The federal resources minister followed the rules when he awarded Imperial Oil and Gas $21 million for exploration in the Beetaloo Basin, a court has heard.

November 3, 2021

Federal Resources Minister Keith Pitt followed the rules when he gave a shale gas company $21 million for exploration in the Northern Territory’s Betaloo Basin, a court has been told.

The Environment Centre NT wants to stop Imperial Oil and Gas’s drilling program, arguing in the Federal Court that the government grant was unlawful.

It says the minister should have considered the potential negative effects that developing the onshore shale gasfield could have on climate change.

But the Commonwealth’s lawyer Tom Howe QC says Mr Pitt wasn’t required to make external inquires when deciding whether to help fund Imperial’s exploration.

Under section 71 of the Public Governance, Performance and Accountability Act, the minister only needed to satisfy himself that the expenditure was a proper use of public money.

The decision can be subjective and doesn’t need to be objective, and any inquiries that are made don’t need to be recorded.

“The minister’s satisfaction is the sole criteria of operation,” he said on Wednesday.

“It is in effect, something that can happen within the brain of the decision-maker so that the inquiries can be fulfilled by subjective cognitive consideration of matters.”

Mr Howe said governments make policy choices based on ideology and ministers aren’t required to act apolitically.

“The policy choice here was to establish an exploratory program and to fund it,” he said.

The minister wasn’t required to consider the validity of the government policy when he awarded the grant.

“The fact there were climate risks might be regarded by some as disqualified,” Mr Howe said.

“Those climate change risks have relevance to the adoption of the policy.

“Once the policy is adopted the question shifts to the financial management of the funding of that policy choice.”

Mr Howe said the ECNT seeks to impose an extraordinary and intolerable burden of decision-making on the minister that could impact Indigenous rights.

“The minister has to make inquiries then depending on the outcome of those, run various bunnies into various burrows to ascertain if something is relevant,” he said.

That could lead to the need for more and more assessment.

“That is such an open textured indeterminate standard that it not only leads to a burden on the administration,” Mr Howe said.

The Betaloo sub-basin has been estimated to hold more than 200,000 petajoules of gas. The extraction and consumption of gas from this precinct would equate to a 13 per cent increase on Australia’s 2020 greenhouse gas emissions, according to one expert report.

The $21 million contract between the government and the Empire Energy subsidiary, which was part of a $50 million federal grants program, was signed on September 9, just days after ECNT launched its legal challenge.

Mr Howe said Mr Pitt’s legal power to make the grant was instilled on him in section 61 of the Australian Constitution under executive power.

He said there were ministerial accountability mechanisms when taxpayers’ money was spent, such as Senate estimates.

“The minister can (also) be the subject of a performance order by the auditor general,” he said.

The hearing continues.