Andrew Wallace (Fisher, Liberal Party) Share this | Hansard source

If that wasn't a preselection pitch, you'll never hear one! What a preselection pitch that was!

Mr Dick interjecting—

Well, there you go. You're trying out for the next term—if you get that far! When the COVID-19 pandemic struck, in early 2020, I said to many people in my local community that Australia's greatest assets in this situation are the Pacific Ocean and the Indian Ocean—and, of course, a stable and effective democracy. Over the past 18 months, we've seen the Morrison government, with the support of all Australians, make the most of these advantages, natural and by design, to keep this country safe and to deliver arguably the best health and economic outcomes in the world.

At times of crisis, the natural barrier provided by the waters that separate our island continent from the rest of the world can of course be an important ally. The 200 kilometres between the northern tip of Far North Queensland and the southern shores of Papua New Guinea makes for an important logistical barrier to invasion from hostile powers, for example. The need to enter Australia via a port or airport makes it easier for us to deny entry to people who wish us harm and to keep out pathogens and biological hazards that would threaten our very way of life.

From World War II to COVID-19 we have used this country's natural moat to keep the world's problems at bay. However, the oceans that divide us from the rest of the world are a mixed blessing. Whilst they help us to keep out the things we don't want, they can also prevent us from getting access to the things we desperately need. Whether it's a global pandemic, instability or diplomatic failures in another region of the world, or, most seriously, an armed conflict or blockade in the Asia-Pacific, Australia is a relatively vulnerable country and it's vulnerable to having our supply chains cut off at the water's edge.

Fortunately, thanks to Australia's fantastic farmers, we have a large surplus of food and, as our national anthem reminds us, our land abounds in natural resources of every kind. However, when it comes to oil based liquid fuels, as a nation we are vulnerable. Petrol, aviation fuel and, in particular, diesel are fundamental to our very way of life. In a crisis they become even more important. The Morrison government is investing $270 billion in Defence procurement over the next 10 years to ensure that if, God forbid, our shores are ever threatened, Australia can defend itself. However, without diesel and aviation fuel, the high-tech products of that investment will have no choice but to sit idly by in their hangars, on wharfs and in sheds. Without fuel, we are effectively defenceless. Without diesel, we cannot transport from country to city the abundance of food and fibre that we produce, and we can't move medical supplies or feed for livestock or manufactured goods to where they are needed. If our roads are Australia's arteries then diesel is this country's lifeblood.

Fortunately, we have not suffered a major fuel supply shock for more than 40 years. However, with an increasingly complex and challenge geopolitical environment, it may only be a question of time. According to the department of energy, Australia currently imports 90 per cent of our liquid fuels. While we do produce our own crude oil—some 21,578 megalitres in 2019-20—most of it is exported for refining elsewhere. Much of our imported fuel comes through areas of potential future conflict, such as the Middle East, the Korean peninsula and the South China Sea. The answer is to ensure that we have substantial supplies of fuel stored here in Australia and that we have the refining capability to produce our own fuel when it is needed. The Bass Strait and Cooper basins can supply the crude oil we need to run essential services, as long as we have our own refining capability and stored supplies to provide necessary supplements during an emergency. Unfortunately, as it stands, this is not the case. According to the International Energy Agency, at the last measure—in March of 2021—Australia had the equivalent of just 64 days worth of fuel imports available. At times, as Senator Molan has eloquently highlighted, our stocks of refined fuels have dropped as low as 24 days of petrol and 17 days of diesel. This is simply not enough, particularly if you consider that the use of fuels in a conflict far exceeds the amount used in peacetime.

The Morrison government has been very aware of this challenge and has taken significant action to deal with it. In April last year, the government took advantage of historically low global fuel prices to purchase $94 million worth of crude oil from the United States Strategic Petroleum Reserve. By June 2020, Australia held just 30 days of petrol consumption cover, the highest level since electronic record keeping began in 1989. Jet fuel increased to 29 days of consumption cover and diesel stocks remained stable at just 20 days of consumption cover. Though these levels were higher than historically, we cannot pretend that such levels of supply are adequate. In January this year, the Morrison government went further, announcing an investment of $200 million in the Boosting Australia's Diesel Storage Program, which will deliver an additional 780 megalitres of onshore diesel storage capacity. These grants of up to $33.3 million will ensure that we have the additional physical storage that we need over the next three years to significantly boost our supplies of diesel. However, we don't just need the fuel tanks; we need them filled.

The bill before the House today will ensure that our extra capacity is kept brimming with fuel. The bill introduces a minimum stockholding obligation on businesses which import or refine oil products in this country. The bill lays out that, if you want to operate in this sector in Australia, you must do your bit to ensure that we have the fuel stores that we need. The government will set a national daily consumption target for gasoline and kerosene, based on the average daily consumption from 2018 and 2019—that is, before the COVID pandemic struck. The government will set a diesel target some 40 per cent higher than these average levels to reflect how critical diesel would be in a crisis. Each operator refining or importing these products in this country will then be given a specific obligation, based on the size and nature of their operations, to store in Australia a certain proportion of these daily usage targets. The government has consulted on these obligations with industry and has ensured that, through the Boosting Australia's Diesel Storage Program, we are helping operators to comply with their new obligations. The industry is ready to go on this, and this bill will lock in the agreement to ensure that we have the stocks that we need.

Alongside these reserves of fuel, we also need the capacity to refine the crude oil that we produce ourselves in this country to ensure we can keep essential services operating in the longer term, whatever the circumstances. In recent months this capacity has been put under serious threat. Refineries in Australia operated by ExxonMobil and BP were closed at the beginning of the year, leaving us with just two significant facilities remaining. Today we have only Ampol's refinery in Brisbane and the facility operated by Viva Energy in Geelong. These represent the last of our sovereign capability and the only thing standing between us and a total reliance on overseas partners for fuel. Both Ampol and Viva Energy have made it clear that without support from the government our remaining refineries will be forced to close. The Morrison government is determined to ensure that that does not happen, and the bill before the House is the means by which we can guarantee it.

The bill will deliver a fuel security service payment to the operators of these refineries when they are doing it tough. The amount of government support the refineries receive will depend on their profitability at the time. When they are making a margin of at least $10.20 per barrel, our refineries will receive no service payment from the government. When margins fall below $7.30 per barrel and refineries are making a loss, they will receive 1.8 cents per litre. When times are good, the taxpayer will be protected from providing unnecessary subsidies, but, when times are tough for the refineries, this vital industry will receive the support that it needs. The government has secured agreement from the operators of our domestic refineries that the passage of this bill and its fuel security service payment will guarantee that their facilities remain open until at least 2027, with an option to extend the arrangement to 2030. In short, the bill before the House will make the difference between an Australia which is entirely reliant on overseas corporations and foreign powers for our fuel and an Australia with a guaranteed capacity to refine our own at home for much of the next decade.

The choice is a stark and obvious one. No-one wants to see a significant disruption to international trade. Certainly, no-one wants to see conflict in our region. However, as the Romans said in years gone by, if you want peace, you must prepare for war. Australia must never be vulnerable to a naval blockade or worse. We must have the ability to refine our own fuels and we must have the stores we need to cover any shortfalls. This bill is a central part of the government's strategy and another step in the right direction to deliver fuel security in this country, and I commend it to the House.

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