Tuesday, 14 August 2018
Offshore Petroleum and Greenhouse Gas Storage Amendment (Reporting of Gas Reserves) Bill 2018; Second Reading
That this bill be now read a second time.
I seek leave to table an explanatory memorandum relating to the bill.
I table an explanatory memorandum and I seek leave to have the second reading speech incorporated in Hansard.
The speech read as follows—
I rise to speak on the Offshore Petroleum and Greenhouse Gas Storage Amendment (Reporting of Gas Reserves) Bill 2018. This bill aims to address a gaping hole in the accountability of those companies who develop and profit from Australia's offshore resources.
It is not a secret that Australia holds significant wealth in our petroleum reserves. In 2018 alone, Australia is expected to export $35 billion of Liquefied Natural Gas.
It is also not a secret that the industry has become extremely profitable for those companies which have the money and resources to develop Australia's natural resources for production.
With so much at stake, it is imperative that the Australian Government puts in place a regime that effectively and fairly taxes those companies that profit from Australia's natural resources. It is the Australian people, after all, that are the true owners of these resources.
Let me make this point clear – we have a frustratingly weak taxation system in place.
In December 2017 the Australian Tax Office published the Corporate tax transparency report for the 2015–16 income year. It shows a range of petroleum companies with household names, paid little or no tax in 2015-16. Chevron had $2.1bn in revenue, yet paid $0 in tax. ExxonMobil Australia had $6.7bn revenue, yet paid $0 in tax. Origin Energy had $11.9bn revenue, yet paid $0 in tax. Clearly something needs to change.
This bill is not a silver bullet for that change, but it will start the conversation.
Our offshore resources are contained in various "fields". Petroleum production entities can apply for a "retention lease" over those fields. A retention lease grants the right to explore and/or develop the relevant field – to the exclusion of all others.
The problem is this: once a retention lease is granted, the communication with the Australian people stops. We have no real indication of how much petroleum is contained in a given reserve. We have no idea of the value of that reserve, nor what the viability is for production and profit.
That's where this bill comes in. This bill is simply about bringing more information to the Australian people. It requires holders of retention leases, and holders of production licences, to provide a 'taxation transparency report' to the regulator.
The Taxation Transparency Report will include information with respect to the size of any resource field held, the value of the resource field, and a record of all payments made to the State and Federal governments- including licensing fees, royalties, Petroleum Resource Rent Tax, as well as income tax.
The Taxation Transparency Report will provide this information regularly. The bill requires retention lease holders and production licence holders to provide reports 30 days after they receive their lease/licence, and a further report for each successive year thereafter, for the life of the lease or licence.
Having received the information in a Taxation Transparency Report, the regulator will then be required to put it into its Register. Subject to the rules binding the regulator, it is expected this information will be released to the public.
The information will allow for a level of transparency and accountability that the petroleum production sector has never had to face before.
Countries like Canada, the UK and the EU have already forced multi-nationals, like Chevron and Exxon, to report on both payments to their respective governments as well as on production levels. All Australia would be doing is bringing us in line with countries like Canada and the UK.
In conclusion, this bill includes relatively minor, simple, reasonable, reform proposals. The bill will start the ball rolling for a broader change that we desperately need. I trust that the Senate will support this bill, and take responsible measures to protect the interests of the Australian people.
I commend the bill to the Senate.
I seek leave to continue my remarks later.
Leave granted; debate adjourned.