Wednesday, 16 June 2021
Fuel Security Bill 2021, Fuel Security (Consequential and Transitional Provisions) Bill 2021; Second Reading
That these bills be now read a second time.
I seek leave to have the second reading speeches incorporated in Hansard.
The speeches read as follows—
FUEL SECURITY BILL 2021
Today, the Morrison Government is taking the next steps to lock in Australia's sovereign refining capacity and our long-term fuel security to keep our economy moving.
These Bills implement key measures to deliver the Government's commitment to long-term domestic fuel security, supporting Australia to keep the economy and critical services running.
The Government has worked closely with the fuel industry and users on the design of these Bills.
The Morrison Government has secured agreement from the Ampol refinery in Brisbane and the Viva Energy refinery in Geelong to operate until at least mid-2027.
The passage of these Bills is critical to ensuring this agreement can be realised.
This will protect the 1,250 workers employed at the refineries and create a further 1,750 constructions jobs for the major infrastructure upgrades.
This package will secure our fuel stocks, protect motorists from future high prices, and value the fuel security services Australian refineries provide.
This will be done through establishing a Fuel Security Service Payment to lock-in our refineries, and setting out the key parameters for the minimum stockholding obligation.
The Bill addresses the need to safeguard against fuel disruptions and the need to ensure Australians have access to reliable energy - both of which are essential to our economic recovery.
The economic impacts of COVID-19 have reminded us that we cannot be complacent when it comes to national sovereignty.
Due to reduced demand, the pandemic resulted in a surplus of fuel products - particularly jet fuel with demand dropping by over 80 per cent. Refineries faced challenges in reducing the production of petrol and jet fuel, while maintaining diesel production.
While Australia's fuel supplies have remained secure and affordable through the pandemic, we know we need to shield Australians from potential shocks in the future and enhance our national security.
Our economy heavily relies on energy from liquid fuels, and this will continue to grow. Growth is likely to be driven by increased demand for road and rail freight, agriculture and mining.
Diesel is our most important transport fuel - Australians use more diesel than electricity. It is also the critical fuel source during an emergency - powering the trucks that move our food and pharmaceuticals, and our emergency services vehicles.
This Bill will protect our ability to produce these vital fuels during an emergency.
In a worst-case scenario, even if imports are disrupted, our refineries are able provide the fuel needed to run our critical services through processing Australian crude.
We cannot be in a situation where we don't have this capacity in extreme circumstances.
The minimum stockholding obligation will also safeguard levels of petrol and jet fuel, and see a 40 per cent increase in our diesel stocks. This will provide certainty for consumers that extra stocks are at hand.
Together, the Fuel Security Services Payment and the minimum stockholding obligation will secure our supplies into the future. These measures will also assist in Australia's commitment to meeting our obligation as a member of the International Energy Agency.
Firstly, to the minimum stockholding obligation, which will guarantee a baseline level of key transport stocks at all times.
The obligation will see Australia's jet fuel, petrol and diesel stocks maintained at 2018-19 average consumption levels at the very least. This first stage commences on 1 July 2022.
Diesel stocks will then be increased by 40 per cent from July 2024. This is due to the critical importance of diesel. It is the most important and versatile fuel needed to protect us during a fuel disruption. Our farmers, emergency services and industry all rely on diesel to keep moving.
This Bill builds on our previous announcement to fund the construction of a significant new domestic fuel storage capacity through the Government's $200 million Boosting Australia's Diesel Storage Program. The program supports implementation of the minimum stockholding obligation by providing co-funding for the construction of the additional storage capacity that will be required by these measures.
We will continue to work with industry over the rest of the year as we draft the subordinate legislation to support the implementation of the minimum stockholding obligation in readiness for 2022.
This Bill also ensures the future of our local refineries. We will protect jobs, our economy, and our ability to refine domestic crude oil in times of emergency.
Viva and Ampol have agreed to remain in operations until mid-2027 contingent on this legislation being enacted.
The Government made clear its intention to provide support in September last year, with both BP and Exxon's decisions coming after this initial announcement.
Both Exxon and BP made clear that those decisions were based on commercial factors and were not a reflection of local policy settings.
As Frederic Baudry, the head of BP in Australia said:
" There is no amount of cash the government could have offered to us, given our own economic situation and strategy, that would have made this viable" .
At the time, Nathan Fay, Chairman of ExxonMobil Australia, said:
"We extend our thanks to the federal government for the significant support offered to Altona and other refineries. Our decision to convert our facility to a terminal is not a reflection of those efforts."
For Viva and Ampol - to put it very simply - without the ongoing support guaranteed through this Bill, it is likely Australia's remaining refineries will close within the next five years.
This would mean Australia would be 100 per cent dependent on overseas supply chains to meet our fuel needs. It would also result in over 1,000 direct job losses, and investment being taken out of local communities.
Locking-in our refineries is a matter of national security, of Australia's sovereignty and our resilience as a nation.
The Government is introducing this Bill because we believe the role our domestic refineries play is critical to our nation.
The Fuel Security Services Payment detailed in this Bill will provide refineries an assurance that when times are tough, they will be supported in the form of a payment which will limit their downside risk. To protect the taxpayer, the Government will not be paying the refineries when they are making profits.
In exchange for this variable-level of support, domestic refineries will commit to remaining open in Australia until at least 30 June 2027, protecting Australian jobs and livelihoods, as well as our fuel security. This can be extended to mid-2030.
Separately, they will also be supported in bringing forward major infrastructure upgrades to produce low sulfur fuels from 2027 to 2024.
The passage of this Bill will ensure that the payments can commence from 1 July 2021. The Government's temporary production payment will cease at the end of June, so it is essential there is certainty for the refineries as to this timing.
This Bill enacts the commitments we announced as part of our 2020 Fuel Security Package, which will see Australia safely through future disruptions. These measures will be overseen by a comprehensive regulatory framework that is to be implemented by the Department of Industry, Science, Energy and Resources.
The minor Bill will also amend four existing Acts to reduce the regulatory burden on entities covered by the scheme in the Main Bill. This will ensure the integrity, and efficient implementation of the minimum stockholding obligation and production payments, in an appropriate manner.
This package is supported by industry, as well as the refineries. The businesses that keep our economy running understand the importance of fuel security and refineries.
The Australia Trucking Association noted that this package is a "big win for every road user".
The Australian Automobile Association and the Federal Chamber of Automotive Industries have both welcomed the package, understanding the range of benefits it brings.
The benefit of jobs and investment into our regions is also clear, with the AWU's National Secretary Dan Walton saying our package
"will save thousands of jobs, both directly at the refineries and indirectly through jobs supported in the community."
Fuel is crucial across the economy, and this package will secure the future for all fuel-dependent industries, like our truckies, tradies, farmers - and every commuter in Australia.
Without the Government's package supported by this Bill, we will most likely lose our refining capacity, and with it the jobs and national security benefits it brings.
We all rely on fuel, we all need fuel security, and that is why the Government is committed to protecting it.
I commend these Bills to the House.
FUEL SECURITY (CONSEQUENTIAL AND TRANSITIONAL PROVISIONS) BILL 2021
I am pleased to introduce the Fuel Security (Consequential and Transitional Provisions) Bill 2021.
The primary purpose of this Bill is to make necessary amendments to existing legislation to support the implementation of the Main Bill.
This Bill amends four existing Acts to reduce the regulatory burden on entities covered by the scheme in the Main Bill, and ensure the integrity, and efficient implementation of the proposed measures.
This Bill also includes transitional provisions to support the Main Bill.
It ensures that applications for the fuel security services payment cannot be made until the Minister has made the rules required to assess applications. It also ensures that the minimum stockholding obligation does not commence until 1 July 2022, to ensure regulated entities have sufficient time to prepare.
I commend the Bill to the House.