David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Hansard source

I rise to speak on the so-called Liquid Fuel Emergency Amendment Bill 2017. This bill empowers the government to enter into option contracts covering up to 90 days worth of Australia's net oil imports. This 90-day requirement is imposed by the International Energy Agency on member governments so that, if there is a major oil disruption, member governments can assist themselves and each other to access oil.

While superficially sounding reasonable, there are several problems with this bill from a libertarian standpoint. The first is the real question of desirability. Why is the government getting into the oil business? As though the tentacles of the ever-intrusive state didn't snake into almost every aspect of life already, the government has managed to find a new area to meddle in and another market to distort. Private oil users secure their own supplies, including purchasing options, without government assistance.

The second is the question of necessity. We aren't at war. There isn't a vital national security reason to maintain oil supplies to keep the Shermans rolling. Our defence forces maintain their own oil stocks. But, even if they didn't, ironically, these option contracts would be of limited use in the event of a major war because they cover oil stored overseas. So, if there is a trade catastrophe, the option contracts may fail and we won't be able to get our hands on the oil anyway.

The third is the question of affordability. In a time of runaway deficits, this bill represents an unnecessary new cost to taxpayers. Ninety days oil supply for the whole of Australia is a lot of oil. If the government enters into oil option contracts, this will bid up the cost of securing access to oil, which will reduce the frequency with which the private sector enters into oil option contracts. So, in a self-fulfilling prophecy, government intervention will lead to insecurity in private sector arrangements, leading to further calls for government intervention.

Finally is the issue of self-determination. Why is Australia being dictated to by yet another international organisation? The costly requirement for the government to buy oil options is not something that the Australian Defence Force or industry or the Australian public have asked for. This so-called emergency reserve has been demanded by a foreign organisation, unaccountable to Australian voters. The International Energy Agency, to whose diktat the Australian government is jumping, is but one of hundreds of international organisations and literally thousands of mainly UN sponsored treaties to which past governments have quietly signed us up.

This is a bill for which no good case can be made. The Zeros aren't bombing Darwin. But, even if they were, our national response would hopefully be a bit more robust than rushing to exercise our call options to buy shares in a virtual lake of foreign oil. This so-called emergency oil reserve is unnecessary, a significant cost to taxpayers and a distortion of the marketplace. Moreover, the impetus to create it is driven by our membership of an international organisation. If the demand to waste millions on this scheme is a condition of membership in the International Energy Agency, that sounds like a good reason for Australia to leave; otherwise, we should simply reserve our position in respect of this condition. I therefore urge my fellow senators to exercise their own call option on this proposal and send this so-called Liquid Fuel Emergency Amendment Bill back down the gurgler.