Matt Keogh (Burt, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Petroleum and Other Fuels Reporting Bill 2017. The statistics that this legislation will now make it mandatory to collect will also show that Australia now imports 91 per cents of its petroleum from foreign tankers. This is up from 60 per cent only back in the year 2000. In fact, Australia now relies on a single megarefinery in Singapore for over half of our unleaded petrol supply. Yet the government's recent energy white paper concludes that it is concerning that we are dependent on petroleum for virtually all of our transportation. Petrol, diesel and aviation fuel accounted for over 90 per cent of transport energy use in 2012-13.

I would like to note at this point a contribution made by the member for Canning from a neighbouring electorate on this very matter on 19 June, when he said:

… Australia is in a position of significant vulnerability. A couple of themes emerged. We are a resource-abundant nation. We are the world's ninth-largest energy producer. By the end of the decade, we will overtake Qatar as the greatest producer of liquefied natural gas. We are geographically isolated. … Despite the strategic advantages that we have in the abundance of energy supplies, we are heavily dependent on imports of refined petroleum products and oils to meet the demands of Australian consumers and, also, to carry out essential tasks, like maintaining a defence force, maintaining supply chains throughout the country and all those other essential parts of the economy that we take for granted.

Our capacity to produce enough fuel for our own domestic market should be a concern for each and every Australian and each and every Australian business. In the last decade we have seen many petroleum and chemical refineries close around Australia. In Victoria, we have the Altona and Geelong refineries producing 200,000 barrels a day, but in Western Australia, just to the west of my electorate, down in the electorate of Brand, we have the Kwinana refinery, which produces 138,000 barrels a day on its own, the largest refinery in the country. With the closures of the Clyde and Kurnell refineries in 2012 and 2014 in New South Wales, the closure of the Lonsdale refinery in 2003, and the closure of the Bulwer Island refinery in Queensland in 2015, transitioning to a bulk-holding facility, 15 per cent of our crude oil is produced in Australia, and the other 85 per cent we receive through imports. In 2012 we were refining 75 per cent of that oil, but in 2014 it was down to only 57 per cent.

Both the NRMA and the RACV have said we have as little as three weeks fuel supply in Australia. We are dangerously reliant on one refinery for our fuel supplies. In essence, we have adopted a 'She'll be right' approach, which might work perfectly well for many things in Australia, but it's not the right approach for fuel security. Relying on the historical performance of global oil and fuel markets to provide for us in all cases merely puts us at the mercy of foreign supply lines. As the members for Canning and Lilley have highlighted, this is now an issue of national security; it is not just about energy security.

Anyone who has dealt with the Australian gas market in recent times knows that it is one of the most opaque and least transparent markets in the country. No-one knows exactly how much gas is produced, who holds it, how much it is sold for and where it goes. This bill will take us one small step towards improving that transparency, and as such Labor is supportive of this bill. Rather than relying on the voluntary disclosure of information, this bill will require the gas companies to disclose information regarding gas supplies to the nation. This bill further highlights the concerns that this side of the chamber holds around fuel security and will ensure that production of accurate statistics is particularly important, as the government implements a planned return to compliance with Australia's obligation, as a member of the IEA, to hold fuel stocks equivalent to 90 days of the previous year's average daily net oil imports.

But no-one should be fooled into thinking that, when this bill becomes law, we will have a solution to the gas crisis that this government has let develop. None of this will address the immediately pressing issue of Australia's energy security crisis, which has seen wholesale gas prices in the Australian industry rise from $4 a gigajoule a few short years ago to up to $20 a gigajoule today. Labor has been warning about this crisis for years. In the four years of this government, it has done nothing. Labor acknowledged this crisis back in 2015, when we adopted a gas export national interest test at our national conference, with great support from Western Australia, which had already adopted its own domestic gas reservation policy, which has secured natural gas supplies for WA. During the 2016 election campaign, almost a year after we adopted our national interest test for gas exports, we announced the details behind how we would test to ensure that, under Labor, LNG exports won't come at the expense of domestic gas users, which is exactly what is happening now under the watch of this government.

What have they been up to in this time? Their whole strategy seems to be one of deny, then ignore, then ridicule. When we are faced with a crisis, they inevitably blame Labor. Can you believe it? This is the short version of the government's approach to managing our gas supply, but the result is job losses, industry closure, low wages, uncertainty for industry, higher power prices and less energy security. The gas crisis facing Australian industry is here and now, but the government's proposed export controls won't be implemented until next year, if ever. That is clearly not good enough both for business, who can't secure gas today, and for the workers who are wondering just how long they're going to be able to keep their jobs. The government's proposed controls barely mention price, and that is one of the key issues for industry. It is also clear that, even if there is a projected gas shortfall, the government could decide to do nothing.

Labor support a strong LNG industry and we support a strong domestic gas market. It shouldn't be beyond our abilities to have both. The Turnbull government, after ignoring a looming gas crisis for years—they have been in government for four years and have done nothing—still fail to adequately address this crisis to ensure that there are affordable gas supplies, or just any supply, for Australians. If we don't see real national leadership on this issue to resolve this crisis, which is here and now, we will see devastating impacts. It will impact on industry and it will impact on businesses with closures that will result in thousands of jobs being lost. There will be ever-increasing electricity prices—not to mention being unable to guarantee that electricity supply in the first place.

We need short-, medium- and long-term solutions—things like pipeline investment and more transparency, which this bill does aim to try to deliver, as well as more development. These are all important, but it will take years before they can deliver more gas into the market. We are now in a situation where solutions to get more gas into the domestic market are needed, but they are needed today as well as in several years time.

Gas is absolutely crucial. It is a crucial input into the production process for many industries around Australia—for chemicals, manufacturing and plastics—as well as for energy generation, which we talk about so often. People often forget just how much gas is a primary input into those products. We cannot let gas supply contract. We cannot have a situation where we run out of gas to supply our industries, where our industries are not able to get the gas that they need under the contracts that they already have because it's being shipped offshore against our own national interests.

Australia's new LNG export industry has tripled the demand for gas but not the supply. So some LNG operators are now drawing on the domestic supply of gas to meet their export obligations, which is creating a lack of supply in the Australian domestic market, as well as pushing up, to record prices, the cost of gas for Australian domestic customers. Those customers are, of course, you and me. But they are also our industry, which so critically relies on this gas. If this is not resolved soon, we are going to have a critical crunch.

It is on the government's watch that this has happened. They have been in government for four years, and they have fronted up and done pretty much nothing about it. They have done nothing. Under the Turnbull government, they have completely surrendered the field. It's like they walked in and talked about all these jobs and growth but didn't realise they were going to need to guarantee some gas supply to make sure we could get jobs and growth. The best we can get out of this government is them giving energy company execs a stern talking-to. It's a bit like the way they talk to bank CEOs and chairpeople. All they do is bring them into a room, sit them all down, get them in front of some cameras and then flog them with a wet piece of lettuce. The way the government approach this makes so much change! The government feel great that they're doing something, the executives walk out and continue to do exactly what they were doing before, and who is left? The Australian public are left. The Australian public, consumers, industry and workers are left going: 'That was great, Government. Thanks so much for making such a great effort to protect our industries, to protect our jobs and to protect our nation.' That is the approach this government have taken. They take it to banks and they take it to an energy crisis. What does it produce? It produces no benefit whatsoever. Thanks very much, Government, for doing absolutely nothing to protect energy security in this nation—but at least you got around to making sure we got some great statistics!

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

That was a very good contribution by my colleague from Western Australia. He raises some very, very important points—not just about the Petroleum and Other Fuels Reporting Bill 2017, but about, in general, our fuel supplies, our refining capacity and our gas markets. The current gas debate is interesting. The Prime Minister would have you believe that he's just become aware of the gas crisis, and that it is the fault of the previous government, and maybe the previous government before that—he tends to blame his predecessors for so much.

But the reality is all of this could be seen, very clearly, coming down the pipe at us. I remember in 2012 and 2013, industry, particularly manufacturing, coming to members of this House. They were reliant on gas, not just the price of gas but the supply of gas. I know they came to me and to the then member for Throsby—now the member for Whitlam—and they talked to us about it. I would be surprised if they hadn't talked to the then opposition about it as well—it was the sort of thing industry would have been concerned enough about to talk to both sides of parliament. They would have wanted us to take a bipartisan approach to fixing the issue. The member for Throsby moved, and I seconded, a motion about these issues in the gas market in 2013 in this parliament. So these issues were entirely predictable. The price of gas and the supply of gas and the effect of Gladstone and the export market were all predictable. Whichever government survived—whether there had been a re-election of Labor in 2013 or whether it had been a coalition government—it was incumbent on that government, that Prime Minister and that energy minister to address those things there and then because you can't make fast moves in energy markets. Nearly everything takes time.

What we have here is a pretty timid bill that's been brought into the House that is mainly regarding statistics. Statistics and information collection are particularly important, but this is a timid bill in terms of the approach that it takes. It's a timid bill by a timid government—a government that's barely getting by at the moment on these gas markets. As the previous speaker, the member for Burt, said, along with this timid legislative response we have the Prime Minister playing year 9 drama lessons with the energy executives of this country. They must be so impressed that they are being brought to Parliament House under threat of a wagging finger, being brought into a committee room and being paraded around while the Prime Minister gives this finger-wagging speech about how industry should run. The PR for the day is done. They all dust off their hands, and off everybody goes, with no real action. That's not the way governments should approach energy issues.

If you read Gareth Evans' diaries—it was quite an interesting period of government—he talks about when the North West Shelf was almost going to fall over. For want of an $80 million contract from the Western Australian government, he spent all day in private meetings with industry. He had meetings with government bureaucrats, the minister and the industry all day to try and get resolution of those matters, and he did get resolution of those matters. That's what serious governments do. They don't do public relations exercises on the hop because they've been caught out on issues they should've dealt with some time ago. They engage with industry properly, with a view to the public interest. Companies are entitled to have their interests. We as a nation are entitled to our interests, and that's one of the reasons why in 2015 the Australian Labor Party National Conference had a national interest test. That's one of the things we put in place as our response.

During the 2016 election, nearly a year after that national conference, we were criticised by the now government as being reckless and interfering. All the things they say about us now and say about the Leader of the Opposition now are the same things they said then about this important issue. Later on, they tried to adopt a policy that was not quite our policy but trending in that direction. They've been playing catch-up footy on this issue of gas supply and of gas price. It is completely ridiculous that we should not protect our domestic market, our domestic manufacturers and our domestic consumers in the face of supply issues with the export market versus the domestic market. Frankly, this issue came up some time ago in Western Australia, and it was a matter of dispute between the court and the Howard government. That was resolved by the then Western Australian government, in defiance of the Howard government, and actually shielded the domestic market of Western Australia. So it's not like we didn't have knowledge of or a precedent for what was going to go on in the gas market, and it's not like this government has anything to stand on in terms of its attacks on the Labor Party and the like.

It's very concerning that we have a government of this nature, and it's a consequence of having revolving-door prime ministers. We have had two Prime Ministers, three ministers for defence—playing musical chairs on our National Security Committee—and maybe 14 or 15 or possibly more other ministerial changes, so it is little wonder that very important things get shuffled off to the to-do list. In many ways this is reminiscent of the 1930s, particularly the post-Lyons first Menzies government period when ministers were so consumed with their own internal dynamics that they did not see what was coming.

It's interesting to talk about statistics. I have a 2013 publication by the Australian Institute of Petroleum, Maintaining supply security and reliability for liquid fuels in Australia. I remember reading this document at the time, and it's interesting, when you look back at the collection of statistics which are obviously used by institutions like this and by academics and by government and politicians, to find out what our vulnerabilities are. It talks about the traffic, and if crude oil was coming from West Africa it would have taken 28 days; from the Middle East, 18 days to Western Australia but 24 days into the east coast; from New Zealand—if we were to get any crude oil from there—it was four days; Russia, 17 days; Papua New Guinea, seven days; and, from South-East Asia, somewhere between nine and 14 days, depending on whether it was going to the west or the east coast. On petroleum products, again from the Middle East, it is some 23 days for LPG; India, 13 to 21 days; South-East Asia, six to 12 to 14 days, depending on where it's going; and South Korea 13 days and the same for Japan.

The same page of this document, page 8, describes shipping security assessments, and there is a profoundly benign assessment about the security environments at that time in the Strait of Hormuz, in the Malacca Straits and through the Indonesian archipelago, around Singapore and the like. When we look at what's going on in the world—in the South China Sea, with Russia and China, and with what's going on in the Middle East—we have this upsurge of conflict or the potential for conflict. In the Middle East we have a war that has been raging now for years; very violent wars in Syria and very violent conflicts in Yemen. We have the potential for clashes across the Middle East. In the South China Sea, the situation is volatile to say the least, we have a volatile situation in North Korea and we have countries like Russia who are quite simply waging war in many ways in all but name. There's a lot of literature around the place from Chatham House and from other notable think tanks that outlines information warfare, the open warfare in Ukraine, the seizure of Crimea and the infiltration into and destabilisation of the electoral affairs of many democracies—the UK and the Brexit vote, the US presidential elections and the like. So, we now know that in a short period of time we have come to live in a less benign and very threatening environment, and, when you take into account Australia's collapse in refining ability combined with our geographical isolation and where we have to get fuel from, that is an issue that this parliament has to think about extremely clearly.

We need statistics to do that, so good on the government for bringing in this bill—but it's a timid bill in the face of a very unstable geopolitical environment. We should think about this very carefully as a nation in case we face fuel shortages—and other nations have. The UK faced a fuel shortage as a result of a refinery strike and it had very serious ramifications at the time. We are very dependent on fuels. We need to not just have statistics but think carefully about the supply of those fuels to make sure that we have enough domestic supplies, that we have enough domestic storage and that we have enough refining capacity. It is a critical thing for our economy, a critical thing for our defence and a critical thing for our sovereignty.

While we're looking at those things, we should also look at other areas where we will need to have sovereign supplies in a worst-case scenario. It's not good enough now simply to look at benign scenarios and assume the worst-case scenario won't happen. I think the drums are beating in so many ways, and I don't think wishful thinking in these circumstances will see this nation through. We need to accept that we live in a very dangerous, volatile world. While I commend the government for bringing into this bill a statistical information requirement so we know where we stand, that simply will not be enough of a response to our domestic concerns in terms of the gas or electricity market, or for the supply for our country in a time of desperate crisis. With those words, I'll conclude.

Pat Conroy (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I want to compliment the member for Wakefield on his well-thought-out contribution. It was a tour de force, going from 1930s Australian politics to a quick survey of the global national security environment. It was very enlightening. It's my pleasure to rise and talk on the Petroleum and Other Fuels Reporting Bill. I'm pleased to join my colleagues, particularly the member for Port Adelaide, who moved a great second reading amendment that allows us to discuss what this bill really tries to go to, which is improving energy security and energy policy in this nation.

As my colleagues have pointed out, the Australian gas market is one of the least transparent markets in the country. There are very significant issues, in that nobody knows how much gas is produced, who holds it, how much the gas is sold for and where it goes. This bill establishes a mandatory reporting regime for fuel information. The government will be able to monitor energy security, facilitate compliance with international reporting and stockholding obligations, and enable the publication of fuel statistics for use by business investors, academics and government. So Labor are supporting this bill because its provisions will require gas companies, for example, to disclose gas supply information to the government, and we will no longer have to rely on voluntary disclosures. But the reporting provisions in this bill do not provide a solution to the wider gas and energy crisis that has occurred on the government's watch, and this is what I want to address in the time that I have left to speak.

We face a national energy crisis in this country, and there are two separate but related crises. The first one is around gas, and this government has been sleepwalking towards this gas crisis for the last four years. Despite all the posturing by the minister for energy and the Prime Minister in question time, it is not a sufficient excuse to blame it on the last Labor government. You might be able to cop that if the government had been in power for three weeks, but they've been in power for 4½ years. They don't act like it, as today's events show, but they've been in power for over four years and they've done nothing to solve this national gas crisis. What we have seen is four years of inaction, and suddenly they've woken up and they've got a problem, but all we have now is talk. All we have now is talk.

What we have got is talk by the Prime Minister, who has quite courageously—and I use that term in the Yes, Minister sense—promised that he will halve gas prices. Gas prices have skyrocketed to over $20 per gigajoule, and the Prime Minister has promised to halve them, to bring them back down to $10 per gigajoule. I wish him every success in that endeavour. My manufacturers and my households will be very pleased if he achieves this. Sadly, he doesn't have any real, concrete policies that will achieve this end. What we have seen is four years of failure and a promise to halve the price, but in the meantime we've got gas prices at record levels. And who's suffering because of this? It's my manufacturers. I met with the Australian Industry Group in the Hunter Valley a few weeks ago, and they were telling me some very shocking statistics about what their members are facing. Manufacturers were saying that they were used to writing gas contracts in the range of $4 to $5 a gigajoule. They'd had a conversation with a supplier this time last year who was saying, 'We can get you those contracts for $8 to $9 a gigajoule.' Those manufacturers chose to see whether the market would stabilise in the year post that conversation. Sadly, the market hasn't stabilised—in fact, it's gone in the wrong direction—and now those same contracts have been offered to them for prices of between $15 and $20 a gigajoule. This is quite outrageous.

Part of the problem, besides the cost impact on manufacturers, is that this is well above export parity pricing. It's fair to say that, with a massive growth in exports that'll come on with the LNG trains at Gladstone, you would expect the Australian price to equalise with the export parity price. But it's far exceeding that now. We've got scarcity pricing, and that's all down to this government's failure to act in the last four years. It's not as if it hasn't had alternatives being floated around. I'm proud to say that I signed a letter in support of a campaign by the Australian Workers' Union in late 2013 calling for a gas reservation policy—a policy that's worked quite well in Western Australia. It was a policy put in place by a conservative government and continued by successive Labor and conservative governments, and it's a policy that hasn't dented their exports of gas. Gas exports are going gangbusters in Western Australia, but they've also got an adequate supply of gas for their domestic manufacturing and household consumption.

I was proud to sign this letter, and I'm proud to be part of a campaign that led to Labor embracing out of the 2015 national conference a national interest test which we took to the last election—a policy that was mocked and derided by the Minister for the Environment and Energy, who now must be sorely tempted to embrace that policy. That policy very clearly states that any new development of gas fields for export must increase domestic supply at the same time. It's all fair to increase gas exports by exploiting new resources, but only if you can show how this exploitation of new gas will actually increase supply domestically. That's very important if we're to ensure adequate supply for the domestic industry and, secondly, suppress the prices that are currently facing the industry.

These price rises don't just flow to manufacturers using gas with a feedstock or onsite power production. They are one of the two key drivers for the very massive increase in electricity prices we're seeing around the country right now. In my home state of New South Wales, household consumers are facing 20 per cent price rises as of 1 July, and it's down to two reasons. The first is the massive increase in gas prices on this government's watch, and the second is the massive policy uncertainty in energy policy that this government has also perpetuated in its four years of mismanagement.

On gas, gas-fired power is the marginal price setter in the market. Gas-fired power through combined cycle gas turbines and open cycle gas turbines is the marginal producer in the Australian electricity market. It sets the price by being the last producer to enter the market. So, if gas prices go up, a direct result is that electricity prices will go up in the wholesale market. We've seen that over the last three or four years. We've also seen massive policy uncertainty, meaning that we've had a lot of retirement of very old power generation in this country. The coal-fired power fleets in New South Wales and Victoria are very old, Mr Deputy Speaker Buchholz. Your home state of Queensland is quite lucky: you've got comparatively young coal-fired power stations. But, in Victoria, the average age of the coal-powered fleet is 44 years old, and in New South Wales it's 35 years old. So it's quite natural that these power stations are reaching the end of their natural life. They are being retired because the companies that own them don't see a commercial justification to undertake the very significant capital investment required. In the case of Hazelwood, they were looking at a $400 million build just to bring it up to current occupational health and safety standards. These companies are not making these investments. That capacity is coming out of the market. Because of the policy uncertainty around energy policy in this country, there is not sufficient investment coming in.

We have very tight capacity in the National Electricity Market and that's leading to price rises. The energy sector itself is saying the policy uncertainty on energy policy, generated by this government, is driving prices up. The Australian Energy Council is the peak body for all generators in the country. This isn't a front for the Labor Party. These aren't mad greenies or a forum for renewable energy companies. This is made up of serious players, such as AGL, EnergyAustralia and Origin. They are saying that the policy uncertainty is equivalent to a $50 carbon tax. That is how much it is adding to the cost of wholesale electricity. That is now flowing through to households. The cost of inaction by this government is now flowing through to household bills.

For 15 years this country has seen hypocrisy and economic illiteracy by those on the other side. We had Prime Minister Howard sticking his head in the sand, when he was in power, on the need to drive new investment in renewable energy. Then we saw the overthrow of the member for Wentworth, when he was opposition leader, for daring to support a carbon pollution reduction scheme. That would have provided policy certainty to the energy industry, which would have allowed them to make investments for 40 years. Since then, we have seen the member for Warringah embrace Direct Action, a fig leaf for his opposition to taking action on climate change—fiscal recklessness on a grand scale is what the member for Wentworth called it. That was his sole energy policy—Direct Action. It was a policy that had very little relevance, if any, to new generation investment in this country.

Since then, we have seen an assault on the renewable energy target, an assault so incompetently implemented that the government's own Warburton review shows it actually reduces power prices in this country. We had to reach a compromise: around a 23½ per cent renewable energy target. We then saw the commissioning of the Finkel review, a well-considered review that had some good recommendations in it. Its draft preliminary findings recommended an emissions intensity scheme. What happened then? The energy minister merely mentioned he was open to an emissions intensity scheme and the world ended. Within 12 hours he was bullied and cowed back into his box by the member for Warringah, by the member for Hughes—who is really the minister for energy in this government—and by a coalition of conservative reactionaries who threatened to revolt and roll the Prime Minister. Within 12 hours this government had pulled an emissions intensity scheme off the table. Dr Finkel, having seen the writing on the wall, said, 'I've got to provide a report that will provide concrete recommendations that have a snowball's chance of getting through parliament.' So he moved to a slightly less effective policy around a clean energy target. He made an assumption that the coalition hadn't ruled it out yet, so there might be a vague chance of having a debate on it. He recommended a clean energy target as the centrepiece for his 50 recommendations.

The Labor Party have supported that. The Labor Party have said an emissions intensity scheme remains our preferred policy, a policy endorsed by almost every stakeholder in the energy industry. But in the interests of solving this energy crisis, a crisis that can only be solved by a bipartisan settlement on energy policy, we're prepared to negotiate on a clean energy target. That's our current position. We're waiting to see what the government does. We're waiting for the Minister for the Environment and Energy and the Prime Minister to get their writing instructions from the members for Hughes and Warringah on what they can agree to. This is incredibly important, because if we don't reach a bipartisan settlement we will not get the billions of dollars of investment we need into the energy industry to solve this crisis. The Finkel report's modelling found that, if a clean energy target is adopted, we will see electricity prices at $175 per annum lower than they would otherwise be. So the inaction on the government's side is a recipe for higher electricity prices.

Returning to the intent of this bill, I think the measuring of petroleum and other fuels is really important, particularly in the gas industry, if we're to solve the gas crisis. We must solve the gas crisis and we must solve the investment strike in the energy sector if we're to get new investment flowing, if we're to suppress electricity prices so that my manufacturers have a chance of succeeding in the next century, exporting and providing the jobs that this country needs and, as importantly, so that consumers and households don't pay as much as they are currently paying for electricity. I represent the suburb of Windale in the Lake Macquarie region. This suburb is the poorest region, the poorest suburb, in the entire state of New South Wales. They're the ones who are copping it in the neck because of this government's failure on energy policy. They're the ones who are suffering. They're the ones who are making hard decisions about whether they pay the electricity bill or feed their kids. I don't say words like that lightly. They're the hard decisions that these households are making right now, because this government is incompetent, this government is divided and this government is putting its own narrow, day-to-day survival ahead of the interests of the Australian people. That's why history will condemn them and that's why history will say that they should have bitten the bullet and come up with a decent energy policy.

Mike Kelly (Eden-Monaro, Australian Labor Party) Share this | Link to this | Hansard source

I'm very grateful for this opportunity to speak on the Petroleum and Other Fuels Reporting Bill 2017 because it brings together a lot of issues that I have been concerned about for many years, going back to my time in Defence. It touches on a nexus of not only energy security but energy security as it relates to national security, as well as, obviously, the challenges of renewable energy and the health dimensions of that. I am grateful for the scene that has been set for me by the comments of the member of Wakefield on the details of the trade issues and the trade lane and sea lane issues that are associated with national security and, of course, the reference to the policy framework aspect of this, which is related.

This bill talks about the issue of meeting our obligations under article 2 of the Agreement on an International Energy Program. The requirement there is that, as a member of the International Energy Agency, Australia is obliged to have its holding of oil stocks equivalent to 90 days of the previous year's average daily net oil imports. We haven't been in compliance with that requirement for a long time, and it is deeply concerning in relation to our national security issues. We have seen the instability that can occur in our region in relation to those sea lanes. We have seen the instability, as referred to in the Middle East, and what impact restraint, constraint or interruption of supplies can have on the international market, as well as the exposure that that creates for us in our economy. Also, we have the situation, as has been mentioned, of the collapse of our refining capability and our dependence on almost all of our oil coming through those sea lanes these days, and this includes some of the special oils and lubricants that are related to our Australian Defence Force's capabilities, particularly things like the F-44 special fuel required by the Australian Navy, which has come under threat in recent years as well. What this points to is the need for us to seriously examine where we sit in the generation capacity of our own fuel needs domestically.

I have also in my previous life been a member of a strategy group with the carriage of, and responsibility for, the Middle East desk, where I did study, for example, the passage of the oil wealth from particularly wealthy individuals in the Middle East into our region to fund things like radical madrasahs and terrorist groups. One of the great objectives of getting ourselves off oil, getting the world off oil, is to eliminate that source of threat to world security. This has been highlighted in the great work done by the NRMA and, in particular, Air Force Air Vice Marshal John Blackburn. They have probably been in briefings with members of the government, as they have been with the opposition over the last few years. They have highlighted all the threats and all the vulnerabilities that we have in relation to this problem of our own fuel generation. We have seen the bit being taken between the teeth by the US, for example. The Pentagon have made great strides in moving towards biofuel. They have talked in terms of the great green fleet and their biofuel concept there.

When I was the Minister for Defence Materiel I was very concerned to ensure that we weren't being left behind in that space. There were great opportunities for Australian companies in helping us fill that hole. Of course, going back to Labor's Clean Energy Future Package policy framework, that was also enabling the possibility of some technologies and companies to work in this space. As Minister for Defence Materiel I was particularly interested in one company called Algae.Tec, which was operating a facility down in Nowra. I took a number of logistics personnel down to meet them and look at this technology. I had first seen this in action in Israel, based on a pond technology taking algae and turning it into a biodiesel fuel. Algae.Tec had made this into a much more efficient process using shipping containers. The way it works is that these containers harvest carbon emissions. They work best when you strap them to coal-fired power stations. You can suck effectively 100 per cent of the carbon dioxide emissions from the coal-fired power station, including the large-scale types of power stations that we have operating, for example, in New South Wales. It greatly accelerates the growth of the algae. This product then created a biodiesel fuel that was a straight drop-in fuel that could have been put into diesel engines without any blending or conversion required. This offered great potential. At the time Algae.Tec, with Labor's Clean Energy Future Package policy framework in place, were able to do a deal with Mac Gen for beginning a pilot project with the Bayswater power station to prove this technology.

Unfortunately, of course, all of that has come to naught because of the dismantling of the Clean Energy Future Package, and also in the context of low fuel prices. But that is the sort of technology that we need to be exploring. We should be looking at the example of our like nations around the world, who are really taking this bit between the teeth on moving on from these outmoded fossil fuels, in the context also of our climate change challenge. In Australia the burning of petroleum products for transport is responsible for about 14 to 17 per cent of our total greenhouse gas emissions. More than that, it also creates a massive health liability. I have seen reports in Australia that fossil fuels possibly add about $6 billion worth of cost to our health bills, and also potentially 3,000 deaths a year are consequent of fossil fuel pollution.

Obviously we need to move off this. In recent times we've seen that the Swedish government established a commission on oil independence back in 2005 to achieve the goal of an oil-free society and substantially achieve that goal by 2020. They're well on the way to achieving that. Since then, of course, we've also had the even more conclusive objective set by France that will outlaw the sale of all petrol and diesel vehicles by 2040 in an announcement that was made by their environment minister, Nicolas Hulot, just recently. They will also ban any new project that uses petrol, gas or coal, as well as shale oil, by that date.

The issue there, of course, was that in Sweden they had concerns about dependence on oil from Russia, so they had similar security issues, but this health issue was also extremely significant. The French, in the meantime, are offering financial incentives to scrap their polluting vehicles for clean alternatives, and the government will offer each French person a bonus to replace their diesel car dating before 1997, or petrol car from before 2001, and buy a new or second-hand vehicle. We also saw at the same time the announcement by Volvo that they planned to build only electric and hybrid vehicles starting in 2019. This is something that Labor have obviously been pointing to in the brilliant climate change action plan that the shadow minister at the table here had the main carriage of, and in relation to its full court press on our emissions battle by factoring emissions from vehicles into that.

It's not only France that's taken this bit in their mouths; it's also Germany, who want to do away with 100 per cent of their combustion powered vehicles by 2030, and India has committed to do the same by that same date. The Netherlands and Norway also intend to achieve the same result by 2025. Adding to that move towards this situation, we've also seen the UK commit to banning all new petrol and diesel cars and vans from 2040 onwards, amid fears that rising levels of nitrogen oxide pose a major risk to public health. Of course, in all of these countries, in their major cities, this is becoming almost intolerable. I was in New Delhi in January this year, and if you have experienced the pollution in New Delhi, you can appreciate what an emergency situation many of these major cities are in, just from a public health point of view. The UK felt this was extremely necessary to avoid the impact of poor air quality on people's health. The ministers believed it posed the largest environmental risk to public health in the UK, costing up to 2.7 billion pounds in lost productivity in one recent year. They also stated that poor air quality was the biggest environmental risk in terms of casualties, and their estimate in that respect was that the high level of air pollution could be responsible for 40,000 premature deaths a year in the UK. In fact, the Mayor of London, Sadiq Khan, was obviously in the middle of this problem and called for tougher measures to tackle air pollution, which kills 9,000 people a year in the capital, they believe.

What we're seeing here is a perfect storm. It brings together our national security issues, our health issues and our climate change and renewable energy issues. What we need to do is look at putting back in place the sort of policy framework that existed under the Clean Energy Future package and that is detailed in the Climate Change Action Plan that we currently have on the table, and work with the government to really tackle this issue as a matter of urgency.

It really frustrates me to hear members on the other side say that renewable energy is a threat to health and that renewable energy will kill people when we see statistics like this—statistics that have been assessed in our own environment—and we understand what the public-health risk is. As a result of that, an extra incentive exists to move to clean and renewable energy. If we're particularly worried about the effect on people of the cost of electricity, all of those matters were detailed very clearly in the Finkel review, of which I read all 212 pages. It's very clear that some members of the government haven't read any of it, because it really bells the cat on the policy uncertainty that's been created by not determining the actual framework relating to emissions, and it urgently suggests that the government move on and make a decision on that quickly.

I've referred to the fact that the Finkel review contains a time line for its recommendations. Some recommendations are meant to be fulfilled within 12 months or 18 months et cetera, but at the zero-month mark—which, in effect, are decisions that need to be made immediately—first and foremost, is the Clean Energy Target decision. It's not a question of when that's phased in; it's a question of making a policy decision so the renewable energy investment flows. Without that framework, we won't see companies like Algae.Tec being able to push forward with those sorts of operations. That operation will help build our own domestic capacity in a biofuel that will emit only about 26 per cent of the emissions of normal fuel. And we need those sorts of biofuels, because electric vehicles can't be the answer to, say, fishing fleets, necessarily, or large plant and long haulers and the like, at least at this stage. There will be a niche that biofuels will need to fill in that space, and we won't get that without creating a policy framework that stimulates it. When a local company like Algae.Tec comes up with solutions, that should also provide a gentler glide path for the coal industry, because, if it can completely absorb all the emissions of a coal-fired power plant, it gives us a longer period of time to glide out of those plants. And, at the same time, they are able to have a by-product for the benefit of their own business.

We know that Finkel has also locked in the issue of requiring warning periods for the closure of those facilities, to give us time to plan. That could be achieved more effectively if the emissions from those coal-fired power plants could be offset or eliminated entirely. From the point of view of dealing with not only a significant contribution to our carbon emissions—as I mentioned, 14 to 17 per cent—but the massive health issues that are posed by the fossil fuel industry, the issues and needs of our own Defence Force, the vulnerabilities of trade routes in the region and the instability of the politics and the confrontations across the Middle East and in our own region, it is in our national interest to get on and do this, to sort it out quickly. I urge the government to sit down with us and come to a bipartisan agreement that will enable that to happen.

Jane Prentice (Ryan, Liberal Party, Assistant Minister for Social Services and Disability Services) Share this | Link to this | Hansard source

I thank all members for their contribution to the debate on the Petroleum and Other Fuels Reporting Bill 2017 and the Petroleum and Other Fuels Reporting (Consequential Amendments and Transitional Provisions) Bill 2017.

This legislative package will improve the accuracy, reliability and timeliness of Australia's fuel statistics. This will help safeguard our energy security, improve the operation of the fuel market and help ensure Australia meets its international obligations. The Australian fuel market is increasingly competitive and diverse, with new technologies and suppliers entering the market. Providing accurate, reliable and timely statistics ensures businesses can direct investment efficiently to meet the changing needs of consumers. Quality statistics ensure that the government can monitor energy security effectively and develop policies accordingly. Accurate statistics are also important as the government implements its plan to return to compliance with Australia's oil stockholding obligation under the International Energy Program Treaty. By capturing all International Energy Agency accountable stock, the current compliance gap and any potential cost associated with returning to full compliance can be minimised. This legislative package provides for data sharing between government agencies to minimise the reporting burden on industry. The legislative package also provides flexibility in the reporting requirements to enable reduced and simplified requirements to be set where they are appropriate.

The Turnbull government is committed to safeguarding our energy security, meeting our international obligations and ensuring the effective operation of the market to deliver reliable and low-cost fuel to consumers. This bill will support the continuing achievement of all three objectives. As recommended by the Senate Standing Committee for the Scrutiny of Bills, following tabling of the bills in March, the government has developed a short addendum to the principal bill's explanatory memorandum. The addendum provides additional information regarding the intent behind the breadth of delegation available to the departmental secretary in terms of persons who may be authorised to undertake compliance-monitoring functions. I table this addendum for the information of members. I commend these bills to the House.

Tony Smith (Speaker) Share this | Link to this | Hansard source

Order! The original question was that this bill be now read a second time. To this, the honourable member for Port Adelaide has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The immediate question is that the amendment be agreed to.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The question now is that this bill be read a second time.

Question agreed to.

Bill read a second time.