Tim Hammond (Perth, Australian Labor Party) Share this | Hansard source

I join the chorus of bipartisanship by rising to speak to the Civil Nuclear Transfers to India Bill 2016 and I thank all honourable members before me for their contributions to this debate. Five years ago, almost to the day, my predecessor, Stephen Smith, the former federal member for Perth, answered a question during question time in this place reflecting on the nature of Australia's relationship with the US. In the process of talking about the shift of the geostrategic centre of gravity to our region, he not only reflected on the rise of China but also emphasised the often unacknowledged rise of India. India is the world's second most populous country, its most populous democracy and is by now the third largest economy by purchasing power. A country of over one billion people has a lot of challenges, of which providing low-carbon energy is one.

The following year, Julia Gillard made a prime ministerial bilateral visit to India, as we know, and high up on the agenda was Australia's transfer of nuclear fuels to India to help them address their energy challenges. It is that context which frames this bill. Labor's platform forms the basis of our support for this bill. We recognise that India is an important strategic partner for Australia. We appreciate the great benefits to both nations that can result from strategic cooperation and we acknowledge the importance of India's application of strong safeguards regarding the safety of the trade in civil nuclear fuels consistent with international guidelines of nuclear supply.

Australia is subject to a number of international agreements regarding nuclear transfers, including the South Pacific Nuclear Free Zone Treaty and the Treaty on the Non-Proliferation of Nuclear Weapons. We are a member of the Nuclear Suppliers Group and have been a member of the board of governors of the International Atomic Energy Agency. These memberships and treaties bring with them legal obligations and make miners in our country subject to strict compliance regimes around the safety and security of nuclear fuels. In that context, this bill clarifies that decisions approving civil nuclear transfers to India are taken not to be inconsistent with Australia's international obligations around nuclear safeguards if particular conditions are met. The bill will provide legal certainty to resource companies, a matter which I will explore further in a few moments in relation to the importance of a stable and certain mining sector.

In relation to safeguards, what are the safeguards that enable Australian uranium to be exported to India? There are many, but the key principles—at least the way I see them—are as follows. Firstly, the key elements of these agreements include India's agreement to separate its civil and military nuclear programs and facilities. This is as self-explanatory as it is sensible. Secondly, India has agreed that its civil nuclear facilities will be subject to external safeguards and IAEA inspections. Thirdly, Australia and India have agreed that the uranium exported from our country will only be used for peaceful purposes consistent with the objectives of non-proliferation of nuclear weapons or for any other military purpose. These safeguards are upheld by the Nuclear Suppliers Group, NSG, and that framework, as well as the International Atomic Energy Agency, the IAEA, framework, which I have previously referred to, and the Australia-India agreement on civil nuclear cooperation, with particular reference to article 7 of that agreement.

In relation to the Australia uranium export context, Australia's uranium has been mined since 1954, and today we have three mines currently in operation. Australia's known uranium resources are the world's largest—almost one-third of the global total. In 2015-16, Australia was the world's third-ranking producer behind Kazakhstan and Canada. As we know, all production is exported.

While I acknowledge that in my home state of Western Australia the issue of uranium has at times been vexed, I am pleased to note that, at a national level, the Labor Party has taken a cautious but positive approach to uranium mining and export under very strict regulation. This is largely through the work of predecessors Martin Ferguson, who approved the Four Mile uranium mine in 2009, and the subsequent efforts of Gary Gray, the former member for Brand, during his time as Labor's resource spokesperson. Indeed, much credit must and should also be given to former Prime Minister Gillard, who overturned the ban on the sale of uranium to India and paved the way for the negotiations that have led us to this point in time and subsequently to this bill.

I would like at this point to return to the legal certainty and stability that this bill will create for the resources sector here in Australia. This bill will provide that certainty and, as a result, the strong expectation and indeed the assumed reality are that it will bring government revenue and, most importantly, it will bring jobs. We can contrast that with what is currently being discussed in the context of, again, my home state of Western Australia and what the Western Australian leader of the National Party, Mr Brendon Grylls, is doing at the moment in relation to his proposal on increasing royalty rates on the iron ore prices for two of the large mining companies in my home state—the effect of which is almost certainly going to undermine investment certainty in our resources sector.

I would just like to spend a few minutes on this issue and the importance of stability and certainty. As many in this chamber will be aware, what is being proposed by Brendon Grylls is a $5 a tonne iron ore mining tax that would, at first instance, apply to BHP Billiton and Rio Tinto, which is, according to Mr Grylls, expected to generate about $3 billion per year. Unsurprisingly, it has been condemned and criticised roundly by those two companies, Rio and BHP, who would be the first companies that would have to pay. Both would have to pay, approximately, an additional $1.5 billion a year. Both have said it will hit jobs and investment in Western Australia. However, leaving aside what is obviously the self-interest of those companies in relation to criticising that bill, if one steps back and takes an independent view as to the efficacy of this proposal, one will soon arrive at the same conclusion as BHP and Rio—and there are a few reasons for that. Firstly, the problem with the design of this tax is that it bears no relation back point to profitability. Royalties, and particularly the significant increases like the royalties that Grylls is proposing, become effectively a tax on production; not a tax on profits. What that means is that the fortunes of the companies to which the increase in tax applies is entirely at the behest and the mercy of the market—sometimes which is entirely out of their control—which then relates back to being a threatening prospect in relation to jobs. That is because, depending upon the buoyancy of the price per tonne of iron ore, the new royalty being proposed by Grylls could mean the difference in new projects not even going ahead, when they could actually be developed quite profitably under the current market conditions. This, of course, will destroy job creation and economic activity. For a state like Western Australia, where unemployment is running well above the national average, this is very much the last thing that we need.

Secondly, the problem with this tax is that the arbitrary nature of how it is being applied means that there is absolutely no comfort whatsoever for those other commodities that are the subject of state agreements. That includes other iron ore companies. It includes other commodity companies. But, if one also then extends the logic of Mr Grylls's proposal, those companies and producers that sit outside the realm of the state agreements should not find any comfort at all in relation to what is being proposed. Should this proposal gain significant or any traction, so to speak, by virtue of its implementation, what is there to stop Mr Grylls simply aiming his sights at commodities? Given that the agricultural sector often relies upon profitability in the context of prices per tonne, why would there be a ceasefire at commodities? Can you imagine just for a minute, Mr Deputy Speaker, the damage caused to our economy, particularly in Western Australia, if such an approach were applied, for instance, to tonnage rates for grain? There is really no distinction, when one thinks it through, between ore and grain in relation to what Grylls is suggesting, insofar as he is suggesting a unilateral change to a long-established way of conducting one's business.

Thirdly, if Mr Grylls is looking for meaningful ways in which to inject revenue into the Western Australian economy, this approach is looking entirely in the wrong direction. The inevitable effect of the manner in which the GST works and the redistribution as dictated by the Commonwealth Grants Commission means that the proceeds of Mr Grylls's proposal would actually be spread all over the country and not, as he is suggesting, go into the coffers of the Western Australian Treasury.

Again, I come back to the notion of bipartisanship, which has characterised the debate in relation to the passage of this bill. We can find the same sort of bipartisanship present in the approaches taken by both sides of the political divide in the assessment of the viability of this proposal. If one scouts around to look at the public comments in relation to this proposal, one can see that it has been roundly condemned by all sides of parliament, both state and federal. They are lining up a mile long to provide a view which roundly criticises this proposal. Look no further than the current Western Australian Premier, Mr Colin Barnett. Also look at this Prime Minister. Look at Senator Cormann and also our state Labor leader, Mark McGowan; the shadow Treasurer, Ben Wyatt; and a host of others. It is true that at one earlier stage the Deputy Prime Minister was cautiously backing in this proposal, but he has since retreated at a rate of knots. Perhaps that begins to tell you something as to the level of support for this proposal that actually exists.

But, pushing all of that aside, let us focus on the timing. Unlike this bill, in which the timing is very much right to provide some positive signs to an industry that has been struggling for many, many years that there is some stability and certainty insofar as the opportunities that the Civil Nuclear Transfers to India Bill presents, the opposite can be said in relation to Mr Grylls's mining tax proposal. This is the worst possible time in the industry to impose a new tax on mining production. The Western Australian economy, led by the Liberal-National Party, is basically on life support. Total private sector investment in the state has collapsed by more than 30 per cent over the last two years and state final demand is down by nine per cent in the same period.

In conclusion, the passage of this bill will have a range of flow-on effects for Australia, all of them positive. The exportation of uranium to India will create an increased export market and jobs—most importantly jobs—over the long term. The projections suggest that, by the early 2020s, India could require up to 2,000 tonnes of uranium oxide each year in order to fuel its reactors. Australian uranium suppliers are well placed to take advantage of this significant market, with large known uranium reserves. There is also strategic benefit to increased cooperation with India. This bill is needed in order to ensure that Australian export of uranium to India can proceed unhindered and in a safe manner. It will give greater certainty to exporters and create Australian jobs, and it will also, most importantly, benefit Australia-India relations.

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