Bob McMullan (Fraser, Australian Labor Party, Shadow Minister for Federal/State Relations) Share this | Hansard source

I rise on behalf of the opposition to indicate our support for the passage of the Liquid Fuel Emergency Amendment Bill 2007. The purpose of the bill is to amend the Liquid Fuel Emergency Act 1984, an act introduced by the Hawke Labor government to provide the Commonwealth with the necessary authority to prepare for and handle a liquid fuel supply emergency. When introducing the bill in 1983, the then Minister for Science and Technology, Barry Jones, said:

The fundamental objectives of a national response to a major fuel shortage should be to minimise the total impact on the community—in terms of maintaining essential services and minimising economic dislocation—and to ensure that available supplies are distributed as equitably as possible.

The petroleum industry obviously holds commercial levels of petroleum stocks, reflecting their commercial decisions and judgements about the amount of stock required to maintain the viability of their commercial operations. They have a clear incentive to operate with the minimum levels of stocks possible because it is a cost and retention of stocks unnecessarily is an inefficiency. They have to strike a commercial balance; that is their task.

The Liquid Fuel Emergency Act and its guidelines allow ministers to direct industry to establish and maintain strategic levels of petroleum reserves. The act provides the government with a number of powers—for example, contingency planning powers to facilitate management of liquid fuels in an emergency; a power for the Governor-General to declare a liquid fuel emergency; and emergency powers to regulate supplies, to regulate maintenance of stock levels and their transfer, to direct the sale of liquid fuels and to regulate refinery operations. It also includes a power for a mechanism through which demand reduction and supply measures can be implemented. As you can see, those words are neutral, but when you think about what they mean they are a sweeping set of powers and would not be lightly applied. But I think every Australian would think, in the sort of circumstance which might lead a government to recommend declaring a liquid fuel emergency and the Governor-General to act upon the recommendation, that we were in a circumstance where sweeping powers were required. That is the starting point.

This bill seeks a number of amendments to the act, the majority of which were identified in the 2004 ACIL Tasman review. That review made 31 recommendations intended to encourage parties in the liquid fuel market to carry out their own contingency planning. The Ministerial Council on Energy accepted the recommended changes in December 2005—roughly 18 months ago—and they have also been accepted by the four major petroleum producers through their organisation, the Australian Institute of Petroleum. The major changes include removing the concept of ‘high-priority’ users to encourage further contingency planning; narrowing the concept of ‘essential’ to include users ‘essential to the health, safety and welfare of the community’; a change made necessary by the introduction of self-government in 1984 in my home territory here in the ACT, which is the inclusion of a separate reference to the ACT in the act in its own right—it clearly could not have occurred in 1984; extending the delegation capacities under the act; amending the compensation provisions, removing the right to compensation of persons or corporations subject to direction in a liquid fuel emergency; extending the immunity to breaches caused by directions issued prior to a national liquid fuel emergency; and exemption from prosecution for a breach of part IV of the Trade Practices Act where conduct during a period of national liquid fuel emergency was required by direction. It is obvious why that is required. Many things that would need to be done under such a direction would be collusion if they operated in the normal marketplace. But, of course, a company operating under an order such as this could not possibly be seen to be in breach of the Trade Practices Act; they would be acting in the national interest and doing so only because they were required to by a direction. Another major change is the provision regarding the operation of the Legislative Instruments Act 2003 to allow the government to respond quickly to changing circumstances and changes to the enforcement provisions of the act.

As I said in opening, the Labor Party opposition supports the passage of this amendment bill, and I would like to take this opportunity to make some brief remarks with regard to Australian production of liquid fuels. The Australian Labor Party acknowledges the significant contribution that the upstream oil and gas industry makes to our economy. Currently, Australia’s known reserves of oil to production are limited, while exploration costs are high. It may not be well known to many Australians, but unless we find new oilfields soon domestic oil production could represent less than 20 per cent of our consumption by 2015. That is not far away. When you think about the lead times from exploration to development to production to distribution, we do not have much time to start to turn around that 2015 target and to seek to do something about that 20 per cent. We are looking at the possibility of a profound shift in the source of our liquid fuels, which has major implications for our energy security in the future.

When you think about that, Mr Deputy Speaker, compared to many countries we have been quite complacent about the issues of adequacy and security of fuel supplies. There are a number of reasons for that—and I am not making a partisan point that it is this government the previous government, or the opposition: it is Australians across the board—and one reason is that in the crucial area of energy generation we are so well endowed with coal and gas that we take for granted that our capacity to supply ourselves is going to go on forever. More recently, in the period since the rash of oil discoveries and development in Bass Strait and off the North West Shelf, with such a lot of hydrocarbons we have found ourselves much more self-sufficient than many. If you think about the part that energy security and liquid fuel security play in the diplomacy of a country like Japan and if you contrast that with the Australian situation, you can see that it might not be unfair to call it complacency. We have had a degree of legitimate comfort because of the strength of our position and the capacity of our domestic supply, but that is about to change. If we are coming to the point where less than 20 per cent of our consumption of liquid fuels will be met from domestic oil production within a mere eight years, then we need to focus much more attention on this issue. It will require us to look at alternative sources of our liquid fuels and to give serious consideration to our energy security in the future.

Our shadow minister Senator Chris Evans has been drawing the attention of those of us in the opposition and the public to the call by APPEA, the Australian Petroleum Production and Exploration Association, for more support for oil exploration in Australia. You can understand that people might say, ‘They would say that, wouldn’t they’? They are the Petroleum Production and Exploration Association. But the fact that they are, by their own charter, advocating the interests of people engaged in that area of work does not make them wrong. It does not make them automatically right, but it certainly does not mean that their argument should be dismissed. When you think about it in the context of the decline in our domestic oil production and the increased risk to our energy security, I suspect that they are quite correct. In fact, on the advice provided to me by Senator Evans, the issue of support for exploration is probably a broader point that goes beyond oil resource exploration—but that takes us too far away from the subject matter of our bill for me to go there. However, that broader question of support for resource exploration is something that, once again, Australians take for granted.

I grew up in Western Australia, where there has always been a very big focus on the resource industries and exploration across a whole range of technologies, from the most basic individual prospector to the most highly sophisticated geophysical analysis that you can get. This is something to which we need to give more attention. However, while we must continue to look for oil, our long-term energy security demands that we look to develop a secure supply of alternative liquid fuels over the medium to long term. Australia’s energy needs are best served if we have a diversity of sources of liquid transport fuels; thus the Labor Party has made it clear that we will support the development of gas to liquids, coal to liquids and biofuels to secure a diversity of supply.

In addition to the energy security benefits of this approach, the development of alternative fuel sources could also yield benefits in terms of employment and technological know-how and lead to new export opportunities for Australia. But of course it also feeds directly into this question of the circumstances in which Australia faces a liquid fuel emergency and what might be our adequate and appropriate response to that. So, in concluding my remarks on this, I want to reiterate that the Labor opposition supports this bill which seeks to improve the efficiency of Commonwealth liquid fuel emergency response arrangements.

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