The NSW government will ensure farmers are insured against potential negative impacts of coal seam gas if the Narrabri Gas Project is approved at the end of the month, the state's Deputy Premier said.
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Deputy Premier John Barilaro, who was in Narrabri on NSW's North West Slopes, to make a series of funding announcements, also talked up the $3.6 billion Santos project.
"Santos will get up. It is the right project in the right place," he said.
The plan to sink as many as 850 gas wells in and around the Pilliga forest near Narrabri is currently before the Independent Planning Commission (IPC). They must make a decision about approving or refusing the project by the end of the month.
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Farmer after farmer told the IPC at its seven days of public hearings they could not get insurance against either direct risks to their business or to their groundwater.
In June Australia's largest insurer Insurance Australia Group announced they would no longer cover landowners for public liability if they have coal seam gas infrastructure on their property.
Asked if the state government would ensure farmers could insure their property, Mr Barilaro promised they would.
"Absolutely. At the end of the day everybody has a right for insurance," he said.
"If Santos gets approved some of the conditions that will be on that approval may actually support and give confidence to insurance companies.
"If we announce the resources regulator will be the regulator I think it will give comfort to everybody. We're a few weeks away from finalising [that decision]."
NSW Farmers President James Jackson, who spoke against the mining project at the public hearing, said the promise was very close to a direct state guarantee for farmers.
"I'm happy with his statement that he's starting to think about the lack of insurance and the exposure that that leaves some of our members out there, that is encouraging. But I am not dead sure exactly what that statement means," he said.
Private insurers were "running away" from the CSG industry because it's almost impossible to quantify its risks, he said.
Mr Jackson said the state government should step in to act as insurer of last resort if necessary.
"If the process throws up an approval for this project there is a number of risks that are being borne by landholders unwillingly. And certainly one of them is the public indemnity issue with some insurers. And the other is there's third party impact on water assets.
"Somebody has to protect our people. That is the principal reason why our policy is to reject this project, because there is no guarantee that critical assets of these people are going to be protected.
"That's what insurance is, it's protection against third-party impacts.
"I'm not convinced that the Deputy Premier is covering all aspects of exposure that landholders are potentially going to have with this project."
In a 2013 report, then-NSW Chief Scientist Mary O'Kane made 16 recommendations about how to regulate a prospective coal seam gas industry, including that the state government "consider a robust and comprehensive policy of appropriate insurance and environmental risk coverage".
A parliamentary inquiry earlier this year found the government had not implemented most of her recommendations, including that one.
The Deputy Premier said the $2 billion agreement between the NSW and Commonwealth governments for the state to facilitate development of an additional 70 petajoules of gas a year into the east coast market had made the project "even more important."
"Because if we don't get Santos up we are going to have to rely on the port of Newcastle and Port Kempla for import terminals," he said.
"In my mind if we're importing gas from across the globe with so much resources in this nation we've failed as governments and our policy is wrong."
Member for Upper Hunter Michael Johnsen committed to Mr Jackson that the state government would ensure all 16 of the Chief Scientists' recommendations are implemented before the project is signed off.