Nick Xenophon (SA, Independent) Share this | Hansard source

I commend Senator Madigan for putting forward this motion. It is a very important issue and one that shows that, yet again, we as a nation are not addressing an important issue with the gravity it deserves. I welcome the opportunity to speak on this issue. It is an issue that I have been interested in for many years. When I was a member of the South Australian parliament I was very critical of the way that the Port Stanvac oil refinery was shut down by Mobil about 10 years ago. The state government did a very bad deal in handling the shutdown of that refinery. It was mothballed with no capacity for alternative competition to move into the refinery. We have had the situation in my home state of South Australia where fuel supplies are precarious. If something goes wrong with a ship, if it has been delayed at sea or breaks down, we could face a fuel crisis in South Australia with huge economic and social consequences.

Let us put this in perspective. Refining in Australia has been in in free-fall for several years—it is down 30 per cent in two years and will continue to drop—as local refiners find themselves stranded with obsolete facilities and unable to compete with huge refineries overseas. Shell closed its Sydney refinery at Clyde in 2012. Caltex's closure later this year of its Kurnell refinery in Sydney means that Sydney will, for the first time since the 1920s—that is 90 years—be reliant entirely on imported fuel. BP has announced it will close its Bulwer refinery in Brisbane in mid-2015. South Australia lost its sole refinery in 2003—that is 11 years ago. These closures mean the loss of thousands of jobs—a huge challenge for each of those families. Senator Madigan and I have been campaigning relentlessly about manufacturing jobs in this country. These are manufacturing jobs we are losing.

Today we are talking about fuel security in addition to job security. Australia will be left with four remaining refineries: BP's Kwinana unit in WA; Shell's Geelong refinery, which was this year sold to Vitol of Switzerland; Caltex's Lytton refinery in Brisbane, which recently announced more than 100 job losses as it seeks to cut costs and stay open; and ExxonMobil's Altona refinery in Melbourne. An NRMA report in February found that Australia will source 90 per cent of its liquid fuel needs from overseas by 2015 and predicted that by 2030 that will become a complete dependence on offshore sources of fuel. The contraction in Australia's liquid fuel supplies is not a surprise. It has been long expected and the dynamics driving it are well understood. Yet no Australian government has adequately assessed or planned for the obvious risks to our economy and society of a disruption to overseas fuel supplies.

I endorse strongly endorse the comments of Senator Madigan in relation to the national security implications of this. If there is a conflict—if sea lanes are disrupted in an increasingly uncertain world—where does that leave us as a nation? It will bring us to a standstill. We are drifting towards a very insecure future, bobbing on a sea of risks and uncertainties in the global fuel market.

And yet it seems to be business as usual. Our national dependence on liquid fuels outsourced to pitiless fuel multinationals. Surely, it is time for the federal government to assert the national interest and plan for a minimum fuel-refining capacity in this country and for minimum fuel supplies. The United States and other countries do it; we have been absolute mugs when it comes to this. I am not sure if Senator Madigan can assist me, but I think the level of fuel supplies we have at the moment is for weeks and not the months that we actually need. The NRMA report, Australia's liquid fuel security, released in February this year, found we would be left high and dry if there were a significant disruption to overseas shipping lanes, refining capacity or oil production. It warned that Australia would have about three weeks of fuel on hand, if supplies were halted for whatever reason, from 2015.

That is a national scandal. If demand were high—as in a run on fuel supplies in an emergency—stocks would scarcely last a week, the NRMA warned. Senator Madigan gently reminded me that we nearly ran out of diesel last year, and in his home town of Ballarat there was a diesel fuel shortage. I did not go to the joint standing committee briefing, but I previously received a one-on-one briefing with Air Vice-Marshal John Blackburn, the author of that report. I commend him for the tremendous work he is doing. This is what he had to say:

If this happens, then Australians will suffer food shortages, will not have adequate access to medical services or pharmaceutical supplies, will not be able to get to work and, if the problem lasts for more than a few weeks, many will no longer have work to go to.

This motion that has been introduced by Senator Madigan deserves our strong support; it deserves not just our words but action from the Australian government. We cannot put our heads in the sand on this issue; we must act decisively on our fuel supply. The NRMA suggests we need at least 30 per cent of our fuel refined here in Australia if we are to avoid the worst effects of unforseen crises in shipping, the oil sector or global refining capacity. Why isn't the government looking at this?

Since 2005 I have been warning of Australia's limited refining capacity, when a secret South Australian government report warned that my home state was regularly running dangerously low on fuel. These are the issues that need to be dealt with. I hope Senator Madigan will raise it again. As I do on many other issues, I will work collaboratively with Senator Madigan on this issue because it deserves to be at the forefront of the government's attention; it has not been to date. If we do not tackle the issue sooner rather than later, it will lead to a national emergency and it will have calamitous consequences for our economy and our society. This issue will not go away—we must tackle it as a nation. I again commend Senator Madigan for raising this issue.

Question agreed to.