Senate debates

Wednesday, 8 February 2017


Offshore Petroleum and Greenhouse Gas Storage Amendment (Petroleum Pools and Other Measures) Bill 2016; In Committee

10:10 am

Photo of Nick XenophonNick Xenophon (SA, Nick Xenophon Team) Share this | | Hansard source

I moved a second reading amendment calling on the government:

… to make further amendments to the Offshore Petroleum and Greenhouse Gas Storage Act 2006 to improve competitive tension in the retention lease approval process in order to facilitate the earliest possible commercialisation of the exploration licence area and increase the gas supply to the Australian market.

That was opposed by the government, but I understand that the minister will set out his reasons. I apologise for the fact that Senator Moore indicated that the opposition was supporting the second reading amendment. I am very grateful for that support. To Senator Moore I say: I didn't hear it. I put that down to the Elvis Costello concert I went to in 1977, where I lost a bit of my hearing and I have never got it back. I am very grateful for the support of the opposition in relation to this, because it is a commonsense second reading amendment. I would be grateful if the government would indicate what its views are on this, because there is particularly in Bass Strait seven trillion cubic feet, potentially, of gas that could really do something to alleviate our energy crisis in this country.

10:12 am

Photo of Matthew CanavanMatthew Canavan (Queensland, Liberal National Party, Minister for Resources and Northern Australia) Share this | | Hansard source

I am happy to clarify the government's position on this. I apologise for not getting the opportunity before the second reading amendment was moved. It is a very important issue that Senator Xenophon has raised, and the government recognises that. We of course did not support your second reading amendment, Senator Xenophon. We do already have a review of our offshore petroleum resource management process in place, which includes and encompasses an examination of the retention lease framework. Consultation on that review was completed late last year, around November. I am working with my department to respond to that sometime this year, and I am more than happy to work with Senator Xenophon on that issue.

It is a very important issue. There is a balance that we need to strike in that framework, a balance that needs to attract investment and give those investors, those companies, security that they will be able to make a return on what are very high costs and very risky investments in exploring frontier areas in sometimes very deep waters. They do need to be given a fair opportunity to make a return on those investments. Otherwise, no-one would turn up to make them. We are not going to have the resource unless someone originally explores for it. While our framework is under review, we have to strike an appropriate balance between the competitive tension that Senator Xenophon and also making it attractive for people to invest here and be able to make a return.

I will respond to a couple of other points that Senator Xenophon raised in his contribution—the specific ones regarding Bass Strait, and also the Great Australian Bight. If I can say respectfully, Senator Xenophon, it is a little disappointing to me that you are trying to have your cake and eat it too in this debate. Yes, there is a substantial resource in Bass Strait; there is no doubt about that. There is a lot of gas left in Bass Strait. What there is not a lot of left, or there is not as much of what was there before, is oil, or condensate. We must not forget that one of the prime reasons that the Gippsland basin was developed was because of that condensate, that oil resource. That was the economics behind the development of the resource. The gas in some senses was a by-product. That has often been the history of gas developments around the world—that gas is often the secondary product that is created from an oil play. That is why gas can often be quite cheap. Manufacturing industries are often located near oil developments where gas is a by-product and a cheap by-product. That is certainly what happened in Victoria historically, and the Victorian manufacturing industry has benefitted from that resource.

The reality right now is that there is not as much oil in the Bass Strait as there once was. So the average costs of developing that resource are now high because there is less of that product to sell and there are fewer products to sell from the development of those resources. The average cost of developing that gas is higher. It is not necessarily the panacea that Senator Xenophon makes out.

While we are looking at our offshore management processes—and I am very open to suggestions to improve competition to develop that resource—it perhaps will not be as easy as Senator Xenophon makes out. The resource is there but, obviously, it comes down to at what cost we can develop that resource and whether that cost can be paid by the gas customers.

That brings me to the Great Australian Bight, which will no doubt come up further in this debate. On Senator Xenophon's point, on one hand you would like to develop the Bass Strait and get that gas out of there but on the other hand you are saying that you want to have a complete ban before even our environmental regulators can look into whether we can develop that resource in an environmentally sustainable way and also protect the manufacturing interests that Senator Xenophon spoke of. I do not doubt your sincerity, Senator Xenophon, in wanting to see a strong manufacturing industry in this country but it does need energy to survive.

There is no doubt there is excitement around the potential resource that exists in the Great Australian Bight. It is a very prospective resource—perhaps one of the best and most prospective in the world. I spoke to Chevron in the United States a few weeks ago and this is one of their top priorities around the world in terms of prospectivity. Again, Senator Xenophon, the reason people are excited about the resource is not the gas; it is the oil that is potentially there. We do not know the resource yet. It needs to be explored. But it will probably be the oil that attracts investment. There will be gas too, no doubt, if there is oil and that gas will then be able to be provided to those manufacturing interests you want to represent.

There is no doubt there are environmental issues. We must seek to protect the Great Australian Bight. That is very important. That is why we have an independent regulator. That is their job. That is why the experts should be left to look at this and assess this. If we were to support the approach from the Australian Greens, which Senator Xenophon says he supports, it would completely cut out the independent regulator from this process and completely stop the potential for jobs and opportunities for the South Australian economy in particular. So the government do not support that approach. We would like to see our resources developed for the benefit of our country, including the manufacturing industries of our nation. That needs to be done in an environmentally sustainable way and in a sensible way that takes expert advice from the people who know what they are talking about. We will balance the issues and interests that we need to to make sure we have both a strong economy and a protected environment.

10:18 am

Photo of Nick XenophonNick Xenophon (SA, Nick Xenophon Team) Share this | | Hansard source

Thank you, Minister, for your response. I reject absolutely and vehemently that I am trying to have my cake and eat it too in relation to that. There is a world of difference between the reserves. With the Great Australian Bight prospective oil reserves there is the depth of the drilling that will have to take place, what the seas are like there—how rough they can be—and some of the environmental studies. I know that NOPSEMA has leaked—I know that the regulator has looked at this—the potential environmental impact and the economic effect of that impact on aquiculture and on tourism. The environmental clean-up costs would be quite significant. There is a world of difference between those reserves and the Bass Strait reserves, which are gas. The drilling issues are very different and the depths are quite different. There is a world of difference between those.

The point I was making with the second reading amendment was that a company can say, 'It is not commercially viable for us to develop the Bass Strait reserve,' and they do so because it may not fit in with their global plans, but there could be some other companies, including local Australian companies that I and my office have spoken to, that say, 'We actually want to give this a go but we need access to the seismic surveys.' There is a problem with the current system, and I know that the minister will work on this in good faith and assiduously. If there were an alternative plan and they could have access to the seismic surveys—and there were a mechanism, a formula, for them to pay for those seismic surveys—and they ended up making a successful bid then that would be a game changer in relation to having those other companies having access to those reserves.

I do not want to take it any further than that but there is a distinction between the two reserves and there are risks to the environment. There are the proven and/or probable gas reserves in the Bass Strait and there are risks involved with drilling for oil in the Great Australian Bight. I hope we can access that gas in the Bass Strait sooner rather than later because of the impact that will have on industry security, our nation's economy and the manufacturing sector.

10:20 am

Photo of Matthew CanavanMatthew Canavan (Queensland, Liberal National Party, Minister for Resources and Northern Australia) Share this | | Hansard source

As I suggested, I am happy to work with Senator Xenophon on those specific issues and with specific companies. Certainly my mind has been exercised on these issues. I stress again that there needs to be a balance here. Under the provisions of the act some seismic information is made public at different times to try to help the process Senator Xenophon mentioned, but, as I said, this is always a balancing act that I am happy to work with the senator on.

10:21 am

Photo of Jacqui LambieJacqui Lambie (Tasmania, Independent) Share this | | Hansard source

First of all I would like to clear something up for Hansard. I have just come from the PM's office and I was in a bit of a rush. I should have been voting on this side of the floor. The reason being is I do not agree with this bill, and I am going to tell you why. When you read the two legislative purposes put forward by the government, which are to clarify the apportionment definitions of petroleum deposits and to allow the environmental management authority to refund fees paid to it by big oil and gas companies, on paper it seems simple. However, this legislation will affect hundreds of billions of dollars of capital investment in Australia's LNG export industry and many hundreds of billions of dollars in revenue for Australian taxpayers.

If our LNG industry was healthy, if the Australian taxpayer was getting a fair share of the royalties through the PRRT and if the east coast of Australia, including Tasmania, was not looking at shortages or significant increases in the cost of gas for industries and households then I would be inclined to support the government's legislation. However, there are a number of alarming signs that this government has failed to properly manage our natural resources, especially LNG and petroleum products. The government has put out mixed and contradictory messages on LNG. There are clear signs that our national energy supplies are at risk and, therefore, I do not trust this government's legislation. Until I receive more information from the government about the effects of this legislation and they take steps to ensure our gas, petroleum and other energy sources remain relatively cheap in comparison to our overseas competitors and gas supplies are secured for future generations in Tasmania, I will not support this legislation.

The Parliamentary Library research brief on this legislation states:

The Commonwealth imposes a profit-based tax, the Petroleum Resource Rent Tax (PRRT), on certain petroleum projects. Section 3 of the Petroleum Resource Rent Tax Assessment Act 1987 provides that, for the purposes of the PRRT, petroleum from a petroleum pool is taken to be recovered from different jurisdictional areas according to any apportionment agreement made under the OPGGS Act. Items 2 and 3 of Schedule 1 make minor consequential amendments to section 3 of the Petroleum Resource Rent Tax Assessment Act, to ensure that apportionment agreements under proposed subsection 54(1E) of the OPGGS Act, which are based on specified parts of the seabed, are also recognised as authoritative under the Petroleum Resource Rent Tax Assessment Act.

I would like to speak generally about how our petroleum resource rent tax, the PRRT, which is supposed to collect a fair share of the wealth this nation produces by virtue of our gas and petroleum resources. Unfortunately, it looks as if the system that Australia uses to collect taxes from the big multinationals who make lots of money mining our resources is broken profoundly. I wrote about this problem in my latest newsletter, which I recently sent to Tasmanians, where I said:

Did you know that in 2019 Australia is likely to surpass the Middle East Country of Qatar to become the world's biggest exporter of Liquid Natural Gas (LNG)?

But as one of the world's most trusted news magazines (The Economist) says in November last year, "The benefits to the (Australian) Government have not been quite as entrancing." Our Energy Minister in March last year, Mr Josh Frydenberg, forecast that Australia's LNG exports from—

the Northern Territory's—

Gorgon Project alone would be worth $440B to the National economy.

Yet The Economist reveals in its article that the petroleum resources rent tax … is forecast to fall from $1.2B in 2014-15 to $800m in 2020!

You and I, indeed all ordinary Australians - own the mineral and oil wealth that's under and in Australian soil. Our State and Federal Governments manage our natural resources on our behalf and future generations' behalf. Where's all the profit from our gas, minerals and oil going?

It is not going back into our kids. It is not going back into our health.

According to The Economist magazine and a study by the International Transport Workers' Federation suggests that "Governments of rival exporters such as QATAR, Malaysia and Nigeria, received two or three times as much revenue as Australia in 2014, as a proportion of the value for gas produced."

In the words of Donald Trump – "this is a lousy deal." Not only should our Governments collect a fairer share of the wealth generated by our natural resources – all Australians, as owners of our natural resources, should enjoy some of the cheapest natural gas, electricity, fuel and power prices in the world.

Australia's been blessed—

my goodness, haven't we been blessed!—

with enough natural resources to provide free power to all our aged pensioners. And yet as soon as the issue of budget repair comes up – politicians want to sink the boot into our aged pensioners, while ignoring the obvious places for financial reform and budget repair.

Our new energy minister, Mr Josh Frydenberg, has spoken eloquently on this legislation's debate in the other place, where he said:

These new projects combined represent around $200 billion in capital investment and will deliver significant economic and employment benefits over their multi-decade lives.

They will see Australia's LNG exports more than triple from 25 million tonnes per annum in 2014-15 to around 75.2 million tonnes per annum in 2020-21, making Australia the world's largest LNG exporter.

Before I give any support for government legislation relating to Australia's LNG exports, Minister Frydenberg has to more than just boast about making Australia the world's largest LNG exporter. He and his Liberal mates have to explain why they have allowed such generous LNG deals to be signed with big multinationals. There is no use in being the world's largest exporter when we have become the world's largest soft touch on LNG, and our grandchildren are being denied hundreds of billions in royalty and tax payments, which are instead lining the pockets of overseas corporate executives and their shareholders.

Why is it that credible studies reported in The Economist indicate that the governments of Qatar, Malaysia and Nigeria, who all have similar quantities of LNG exports, are receiving two or three times more in petroleum taxes or royalties than Australia is? Do the politicians and government bureaucrats who sign us up to those dud LNG deals do an Andrew Robb and go and get plum jobs with the people they were negotiating with, as soon as they retire from politics? Did those big multinational companies that were given sweetheart deals, most likely by both major political parties in this place, give big political donations to the Labor, Liberal and National parties? The LNG deals this country has entered into in the last two decades need close scrutiny, with the questions I have asked in mind. Perhaps it is time for a Senate committee inquiry, because I want to know why our kids are missing out on these profits, especially when you have the incredible situation of a Liberal energy minister boasting in his second reading speech:

… Australia's LNG exports more than triple from 25 million tonnes per annum in 2014-15 to around 75.2 million tonnes per annum in 2020-21, making Australia the world's largest LNG exporter.

At the same time, the ABC reported in December last year that the Liberal industry minister, Greg Hunt, will meet with Australia's energy executives to discuss a looming gas shortage credited for job losses and spiralling consumer costs. He then tries to blame the domestic shortage of gas in Australia on fracking bans that some states have placed on onshore gas mining activities—give me a break! Do you think we are a pack of idiots out there? Everyone knows it is the Liberal government's policy of selling all our gas to overseas markets, without ensuring we have enough gas for domestic use, that has caused the domestic gas shortage crisis that will cripple Australian business. Another report in The Australian, also in December last year, said:

Manufacturing Australia chairman Mark Chellew, who has called for 'urgent' action in response to the Australian Competition & Consumer Commission report into the east coast gas market released earlier this year, said the sector faced an 'alarming' set of circumstances.

'My view is that this is the greatest public policy failure since federation,' he said. 'The significant problem is that Australia has allowed its gas to be sold offshore without significant gas being available for the domestic economy. That, coupled with our renewable energy target has led to electricity prices spiking and very, very high natural gas prices.'

Mr Chellew warned the problem was set to become significantly worse, with new supply contracts potentially needing to be met by imported gas in only two years' time.

National Secretary of the Australian Workers Union Daniel Walton said the idea of a national gas shortage was 'pure garbage' and renewed calls for a domestic gas reservation policy.

'We have plenty of gas already for both our own needs and for export. The only problem is we've allowed multinational gas exporters to completely set the terms,' …

'Australia gets the world's worst deal from multinational gas exporters: no special access to our own gas and pathetic tax revenue.'

And that is where we are at.

If we are going to be serious about securing our gas security, we must put in place a domestic gas reserve policy of at least 20 per cent and possibly more. That would be another great question a Senate committee could look at when examining the state of our LNG industry—does Australia need a gas reserve policy and at what level should it be set at? We should look at the lessons from America, which made a gas reserve policy of 100 per cent after the GFC. It had the impact of driving down the cost of energy by a factor of three in America, which then threw a lifeline to the manufacturing industry. That, along with robotics and innovation, has led the resurgence in America's economy and caused a growth in its jobs and national wealth. But it all started with an American gas reserve policy of 100 per cent, which forced down energy prices following the GFC and gave conventional energy security for America.

I know that the Prime Minister and his Liberal colleagues understand why we need energy security and why we need the cheapest possible energy prices in the OECD at the very least and in the world at best. Last week I put out a public statement in which I welcomed parts of Prime Minister Turnbull's National Press Club speech, especially his prediction that electricity prices and energy security will be the defining political issues in the year ahead. That was two years and five months after I made my first Senate speech, which indicated that energy security and prices should influence all Australian political decision-making. On Wednesday, 3 September 2014, I told the Senate, in my first speech, with regard energy power:

In this place as a senator I will do my best to vote in and protect Tasmania's and Australia's best interests. In order to help determine what is in my state's and nation's best interests, I will ask this simple question: how will this legislation or proposal affect our food security, water security, energy security, national security and job security?

In a deregulated world and free-trade economic environment, if we are to create national wealth, generate more high-tech jobs and protect Australian workers' wages then the only solution is for our governments to deliver the cheapest electricity and power in the world to our pensioners, families, industry and entrepreneurs.

I am glad that Prime Minister Turnbull has, on energy at least, finally seen the light and begun to understand the strong link between Australian standards of living, business innovation, economic prosperity, job growth and energy cost security. Eventually, if he continues on this course, the PM will realise that our stupid RET system has artificially increased Australia's energy costs by $3 billion a year and wrecked our nation's energy security while destroying business innovation, economic prosperity, job growth and living standards, with no benefit to the environment. No-one in their right mind could ever say that forcing our businesses, families and pensioners to artificially pay more for their power in comparison with our international competitors will ever stop global climate change.

As I mentioned before, this bill makes amendments to the regulation of offshore petroleum. Some of the gas and oil is under the control of the states and some is under the control of the federal government. It is very easy to get confused who owns what, and the Parliamentary Library has cleared that confusion up through a report they gave me.

In closing, I note that item 3 proposes to insert subsection 688C(1)(a) to provide a clear power for the government to make regulations to provide for remittals or refunds to big business of part of the environmental plan levy. Given that the government has already given sweetheart deals to the larger energy companies that will benefit generously from extracting oil and gas from Australia's many well-endowed gas and oil basins, I have grave reservations in supporting legislation which makes it easier for the government to give more money back to the multinationals.

Indeed, I will not be agreeing to the government's legislation, which makes it easier for the government to give even more money back to the multinationals while they justify cuts to aged pensioners and family benefits and payments as so-called budget repair. It is rubbish. Those pensioners and families are also owners. We are all owners of Australia's natural resources, which this government has failed to manage wisely. As a result, it is aged pensioners and working families who are supposed to miss out on entitlements—well, not on my watch. I oppose this legislation for the reasons I have outlined, and I look forward to speaking with the government. Do you have a response?

10:36 am

Photo of Matthew CanavanMatthew Canavan (Queensland, Liberal National Party, Minister for Resources and Northern Australia) Share this | | Hansard source

I thank Senator Lambie for her contribution. There is a lot in what Senator Lambie said that I agree with completely. She spoke about the need for our nation to secure its energy resources, to provide cheaper energy to households and pensioners and also to industry and businesses so they can be competitive and provide jobs. In terms of our objectives of what we want, we and Senator Lambie are very much of one mind. But I would like to talk about a few points Senator Lambie has raised.

You mentioned how this legislation helps solve these problems, and that is the core issue; you have hit the nail on the head on that: how will this legislation help us solve these energy issues? Well, it is not a panacea, and I am not here and the government is not here to say that this is the solution for all issues. It is a relatively technical and small change to our framework that will give certainty to investors coming here to develop these resources.

Where I absolutely agree is that we need to encourage more gas supply in our nation; we need to develop gas so that those manufacturers, the energy providers, can continue to provide energy to our country in a cheap and affordable way, and we have traditionally been given those God-given resources that Senator Lambie mentioned. So, when investors come here and there is a resource and there is uncertainty about whether it comes under state laws or state jurisdiction or Commonwealth jurisdiction, unless we can make clear to them where the dividing lines are and how we will coordinate between state and Commonwealth governments, clearly those investors will be warded away or at least be less likely to come here to our country.

This bill simply provides clarity for those investors and helps ensure that Commonwealth and state governments can come to agreements to make that happen. So, as I mentioned earlier, while there are elements of this bill that will be retrospective, it relates only to one agreement so far under section 54, which relates to the Tarosa fields in the Browse Basin, where there is this uncertainty between Commonwealth and state governments. And that is retrospectivity. It will not cause detriment, because, indeed, that agreement was made with the expectation that we would be making these changes to legislation to clarify these issues.

On the other specific point Senator Lambie made, about refunds and remittals, this is a practice that the government has already done, where either environmental plans or safety cases do not proceed or there is some withdrawal such that we refund or remit the levies in those cases. We are making sure that those powers do exist, and we are also ensuring, in the case of environmental levies, where those refunds have been paid in the past, that they are valid. In the explanatory memorandum we explained that the total amount of those refunds adds up to $500,000 over the time—it was a few years back, but I could get you the date, Senator Lambie, if you need it. But it is not an enormous amount of money in the context of the PRRT that we do raise, as you say.

That brings me just briefly to the other points, which are beyond the scope of this bill. But on the issues you raised about the PRRT, I hear what you are saying, and the government hears these issues and concerns. That is why, just before Christmas, we announced a review into the PRRT framework. You are right: it is our resource, and we need to maximise it and ensure that we get the maximum benefit to all Australians from that resource. At the same time, we need to attract people to come here and invest. You mentioned some other countries, like Malaysia and Qatar. In many of those other nations, governments themselves develop their resources. They have government-owned companies which develop their resources. That is why they have different arrangements and different returns. They take on the risks of that development and they potentially get the returns as well. We do not do that here; we seek for the private sector to develop those resources, and over the past few years that has certainly accorded us well, treated us well, because many of these investments have experienced cost blowouts and they will not make the returns perhaps that the original investors would have thought. We will still have the development and have the jobs, but if we had been making those investments it would have been Australian taxpayers on the hook for those losses.

Those losses, and the oil price falls, have certainly impacted the prospects for the government to receive its petroleum resource rent tax. It is a profits based tax, so it is calculated waiting for profit to accumulate. That is why it takes some years for the capital of a big project like Gorgon to be paid back, and then the government will take its share of the profits. That is the system we have had in this country going back to the 1980s, and it was recently extended by the former Gillard Labor government to onshore gas resources as well.

Notwithstanding that, we are genuinely, in good faith, conducting a review to ensure that we do have the greatest return to Australians from that resource. I hope and am willing to work with you, Senator Lambie, through that review on the legitimate issues you have raised. I understand your concerns, but I would just implore you that the specific provisions we are changing in the act here, in this bill, will help encourage, in a small way, investment in our energy sector. And they are important, and that is why they should be supported.

10:42 am

Photo of Jacqui LambieJacqui Lambie (Tasmania, Independent) Share this | | Hansard source

First of all, you probably need to look at your priorities, okay? We do not have a gas reserve policy here in Australia, and we are about to hit a crisis down on the east coast which is going to cost gas users a lot more money. How do you explain that? Where are your priorities? Should you have not looked at a gas reserve policy and started to put legislation through on that first, before looking after your mates? That is exactly what you are doing.

Senator Hanson-Young interjecting

That would be wonderful. And what I want to know is whether you have any intentions, and your time line, of putting in a gas reserve policy in this country.

Photo of Matthew CanavanMatthew Canavan (Queensland, Liberal National Party, Minister for Resources and Northern Australia) Share this | | Hansard source

We have no plans to produce a gas reserve policy in this country, for a couple of reasons. One is that we need to make sure we attract investment in our energy resource. But where we do agree, Senator Lambie, is that we need more gas. We need to develop more gas. And I would be concerned that restricting the market for that gas only restricts the returns or the profitability of that development and then potentially limits and reduces investments. So, we need to be very careful about going down that path.

You mentioned the United States. Well, the United States does not have a gas reservation policy. What it does have is a large domestic market which has traditionally soaked up all the gas that has been developed in the United States. It is in fact, right now, building LNG terminals on its south coast, and very soon it will be a major exporter of LNG into possibly our region, the Asia-Pacific region, from its resources. You are right that they have been able to tap and extract relatively low-cost resources. They have not faced the same moratoriums or bans we have in this country and various state governments have allowed the development, and that has allowed them to get costs down, to get to a scale that has been very competitive. I am not sure whether you were in the chamber earlier when Senator Xenophon was contributing, but it is also the case that a lot of their shale gas or shale resources also produce a fair amount of tight oil and a wet resource as well, which helps them lower their costs and become more competitive. The coal seam gas we have developed in this country so far does not have those oil resources partnered with it, so, generally speaking, it is of a higher average cost.

We are seeking the same objective, Senator Lambie, but a gas reservation policy, I think, requires very careful consideration. The Western Australian government has had such a policy for some time; it does not seem to have greatly increased the amount of domestic gas available in that state. I think we can look at other ways and better ways, particularly the unnecessary and illogical moratorium on even conventional gas that is coming into the Victorian parliament. That is what we should focus on; that is most prospective; and that is where we can get a solution to this issue.

10:45 am

Photo of Jacqui LambieJacqui Lambie (Tasmania, Independent) Share this | | Hansard source

You think we can call it a gas reserve policy, but I desperately want to make sure that this is quite clear on Hansard: the United States banned the export of LNG; they did that back in 2009. So it is a reserve ban. I will re-ask the question: does the country intend to ban 20 per cent, 30 per cent? Are you looking at a ban or putting a reserve on our gas being exported?

Photo of Matthew CanavanMatthew Canavan (Queensland, Liberal National Party, Minister for Resources and Northern Australia) Share this | | Hansard source

We have no intention, as I mentioned, of introducing such a gas reservation policy. We have been very successful in this country in developing our gas resources, where state and/or Commonwealth governments—if they are in offshore waters—state and Commonwealth governments have allowed that resource to be developed. In Queensland, where I am from, we have attracted record amounts of investment in the LNG industry and in the other part of the country where the chair is from there has been even greater investment in offshore resources.

But, of course, where state governments decide they will not develop the resource at all and no-one can come in or where we have senators in this place seeking to ban the development of offshore areas like the Great Australian Bight—that will ward off investment. That will turn away investment and we will not have the resource developed and we will not have the gas for our manufacturing sector that you and I both want. That is what we should be focused on. We need to be focused on unlocking the supply, not seeking to send it in a certain direction. We need to be unlocking the incentives for people to invest in that supply, not putting on state-wide bans, which even ban conventional gas developments—conventional gas techniques which have been around for decades, if not centuries. That is illogical and is harming our manufacturing interests in this country. That is something we do not support; we think it is counterproductive. I do not think the reservation policy that Senator Lambie has put forward is a solution to those issues.

10:47 am

Photo of Jacqui LambieJacqui Lambie (Tasmania, Independent) Share this | | Hansard source

I am laughing to myself: how can you possibly say that you have been successful when we are about to have a gas shortage on the east coast of Australia? Honestly, that is not success. That is my first point. My second point is this: do you support a price on the volume of gas rather than on profit—basically, instead of taxing them on profit, will you do it on volume?

10:48 am

Photo of Matthew CanavanMatthew Canavan (Queensland, Liberal National Party, Minister for Resources and Northern Australia) Share this | | Hansard source

As I mentioned in my comments on the Petroleum Resource Rent Tax, that is a profits-based tax that has been around since the 1980s. We are looking at that tax at the moment and doing a review; and so it would be inappropriate for me to forecast or to suggest right now what changes we would make. Suffice to say, any move to a volume-based tax would not necessarily achieve what we want. Of course, a volume-based tax would simply be on the production and have no relation to the profit that is received on a particular development. It could potentially harm particularly marginal developments—but if those developments that might not make a lot of profit—very unfairly and choke off the very investment that we want to achieve.

It is generally felt that a tax based on profits is more efficient. That is why the Commonwealth government moved to this regime in the 1980s and that is why the former Gillard Labor government extended that to onshore areas a few years ago. That regime means that we take our share once there are profits there and that, of course, helps encourage private investors to come here knowing that they can make a profit and a return, which they legitimately should be allowed to do, and then just pay a share back to the Commonwealth government. There are whole lot of details about how that tax system and regime work, notwithstanding the general idea that a profits-based tax is the best way forward. That is what this review is looking at. I am happy to engage the senator with this review and on those particular details.

10:49 am

Photo of Jacqui LambieJacqui Lambie (Tasmania, Independent) Share this | | Hansard source

When we are talking about the volume and the profit, can you tell me what modelling has been done so far?

10:50 am

Photo of Matthew CanavanMatthew Canavan (Queensland, Liberal National Party, Minister for Resources and Northern Australia) Share this | | Hansard source

The review is being handled by the Treasury department and I do not have the details of exactly what they have engaged in so far. It was announced just before Christmas—I believe in the last sitting week we were here. They have issued a discussion paper—is that the term?—or certainly an initial scoping paper and they are seeking submissions right now. As I said to Senator Lambie, I am happy to engage with her about that. While I do not wish to predict the outcomes from that, there has been a regime in place in this country based on profits-based tax for some time. We can disagree, Senator Lambie, about the success or lack of success, but we have attracted some of the world's biggest capital investment projects in this nation under that regime. The Gorgon development is one of the world's biggest capital projects which is going on right now. The Inpex project in Darwin likewise is one of the biggest in the world. These generate enormous amounts of investment for our country and they have created tens of thousands of jobs for people across Australia—particularly for areas in Northern Australia, it has been game changing.

While we need to do better to get gas into southern markets, those issues are largely related to the state governments not allowing the development of their resource. Whereas in Northern Australia, the Western Australian government, the Queensland government and the Northern Territory government have welcomed the gas industry with open arms. They have said, 'Let's come here and invest here.' Guess what? By being open, by being accommodating and by facilitating investment, you get investment. That is what has happened. If we had that attitude in southern Australia, I think we might have different outcomes. It has been a success attracting those major investments. They are hugely important to Senator Back's area, to my own state and to Senator Scullion's territory as well. That is a major success for our country that we should be very proud of.

10:52 am

Photo of Sarah Hanson-YoungSarah Hanson-Young (SA, Australian Greens) Share this | | Hansard source

I want to pick up on the current debate that is being had here between the minister and Senator Lambie. Firstly, I want to point out that one of the biggest concerns that the Australian Greens have with this bill and the reason we are moving the amendments that were circulated in the committee stage is that we fundamentally believe that the Liberal Party, the coalition, and the Labor Party have been bought by these big oil and gas companies. We know they have been bought because these companies keep handing over thousands and thousands of dollars in election donations. One of the donations that was revealed last week was made by Chevron—a big multinational foreign company that wants to drill for oil in the Great Australian Bight. Chevron gave $8,800 to the South Australian Labor Party a week before the Senate committee looking into mining and drilling for oil in the Great Australian Bight met. One week before that hearing, the Labor Party received thousands of dollars worth of donations from Chevron. Then only the day after that inquiry, guess who received the next lot of donations? The Liberal Party. Chevron gave another $8,800 to the South Australian Liberal Party.

Photo of Sarah Hanson-YoungSarah Hanson-Young (SA, Australian Greens) Share this | | Hansard source

Join the dots. This is dirty money playing a role in dirty politics. You have a bill before this chamber today that is all about setting up the regulatory framework that the big oil and gas mining companies desperately want. It is about setting up the regulatory system that they want, retrospectively. They have bought favour with both of the major parties, and it is at the cost of the Australian community. We now have lobbyists running around this place, knocking on the doors of ministers and shadow ministers, saying, 'Oh please, let us start drilling for oil in what is meant to be a marine protected area, a Commonwealth marine protected area, in the Great Australian Bight.' The public is rightly worried that the money being donated by these massive big oil and gas companies is having influence over the policy decisions of both the major parties.

The example of Chevron connected directly to the time frames of Senate investigation and inquiry and, I must say, questions from senators in this place to Chevron, who were basically asking Chevron to sit in a Senate hearing and tell the world how wonderful they are. If that is not cash for comment, what is it? Chevron's cash for comment is what we saw in the Senate hearing: $8,800 and then another $8,800 to the state parties; $15,000 to the federal Labor Party; and $11,000 to the federal Nationals. This big multinational company is buying favour with Australian political parties to get the policies they want. The Australian public are sick of it. Dirty money leads to dirty politics. Our democracy is not for sale, people! Our democracy means that is a place where policies are debated on merit, debates are had with integrity, and members of parliament stand for what they say, not because someone has paid them.

South Australians in particular are very concerned about what is potentially listed for the Great Australian Bight. We know that the risks are huge. They have not been mitigated. There is not even a proper response plan from these big companies, who just want to come in and drill for oil in the middle of a whale sanctuary: big profits for them; big risk for South Australians. It is putting our tourism industry at risk and our fishing industry at risk and providing no jobs for South Australians. The jobs are going to be imported from overseas.

Photo of Matthew CanavanMatthew Canavan (Queensland, Liberal National Party, Minister for Resources and Northern Australia) Share this | | Hansard source

What a load of rubbish!

Photo of Sarah Hanson-YoungSarah Hanson-Young (SA, Australian Greens) Share this | | Hansard source

The companies have said, black and white, that they cannot guarantee any real job creation in South Australia as a result of this proposal. But I tell you what: the fishing industry and the tourism industry are scared. What if there is an oil spill? What happens to our clean, green tourism reputation in South Australia if a spill occurs? Don't say, 'Oh, it can't possibly happen.' We saw what happened in the Gulf of Mexico. It will not just be a spill in the Great Australian Bight, which is one of the roughest parts of the sea in the world. The modelling shows it will spread further than just the South Australian coast. It will hit Victoria. It will hit Tasmania. It could even possibly get up to the New South Wales east coast. This is the evidence that has been presented, yet here in this place today rather than us having a discussion about how we keep these companies more accountable, we are rolling over. We have the Labor Party and the Liberal Party, the government here, rolling over and saying: 'Oh, you want changes to the regulatory framework. Oh, you need it done retrospectively? Oh, yes, that's right, you did donate to our election campaign—how many years in a row?' That is what is going on here.

Giant multinational oil companies should never been given permits to drill for oil in the Great Australian Bight, especially considering the lack of foresight, transparency and planning that has been presented. All of this is being done behind closed doors. Only last week we found out that big amounts of cash were being handed to both the government, the coalition, and the Labor Party. No wonder Chevron think they are on a winner here. Chevron's cash for comment. That is what we have seen in the last few months, folks, and this bill is no exception. On that note, Chair, I refer to the official amendments on sheet 7956 and seek leave to move those amendments.

Leave granted.

I move amendments (1) and (2) on sheet 7956 together.

(1) Clause 2, page 2 (at the end of the table), add:

(2) Page 10 (after line 6), at the end of the Bill, add:

Schedule 3—Protection of the Great Australian Bight marine area

Offshore Petroleum and Greenhouse Gas Storage Act 2006

1 After Part 9.10C of Chapter 9


Part 9.10D—Protection of the Great Australian Bight marine area

780N Ban on authorising activities in Great Australian Bight marine area

(1) An authorisation, or a renewal or extension of an authorisation, applied for on or after commencement of this section must not be granted if it would permit a mining related activity to be undertaken in the Great Australian Bight marine area.

(2) In this section:

authorisation means a permit, licence, lease, title, approval or other instrument applied for under this Act.

Great Australian Bight marine area means the waters of the sea known as the Great Australian Bight in the Southern Ocean that are:

(a) beyond the outer limits of the coastal waters of South Australia and Western Australia; and

(b) within the outer limits of the continental shelf; and

(c) between Cape Pasley, Western Australia and Cape Carnot, South Australia.

mining related activity:

(a) means an activity connected with, or incidental to, the mining or recovery of minerals or other geological material (including naturally occurring hydrocarbons) in any form, whether solid, liquid or gaseous and whether organic or inorganic; and

(b) includes prospecting for or exploring for minerals or other geological material.

10:59 am

Photo of Claire MooreClaire Moore (Queensland, Australian Labor Party, Shadow Minister for Women) Share this | | Hansard source

The Labor Party are not supporting the Greens' amendments, and we have made that clear, but we could not let the previous comments made by Senator Hanson-Young in this debate go without some response. This is not a debate about political donations, Senator Hanson-Young.

Photo of Sarah Hanson-YoungSarah Hanson-Young (SA, Australian Greens) Share this | | Hansard source

No, but it should be. You're both as bad as each other.

Photo of Claire MooreClaire Moore (Queensland, Australian Labor Party, Shadow Minister for Women) Share this | | Hansard source

You must have got the agenda wrong. You must have found the wrong place to make yet another personal attack on other parties. We want a debate—

Photo of Sarah Hanson-YoungSarah Hanson-Young (SA, Australian Greens) Share this | | Hansard source

It's just a bit of a coincidence—

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

Order! Senator Moore, resume your seat. Senator Moore will be heard in silence, and I ask that you direct your comments through the chair.

Photo of Claire MooreClaire Moore (Queensland, Australian Labor Party, Shadow Minister for Women) Share this | | Hansard source

We are, as you all know in this place, more than happy to have a debate on the issue of political donations, and our policy is really clear. But Senator Hanson-Young comes in here in a debate about a bill around offshore petroleum and strongly puts her case in terms of the environmental issues. She has every right to make those arguments, and I have no doubt we will listen to them just as we will in the Senate inquiry—those things will be before the inquiry. But to colour this debate by making statements about publicly declared donations to the parties and then to draw that inference just to get a quick point in this debate does not value the issues about which we are talking.

I am not going to go down the long discussed history of who gets what from whom in political processes in this place. We have heard a lot about who has received large donations from which companies and from which individuals. There is a time to have that debate. But again, rather than looking at the key issues of this particular debate, which is what we are looking at, we have had it taken aside just for a cheap line, and I think it has been heard by a number of people. Linking one company to cash for comment does not progress the debate. So we will put on record that we are not supporting the amendments. We are more than happy for the debate to continue. We want to ensure that there is effective processing of environmental concerns when looking at our energy future in this nation. But yelling abuse across this chamber will not achieve that and will just ensure that, again, the real issues are not considered.

11:02 am

Photo of Matthew CanavanMatthew Canavan (Queensland, Liberal National Party, Minister for Resources and Northern Australia) Share this | | Hansard source

I indicate that the government will also not be supporting Senator Hanson-Young's amendments. I also find her suggestions objectionable and contemptible. To say that individual senators before a committee are influenced by those sorts of things, you would think you would have some evidence, Senator Hanson-Young, apart from just these slurs and suggestions you put out there. Let's be clear what Senator Hanson-Young is suggesting.

Photo of Sarah Hanson-YoungSarah Hanson-Young (SA, Australian Greens) Share this | | Hansard source

You wouldn't want anyone to know, would you?

Photo of Claire MooreClaire Moore (Queensland, Australian Labor Party, Shadow Minister for Women) Share this | | Hansard source

It's public.

Photo of Matthew CanavanMatthew Canavan (Queensland, Liberal National Party, Minister for Resources and Northern Australia) Share this | | Hansard source

She is suggesting not only that some donations affect individual senators, but she is going on to make the allegation that we will develop a resource, the Great Australian Bight, because of some donation to a political party, when she well knows that those decisions on developing the Great Australian Bight are made by an independent regulator, by independent public servants with expertise in these areas. So she is also slurring those public servants, who are reputable individuals who do their job, day in, day out, and do not deserve the slurs from individual senators that Senator Hanson-Young is subjecting them to. Surely it is enough, Senator Hanson-Young, as Senator Moore said eloquently, for all of us to debate these issues on the substance and the merits, which we can do with those officials. We can debate with those officials and disagree with them, but I think it is contemptible to impugn motives to public servants who are just doing their job and cannot be in here to defend themselves on those allegations in that way. So I utterly reject those suggestions from Senator Hanson-Young.

As Senator Moore said, we could side track here and go into a whole debate about how many donations the Greens get from different individuals and different organisations and do the same thing, but that would be a complete distraction, because the issues before us here are quite simple, quite technical and do not relate to the Great Australian Bight, which Senator Hanson-Young's amendment does. That brings me to your amendment, Senator Hanson-Young, and we reject that for similar reasons. We reject that because we have an independent regulator here that is established to look at these things. They should be allowed to do their job. I love how the Greens, when a certain umpire calls a decision in their favour, use the authority of that particular organisation to buttress their claims and say, 'Such-and-such has said this, so therefore you can't do that.' But when an independent umpire says something different to what the Greens expect or want, they will disagree with it. You cannot have it both ways. We have a very robust environmental regulatory framework in this country. It will seriously look at all of the matters that Senator Hanson-Young has put forward, and it was doing that. As Senator Hanson-Young knows, BP are not progressing with their environmental plan. But the regulator will, for future companies involved in the Great Australian Bight, look at these things seriously.

As I said in response to Senator Xenophon, the Australian government would very much like to develop the resources in the Great Australian Bight. They have potential to be game-changing for our nation to secure our nation's energy needs. It is what we need. We do not produce a lot of oil in this country—as you know, Senator Hanson-Young—and it is an issue for us to respond to. The Great Australian Bight has the prospect—just the prospect—that it could help solve those issues. So those developments are very exciting for our country and should be exciting for South Australian senators because they are a major resource for your state and could be a game changer for it—it certainly needs something to develop its economy. But that is in the future. We need to step through those environmental plans properly, which we will do. We have a very robust framework in this country with a very good record on both safety and environmental matters. We stand behind that framework, and we certainly defend the integrity of those public servants that operate it for us.

11:06 am

Photo of Kim CarrKim Carr (Victoria, Australian Labor Party, Shadow Minister Assisting the Leader for Science) Share this | | Hansard source

Can I just intervene on this matter? I have been sitting here quietly waiting for the next bill to come along but I do really think it is important to repudiate the assertion that Labor senators would be influenced by an $8,000 contribution from a company—

Photo of Sarah Hanson-YoungSarah Hanson-Young (SA, Australian Greens) Share this | | Hansard source

Prove that you didn't. It seems pretty dirty to me. Prove it.

Photo of Kim CarrKim Carr (Victoria, Australian Labor Party, Shadow Minister Assisting the Leader for Science) Share this | | Hansard source

and this would be described, as the senator has just done, as 'dirty money'. I think it has to be stated unequivocally that Labor senators' integrity should not be challenged in that way, and such a suggestion should be repudiated in the most forceful terms. I am particularly impressed by the Greens' gall in these matters; they have more front than Myer when it comes to the question of donations. Up until recently the largest single individual donation was actually received by the Greens. I know Malcolm Turnbull has changed the rules in that regard with his $1.75 million donation. But on several occasions now Mr Graeme Wood has been the largest single donor in this nation's history—to the Greens.

When it comes to the question of Chevron, let me make it very clear, because the Greens have been trying to campaign on this question for some time—in regard to the CSIRO; in regard to the development of Bass Strait. I support the development of our resources, particularly given how significant the development of those resources is to the future prosperity of this nation and to millions of blue-collar workers across this country. The CSIRO is engaged in research, properly, ethically, and in accordance with the most strict guidelines to ensure that information is publicly available and is not compromised because of that investment by Chevron. It is an appropriate use of public resources to establish where our resources actually are and what the questions are in regard to the strictest environmental standards necessary to exploit them. The suggestion that somehow or other and $8,000 donation changes the dynamic in that regard is preposterous, and I suggest to you that to challenge the integrity of the Labor senators on that basis is totally out of order.

11:09 am

Photo of Jacqui LambieJacqui Lambie (Tasmania, Independent) Share this | | Hansard source

The facts speak for themselves. On the one hand we have a minister who says we are going to be one of the biggest exporters in a world of LNG and then on the other hand we have a minister who says we are having a domestic crisis because of a domestic shortage. On top of that, both of you have been doing dud deals between yourselves for years—dud deals in taking political donations. And you do not think the Australian people are wondering why they should vote for you? If you were half-serious about political donations you would be putting them up live. If you get them one day and that cheque is cleared then get them up there and show the people. You do not wait 18 months or 12 months. If you were half serious about showing that you are all clear in this matter, then get them up there live and let the Australian people decide whether or not you are being paid by cheque book or whether you are actually doing it for them and their future. It is enough.

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

The question is that the amendments of Senator Hanson-Young on sheet 7956, taken together, be agreed to.

11:18 am

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

The question now is that the bill be agreed to.

Question agreed to.

Bill reported without amendments; report adopted.