Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Hansard source

I rise to speak tonight on the Excise Tariff Amendment (Condensate) Bill 2011 and the Excise Legislation Amendment (Condensate) Bill 2011. The Excise Tariff Amendment (Condensate) Bill 2011 amends the Excise Tariff Act 1921 to clarify and confirm the area encompassed by the 'rank and trend', as it is known, condensate production area located within the North West Shelf project area. The Excise Legislation Amendment (Condensate) Bill 2011 amends the Petroleum Excise (Prices) Act 1987 to clarify that failure to provide petroleum producers with written notification setting out the terms of a volume-weighted average of realised prices determination does not affect the making of that determination, the measure of firms, or the current application of the crude oil excise regime as it applies to condensate production. And I make it clear, Mr Deputy Speaker Thomson, at the outset, that the coalition will be supporting these bills. However in doing so, the coalition will move an amendment to the motion of the second reading that condemns this Labor government for its assault on the Australian energy and resources sector and for its comprehensive mismanagement of the investment framework for oil and gas exploration and the resources sector in general.

When it comes to identifying which areas of policy this government has so fundamentally mismanaged, there is some very serious competition amongst its incompetence. Along with the well-publicised failures in border protection, there is the Prime Minister's carbon tax backflip which has, in itself, made its own assault on the resources industry by making it, and it alone, pay a carbon price on the fuel it uses. There is even further competition though on the bungling of the school halls program, the pink batts program and, most recently, the mishandling of the issues involved with live exports which has decimated Northern Australia. It is not just the cattlemen and women involved who are affected, but also the truck drivers, the Aboriginal stockmen, and the economy of Northern Australia which has been built around this incredibly important export trade. So incompetent is this government that they could not even get that right. The Gillard government has inflicted some extraordinarily counterproductive and destructive policies on a sector that has contributed so significantly to our economy and should be given the opportunity to continue to do so.

The oil and gas industry over time has made an enormous contribution to Australia's economy. But just as importantly, it has provided the energy security that other countries would literally kill for. We are one of the few countries in the OECD—the only country that springs to mind—that is in fact an energy exporter in its own right. That is, we have a surplus of energy which we export. Part of that export is condensate from the North West Shelf, originally exempted as part of the incentives that were provided to this very important industry to get the project off the ground. And whilst we see those incentives ripped away by this government, we also see a very significant change in attitude within the oil and gas sector, and potentially the investors in that industry in particular.

As a result of the government's deliberate actions, Australia has been forced to suffer an erosion of our previously gilt-edged sovereign risk profile when it comes to investment in the energy and resources sector in this country. There can be no excuses for this government-led assault based on changing international circumstances or economic difficulties given that one of the very first acts of the Labor government after it was elected in November 2007 was to slug a massive tax increase on the oil and gas sector, in particular the North West Shelf, by removing the exemption that had applied to condensate. It is fair to say that without that exemption and without some very significant courage by the players at the time the exemption was introduced, including of course Sir Charles Court, the Premier of Western Australia, this condensate would be still lying under the seabed thousands of metres down.

Coalition governments, Liberal governments in particular, go out of their way to provide incentives to get these resources developed. The moment that happens we have a government currently in power, the Labor government, that then does everything it can not only to rip away the money that these companies have put at risk and have then earned quite justly but also to destroy our international sovereign risk profile. We on this side of the House, and of course the wider community, have also been aware of the Labor Party's complete and absolute inability to manage money. We have seen the field evidence from successive Labor governments that apply the big-spending, big-taxing philosophy, and this legislation is just more proof of that.

But even though I am conditioned to this big-taxing, big-spending government, I was shocked when the former Rudd government so brazenly slapped a $2.5 billion excise on condensate. This signalled a very clear intention that this was to be a government that would view the resource sector as nothing more than a cash cow. I am sorry to say that the government has lived up to, or should I say lived down to, that expectation it has created. While the oil and gas industry, in particular the offshore sector, has spent much of history well out of the public spotlight, it is nonetheless one of the most substantial sectors in our economy. During my time as minister responsible for this sector, the coalition government took great care to encourage investment and to facilitate an environment that would be conducive to exploration and production where appropriate. I travelled the world, literally, selling Australia's wares, telling of the opportunities that lay in Australia, telling of the stability of the government regimes, and providing exploration incentives to try to get companies to invest here. And what happens? We get a government now desperate for money. The government's $2.5 billion tax slug has sent a shiver down the spines of major investors in the oil and gas sector because it has shown that this is a government that is prepared to be cavalier with investment, with issues of sovereign risk and with Australia's very dearly held reputation as a safe investment destination.

This bill before the House today is one of the consequences of the government's multibillion-dollar cash grab and an attempt to clean up some of the confusion it has created from that tax grab in the zone covered by that taxation. Unfortunately, but ever responsibly, the coalition wants to end that confusion and that is why we are supporting these amendments. As I mentioned, we will not oppose these bills because we take the responsible attitude that investors in the oil and gas sector deserve some certainty in this very uncertain climate, even in a situation where the government seems to go out of its way to create uncertainty. As I say, it is our responsibility to bring what stability we can as a coalition and as an opposition to this very uncertain playing field.

No matter how the government may try to spin it, the subsequent projects in this field are in spite of what the government is doing, in spite of the hurdles it is putting in place and certainly not because the government has put in place anything like appropriate policy settings. It seems to wake up daily wondering how it can tax this whole resources sector yet again and, even more, how it can tear down any incentive that we put in place previously to compete against those investment destinations around the world that are out there every day trying to tear the investment dollar away from Australia.

I fear a sense of complacency from this government, which assumes that because Australia has had past successes in oil and gas exploration it will continue to be a productive sector regardless of how badly the government handles the regulatory settings or how badly it handles the taxation of that industry. As I mentioned, it was one of the very first actions of the Labor government to reach further into the pockets of the successful enterprises, to ramp up the taxes after all the risks had been taken, after the resource companies and investors—many of them Australian mums and dads—had put their capital at risk in a project which, I can assure you, was exceptionally borderline in its instigation in the mid-to-late eighties.

We have seen the government ramp up the taxes to this sector to provide a convenient cover for the profligate spending, which has come from those who sit opposite. This huge tax burden was slapped on the industry with no warning and no consultation. Even the Minister for Resources and Energy found out after the event. What sort of government would do this to such an important sector? It is a government that knows no bounds when it comes to applying taxes and shattering the investment security that companies and investors from overseas look for.

It is little comfort that we now recognise in retrospect that this action is the standard operation procedure for this Labor government, particularly when it comes to decisions that affect the energy and resources sector. As we know from the resources super profits tax debacle, which not only affected onshore exploration and mining but also offshore exploration and development, and from the ongoing mess that surrounds the new version of the minerals resource rent tax and the toxic carbon tax, the Rudd and Gillard government simply do not understand or do not care about the dynamics in the resources sector.

Modelling done on the impact of the carbon price on industry estimates that a carbon price of $25 a tonne would close 16 coal mines and cost 23,000 jobs in that industry alone, many of them in the electorate or adjoining the electorate of my colleague here, the member for Paterson. I can assure this House that the member for Paterson—and I had the pleasure of being up there with him the other day—is tireless in his efforts to protect jobs in the Hunter Valley. And those who sit opposite—one them is here; I will be interested if she stands up and speaks on this bill and explains why she is happy to tax the industries in her electorate—sit silent while jobs in their electorates get wasted.

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