At the centre of the fight are attempts by primary producers on the Darling Downs to force the overhaul of the decision by Australia’s largest insurer, IAG, to withhold public liability cover from farmers with coal seam gas (CSG) equipment on their properties.
Dalby cotton grower Zena Ronnfeldt told InQueensland that without public liability insurance, she and many others like her were at the risk of going under in the event a visitor or contractor was injured on her property.
Banks were also unlikely to finance farming enterprises and could call in loans should they assess exposure to lenders with absent public liability insurance, she said.
“It would be pointless to own land or run a farming business on it if I cannot cover my financial risk to others of unforeseen injury.
“I would be better off spending my days sitting around watching TV.”
The heightened risk to primary producers across the CSG belt is the latest boil-over in the long and fractious relationship between the farming and gas extraction sectors.
Since CSG extraction first began to boom in Queensland in the early 2000s, farmers have been critical to the success of the operation, with their properties providing many of the access points to underground coal seams via wells drilled and constructed on their paddocks.
As the gas from controversial fracking and mining royalties to government coffers flowed, the wells across the state’s big CSG fields in the south-west mushroomed in their hundreds, covered by complex ‘conduct and compensation agreements’ (CCAs) struck between energy companies and farmers. The arrangements proved profitable for some farmers, providing an alternative non-farm income stream, and equally lucrative for the lawyers who were engaged to negotiate the complex CCAs.
For other farmers the CSG juggernaut was an unwelcome intrusion that disrupted their operations and imposed a massive cost on the environment, depleting underground water tables, contaminating waterways and degrading soil health, all claims that remain disputed.
Now with many of those wells in line for decommissioning as the CSG industry looks at a potential 60 per cent decline over the next decade, according to forecasts, the derelict infrastructure could prove an even bigger headache for landholders, who may be left to carry the risk if the disused equipment causes injury or an adverse environmental impact.
IAG, through its subsidiaries WFI and CGU, major insurers specialising in cover for farming operations, stopped insurance for farms accommodating any CSG infrastructure last year, on the grounds the company was not set-up to supply policy cover for mining operations.
The Australian Petroleum Production and Exploration Association (APPEA) has stated that the change to coverage was a decision made by only one company and landholders would be able to get public liability coverage from competitors.
“We are confident any concerns in relation to gas activities can be resolved,” a statement provided to the ABC said.
“This issue only relates to very unlikely scenario where farming activities impact gas facilities.”
Gasfields Commission Queensland, a state government authority established to facilitate interactions between the warring gas and farming sectors, has been charged with the unenviable task of finding a palatable solution for both sides, as well as the insurers.
It’s been leading a working group comprising the Insurance Council of Australia (ICA), AgForce Queensland, Cotton Australia, Queensland Farmers Federation (QFF), Australian Petroleum Production & Exploration Association (APPEA), Queensland Resources Council QRC), and the Department of Resources and the Department of Agriculture and Fisheries since June last year.
The organisation thought it had a breakthrough earlier this month when it presented an indemnity clause aimed at providing clarity and protection for farmers.
The clause was immediately rejected by Ronnfeldt and her group of neighbouring farmers as inadequate because it provides no coverage when gas extraction companies exit the operation and decommission the on-farm gas extraction plants.
“The situation has not changed,” Ronnfeldt said.
“Farms with any remaining CSG infrastructure, once the CSG industry comes to a close and tenements have been returned to the government, are uninsurable.
“Landholders are well within their rights to refuse to sign any CCA forcing them into an untenable position that then allows banks to foreclose on loans.”
Neighbouring landholder Mark Schuurs calls the shift of liability to farmers “a ticking timebomb waiting to explode”.
“Government can’t compel insurers to offer coverage. When the sun goes down on CSG, the degradation of all this buried infrastructure begins. There is no coverage,” he said.
He is joining calls for a CSG industry levy to fund landholder ‘residual legal liability risk’ that may arise when CSG activity ends.
Zena Ronnfeldt’s husband Garry is among those backing the levy proposal, saying it’s time for the state government to step in, given its role in actively facilitating the industry’s expansion for well over two decades.
“CSG giants bank the profits, governments bank the royalties and tax, and farmers cannot say no so get stuck with the risk and liability when CSG operations on their land shut down,” he said.
“This means state governments are forcing farmers to subsidise CSG corporate profits by allowing the CSG industry to get away with not paying its own way.
“If government does not come up with a solution agriculture will be shut down where it is forced to co- exist with CSG. The economic and social fall out will be catastrophic.
“We cannot run our businesses without adequate risk coverage. We cannot get finance; our bank can foreclose on us at any moment no matter how far ahead we are with our loans. Our land will be worthless.”
Resources Minister Scott Stewart said landholders who host gas activities on their properties would be able to access general insurance policies for farm risk and be appropriately protected against loss.
He told InQueensland that all members of the working group had agreed to continue to work together on examining landholder public liability insurance in areas of “post-gas activity”.
“If a landholder with gas activities on their property has any concerns about their insurance, they should discuss them with their insurance provider and the relevant resource company,” he said.
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