completed through to publication, no.

Senator EDWARDS: If not, have you completed any other report on a similar subject that the article may be referring to? I am referring to an article by Piers Akerman on 20 January 2012. Do you know the article?

Mr Williamson: Yes, I believe so. I will ask Dr Dolman to elaborate, but certainly the bureau has undertaken a range of work in the area of transport energy around fuel prices, transport emissions, projections and so on. That work manifests sometimes in formal publications, sometimes in papers delivered at conferences and sometimes in contributions to other processes across government, but it is certainly true to say that we have done considerable work in that area. I will ask Dr Dolman to give you some examples of what we have done.
Dr Dolman: Some examples of the other work that we have done in this area include working paper 73, which looked at greenhouse gas emissions from Australian transport and made projections out to 2020. We have done information sheet 30, fuel consumption by new passenger vehicles in Australia; report 124, road vehicle-kilometres travelled, estimations from state and territory fuel sales. We have a forthcoming report, which will be number 127, looking at traffic growth in Australia. We have also published a number of staff papers principally through the Australian Transport Research Forum by a number of researchers. David Cosgrove has published one on long-term emission trends in Australian transport. David Gargett has published one on petrol prices in Australia, which looks at some of those peak oil issues that you specifically asked about. David Mitchell has published a paper on Australian intercapital freight demand.

Senator EDWARDS: So there has been an extensive amount of reports done in this area. Why was report 117 called for, given that you have just rattled off all the other reports and you have only ever produced a draft?

Dr Dolman: That report was prepared in the normal way and sent out to reviewers for comments. A number of reviewers looked at the paper.

Senator EDWARDS: I am new here. Who are the reviewers? Is it a peer review?

Dr Dolman: It is essentially a peer review process. In this case we sent the paper to the International Energy Agency, the global authority on these sorts of things; the OECD; the German Federal Institute for Geosciences and Natural Resources and a number of relevant Australian government departments for comment. That process of eliciting comments drew our attention to some weaknesses in the report. We think the report is a good piece of analysis based on what it did. It looked at discovery trends and then forecast production trends from that. However, the referees pointed out that there were a number of weaknesses in the report, things that it did not cover adequately. For instance, according to the referees, it underestimated the influence of oil price and enhanced recovery techniques, which would mean that there would be more oil produced at higher prices than the draft report looked at.

Senator EDWARDS: Who called for the report to be undertaken and why was it prepared in the first place?

Dr Dolman: The research program of the bureau is agreed annually. It is based on a set of priorities that are discussed within the department for the research that is required. Unfortunately, none of us were in our current positions, so we do not know the detail of exactly how that happened, but it would have been formulated as part of the bureau's research program.

Senator EDWARDS: You probably know where I am going with this. You would be aware that there have been allegations that the report has been censored by government as it is unavailable for public release on the department website. Indeed there are allegations in the public that everything leads to report 117 and thereafter it is all a jumble. Do you or the minister have a comment on that?

Mr Williamson: There was no suppression and the report was not withdrawn. As I said, initially it did not proceed to publication. We are quite happy to make that clear. That is not being hidden. The copy of the draft report that is floating around is a draft. It is one of the versions that Dr Dolman referred to that was sent for referring. That is out there in the ether. The bureau, itself, has not suppressed the work, nor has the government.

Senator EDWARDS: How many reports that you commission like that normally hit the deck and crash and burn?

Mr Mrdak: I do not think that you can say it would crash and burn. The bureau produces a number-

Senator EDWARDS: You did not publish it, though.

Mr Mrdak: We produce a number of draft reports which often circulate within government or key agencies and which of themselves might not be published. They then lead to further work. In this situation, as Dr Dolman and Mr Williamson have indicated, the initial work was done and the draft was prepared. It was unfortunately misreported that this was a final report; that is not the case. In fact, the report then fed into work such as the energy white paper and the like that was undertaken for the government. It is not unusual that bureau internal reports do not finalise themselves into official reports that we publish. They may then feed into other reports like the ones that Dr Dolman has outlined.

Senator EDWARDS: So I am likely to see other reports missing in the chronological sense?

Senator Carr: The word 'missing' is pejorative. I have heard the officers say that reports are commissioned. They are used as part of a deliberative process. They are subject to peer review. There are occasions when the peer review demonstrates that a report is really not up to scratch.

Senator EDWARDS: Let me reframe it. How many reports that were commissioned went unpublished last year?

Mr Williamson: I would have to take that on notice to provide an answer. What I can say is that the bureau undertakes research in a range of policy areas around transport and infrastructure. That research work manifests in a variety of ways, including formal published reports, but not exclusively formal published reports. The substantive work around transport energy issues, fuel price issues and so on continues and, indeed, as Dr Dolman has outlined, has seen further publications since and will see further publications in the future. Therefore, I cannot give you answer that this number of reports did not proceed to publications because the bureau is a research organisation that is undertaking research in a range of priority areas.

....

 

CHAIR: Thank you. Senator Ludlam.

Senator LUDLAM: Is that report going to be republished at some point. Will you go through the data and republish at some point in the future.

Ms O'Connell: Dr Dolman has outlined subsequent reports that have overtaken that report. That report was done in the period 2006 to 2008, so there has been subsequent material on the topic that now negates that report.

Senator LUDLAM: One of the findings-and not to paraphrase too loosely-was that there was a recommendation, effectively, that went to preparation for the long-term task of replacing oil as a source of energy. Does the government acknowledge that the long-term task still remains before it, or has the dumping of this report offset that view? Has that recommendation appeared in future or subsequent reports?

Mr Mrdak: The government's position on energy future has been set out in the draft white paper.

Senator LUDLAM: So the white paper has overtaken this in this instance?

Mr Mrdak: As Dr Dolman outlined earlier, the bureau provided information which fed into that white paper development process in the Resources, Energy and Tourism portfolio.

Senator LUDLAM: If I asked you, and I think I have asked you before, who in the federal government takes the lead on oil depletion and oil or energy security issues, you would bump me over to Minister Ferguson.

Mr Mrdak: Those matters rest with Minister Ferguson and that portfolio.

Senator LUDLAM: But then we have this agency and this portfolio doing some quite good primary research into exactly the same topic, supply constraints, so how does that work?

Mr Mrdak: We work quite closely with other departments, including the Department of Resources, Energy and Tourism.

Dr Dolman: We are particularly interested in transport fuels.

Senator LUDLAM: In the sense of the previous portfolio, or the one before, surface transport policy, we were talking about infrastructure decisions with tens of billions of dollars being spent on the basis of reports such as the one that was not eventually published by the bureau, which would tend to tilt heavily the cost-benefit or the benefit-cost analyses that go into deciding whether or not you build a road or railway line. With documents like this it is very interesting when something like this is about to be published and then pulled, particularly when it is dealing with sensitive issues like this.

Mr Mrdak: I can clarify. We have explained that the report has not been pulled in any sense. There was work undertaken and that report was then reconsidered. Subsequent work has been undertaken in similar fields which has been published by the bureau. This particular piece of work did not proceed to publication. I would not use the term 'pulled'.

Dr Dolman: One of the ways that this work has been progressed is through an Australian low carbon transport forum, which we are running with CSIRO and ARRB, which is looking at a number of issues around alternatives for low carbon transport, which looks at fuel efficiency in particular. One of the things that it is coming up with is the most likely ways of dealing with these issues, the improved fuel efficiency for vehicles and biofuels and other alternative fuels becoming viable.

Senator LUDLAM: That kind of thing is going to take decades to wash through, even if there was some sign of urgency, which I am afraid I am still yet to detect. Has there been any work done that you can point me to that would describe Australia's state of readiness or preparation from an oil price shock, something akin to what happened in the 1970s.

Mr Mrdak: The best statement on this matter would be the draft white paper.

Senator LUDLAM: It certainly does not do that.

Mr Mrdak: If you have a look at that white paper it goes through a range of medium-term scenarios. It is probably a very good exposition of the issues.

Senator LUDLAM: So if there is an oil price drop we are going to start feeding coal into our cars?

Mr Mrdak: You asked about projections of future scenarios of oil constraint. I think the white paper sets out a position. It also goes into some length about the alternative developments that are taking place in vehicle technology and fuel supply.

Senator LUDLAM: Can I take that as a no, that the bureau has not been asked to do that kind of modelling or research, that has been handed across to the people writing the white paper?

Mr Mrdak: I think Dr Dolman has indicated to you that we are continuing work in this area and that is feeding through to processes like the white paper.

Senator LUDLAM: What would you say is the closest that you have got? I am still intrigued as to why this document-I will not use the word 'pulled'-was not published. What is the closest you could point me to on your website that was published that attempts to do what that report was doing.

Mr Mrdak: I will get Dr Dolman to run through that list of items again, if you do not mind.

Senator LUDLAM: Just the most recent. What is the closest analogue to that document?

Mr Williamson: There are a number of publications and conference papers that deal with these issues. Dr Dolman can give you some examples or we can provide you with a reasonably long list of-

Senator LUDLAM: Time is short; could I just invite you to table the list. I would greatly appreciate that.

Dr Dolman: We can do that.

Senator LUDLAM: Are there any other senators with questions?

CHAIR: No, you have the call.

Dr Dolman: I would say there is one paper that in particular looks at some of those issues. It is a staff paper by Dr Gargett, who is the author of the paper that you were referring to earlier, and it looks at petrol prices in Australia. It looks at a number of scenarios, including peak oil scenarios, and calculates likely maximum petrol prices in Australia under those scenarios.

Senator LUDLAM: Is it the view of the bureau that we have come into the age of peak oil or is it still your view that that is some years or decades away? If there is not a view as such then-

CHAIR: You are bordering on an area that is not policy.

Senator LUDLAM: I am sorry?

CHAIR: No, it is all right. Keep going.

Senator LUDLAM: This is a research outfit.

Dr Dolman: I do not think we have a firm view. We look at that evidence. There are a number of authoritative publications in this area from the International Energy Agency, for instance, that show that oil production is at least plateauing-

Senator LUDLAM: So, it is no longer doubling, it is plateauing; do you consider that to be-

Dr Dolman: But also the International Energy Agency shows that demand is also plateauing. The growth in demand in China and India, for instance, is being offset by shrinkage in demand for oil within OECD countries.

Senator LUDLAM: I will take this up with Treasury. I think it is a terrifically important thing to note that economic growth is now constrained by rising oil prices. We have just been through a century where that was not the case.

Dr Dolman: I think there is also included in the energy white paper a lot of evidence to show that the amount of oil used per unit of GDP growth is shrinking in all countries, including Australia.

Senator LUDLAM: The irony is when you Google report 117, which I did just as Senator Edwards was speaking, you come across a paper on aviation. So the 117 that was eventually published was about aviation.

Mr Williamson: That is correct.

Senator LUDLAM: I presume if I look at the conclusions of that report out to 2029-30 it will say that aviation is just going to double and then double again presumably out to that period. Does anybody else at the table share the irony that the report into supply constraints never got published; the report into never-ending expansion of aviation ended up being report 117?

Mr Mrdack: I do not think anyone shares your notion of irony, because I do not think that is an accurate representation of what the research is saying.

Senator LUDLAM: What is the research saying?

Mr Mrdack: I think if you have a look at the projections that have been done on aviation demand, they are being modelled on the best projections available of supply and demand of oil. Also, as Dr Dolman said, alternative fuel sources and technologies are coming into the market.

CHAIR: On that, I am going to have to pull up, because we have gone over.

Senator LUDLAM: That was nonetheless my favourite awkward silence of the day so far. But thanks very much for your time.

 

 

Full transcript at

http://parlinfo.aph.gov.au/parlInfo/download/committees/estimate/f65f6b10-248f-4b70-a958-159779bef76c/toc_pdf/Rural%20and%20Regional%20Affairs%20and%20Transport%20Legislation%20Committee_2012_02_14_787.pdf;fileType=application%2Fpdf#search=%22committees/estimate/f65f6b10-248f-4b70-a958-159779bef76c/0000%22

 

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