David Johnston (WA, Liberal Party, Shadow Minister for Resources and Energy) Share this | Link to this | Hansard source

My question is to the Minister representing the Minister for Resources and Energy, Senator Carr. Can the minister inform the Senate how Labor’s new $2.5 billion tax on crude oil condensate will support the expansion of Australia’s oil and gas industries, who have invested billions in high-risk projects?

Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

I should get a few facts on the table here, seeing that this is a matter that has been subject to some misleading press speculation. Condensate was made exempt from the crude oil excise in 1977 to encourage the sunrise industries investment in the North West Shelf gas project. Condensate is a light oil processed in association with natural gas. The budget removes this start-up concession some 24 years after the project came on-stream—24 years after the project came on-stream! The measure will have no impact whatsoever with regard to the price of LPG, petrol, diesel or similar products, since these are all traded on the global spot market. It will have no impact on Western Australian revenues. Excise payments will be deducted from the royalties Western Australia receives from the North West Shelf gas project but the Commonwealth will make up the difference. Nor will it affect other gas projects in offshore areas. They will continue to be covered by the petroleum resources rent tax regime.

What removing this concession will do is give the Australian community a fairer share in the benefits of resource exploitation on the North West Shelf. The concession has been worth almost $1.5 billion to the six participants in the project over the past five years alone. And this was at a time when oil prices were at about half their current levels. With oil prices now at record highs, continuing to exempt condensate from excise would deliver windfall gains to these companies. The North West Shelf gas project is now firmly established and highly profitable. It no longer needs this massive subvention from Australian taxpayers. The concession has become an anomaly that can no longer be justified.

David Johnston (WA, Liberal Party, Shadow Minister for Resources and Energy) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Minister, is Professor Neil Warren of the Australian School of Taxation at the University of New South Wales wrong, then, when he said of the budget:

Last night they brought in a tax on condensate ... that’s quite significant ... that’ll feed through to petrol prices.

Will the minister guarantee now that petrol prices will not increase as a result of this Labor policy?

Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

I repeat, Senator Johnston: this measure will have no impact on the price of LPG, petrol, diesel or similar products, since these are all traded on the global spot market. It will have no impact on Western Australian revenues. Excise payments are of course being deducted from the royalties that Western Australia receives from the North West Shelf gas project. The North West Shelf gas project is firmly established—I repeat: firmly established—and now, 24 years after the project was established, it is time to end this incentive which was made at the point of its establishment. It no longer needs this massive subvention from Australian taxpayers. Legislation giving effect to this change will be introduced in the House of Representatives today. All government legislation, as I am sure Senator Johnston is only too well aware, will be carefully scrutinised by the Office of Parliamentary Counsel and, where necessary, the Australian Government Solicitor, to ensure its constitutionality. (Time expired)

Chris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | Link to this | Hansard source

Mr President, I ask that further questions be placed on the Notice Paper.