Stuart Robert (Fadden, Liberal Party, Minister for Human Services) Share this | Link to this | Hansard source

On behalf of the Joint Standing Committee on Treaties I present the committee's report titled Report 168: Certain Maritime Arrangements—Timor Leste, together with the minutes and proceedings.

Report made a parliamentary paper in accordance with standing order 39(e).

by leave—Today, I present the Joint Standing Committee on Treaties' report 168, which contains the committee's review of amendments to the agreement on Certain Maritime Arrangements in the Timor Sea with Timor-Leste, commonly known as the CMATS treaty. Australia and Timor-Leste, at present, have not agreed to a permanent maritime boundary in the Timor Sea. This has been the case now for some time.

In the absence of such an agreement, the CMATS treaty provides for the joint development of petroleum and gas reserves in the Timor Sea, known as Greater Sunrise. These reserves have an estimated value of some $40 billion. The CMATS treaty provides that future revenue from the development of Greater Sunrise will be shared equally between Australia and Timor-Leste. It also places a moratorium on establishing a permanent maritime boundary. To date, Greater Sunrise has not been developed, even though the CMATS treaty has been in place for some time.

The amendments to the CMATS treaty, reviewed by the committee, are largely procedural in nature, may I say. However, they are necessary prior to its termination on 10 April. Indeed, the CMATS treaty was terminated unilaterally by Timor-Leste on 10 January this year following an agreement between Australia and Timor-Leste to negotiate permanent maritime boundaries.

Termination of a treaty would normally cease all operations and effect of all its clauses. However, article 12(4) of the CMATS treaty gives continuing effect to a number of provisions that would enliven the whole treaty if Greater Sunrise was developed in the future. It is somewhat of a Lazarus clause. As agreed between Australia and Timor-Leste, the proposed treaty actions under review amend article 12(4) so that the Lazarus clause will not survive beyond termination of the whole treaty. Indeed, what we are presenting today ensures Lazarus cannot rise again.

The committee's report also notes that the CMATS treaty gave Timor-Leste a much larger share of the Greater Sunrise resources than it would have under pre-existing arrangements. These pre-existing arrangements will govern the joint development of Greater Sunrise until such time as a permanent maritime boundary is negotiated. The committee is of the strong view that the maritime boundary dispute, like all disputes, should be negotiated bilaterally and in good faith. We continue to commend both governments for agreeing to cooperate by these principles. Consequently, the committee's report recommends to the parliament that the proposed treaty action to amend article 12(4)—to ensure Lazarus stays where he is—proceeds. This recognises that the termination of the CMATS treaty is a first step towards further negotiation on maritime boundaries.

The committee recommends that binding treaty action be taken. However, in supporting the proposed treaty action, the committee has requested that the Department of Foreign Affairs and Trade brief the committee every six months until this matter is resolved.

I note that the negotiations with Timor-Leste will occur within the confines of the Conciliation Commission, and of course those discussions remain confidential. The committee will, where necessary, hear such briefings in closed session.

These briefings will give the committee the necessary context to review subsequent treaty actions, should Australia and Timor-Leste reach an agreement on maritime boundaries in the Timor Sea.

On behalf of the committee, I commend the report to the House.

Michael Danby (Melbourne Ports, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

by leave—I commend the Chair of the Joint Standing Committee on Treaties on his report to the House. This arrangement and these developments with Australia and Timor-Leste are not necessarily welcome, in the sense that I wish these things could have been resolved in other ways, and it is a shame particularly for Timor-Leste. But I have to make it clear that these are the provisions of arrangements between our two countries. They have been going through the law as it was set out beforehand. I hope that the opposition's support for this report is noted. I wish, for the sake of our good relations with China, that the opposition's two recommendations to the committee had been noted more clearly by the government, but that is not the fault of the chair.

Australia and Timor-Leste have not agreed to a permanent maritime boundary. In the absence of permanent maritime boundaries, three treaties govern maritime arrangements in the Timor Sea: the Timor Sea Treaty between the Government of East Timor and the Government of Australia, signed in 2002, also called the Timor Sea treaty; the Agreement between the Government of Australia and the Government of the Democratic Republic of Timor-Leste relating to the Unitisation of the Sunrise and Troubadour Fields, signed in 2003, also called the international unitisation agreement; and the CMATS treaty signed in 2006.

This CMATS treaty allows for the development of the Greater Sunrise field, estimated to have a value of $40 billion. Where this $40 billion figure came from no-one is exactly sure, but it was apparently in some report that Shell issued way back when. This treaty would share revenue equally between Australia and Timor-Leste. If the treaty did not exist, it is said that Timor-Leste would get only 18 per cent of the revenue, so renegotiation of this in the fullness of time, Lazarus or not, is going to be very important for them.

Timor-Leste unilaterally terminated the agreement on certain maritime arrangements in January, as is their right, and the agreement will cease to be in force from 10 April 2017. The amendments to the CMATS treaty are required before 10 April to give effect to the intention of both Australia and Timor-Leste that the CMATS treaty will cease to be in force in its entirety.

Australia and Timor-Leste have agreed to negotiate an agreement for permanent maritime boundaries in the Timor Sea, and that is good. The two countries are currently before the Conciliation Commission to reach a negotiated, non-binding solution. That is also good. Particularly with a developing country like Timor-Leste, 'Big Brother Australia' wants to make sure that we do these things by conciliation and agreement as much as possible. Part of the start of the process was a package of measures including the cancellation of the CMATS treaty. Australia does not recognise the jurisdiction of international courts in relation to maritime boundary disputes. Actually, I think it is better if we negotiate this directly with Timor-Leste, as I said, in a conciliatory way.

The committee heard evidence that Timor-Leste may struggle financially as natural resources income declines, and that is one of the things I most want to note my alarm at. Evidence before the committee was that in some years Timor-Leste is exceeding the expenditure that was suggested to it as a result of some of the revenues it is getting from natural resources. There is some doubt that a viable solution can be reached, because of topographical issues. The idea that to the south of Timor one would have a vast petrochemical complex is made difficult by the fact there is an enormous trench that goes between the fields and Timor-Leste. So let us hope that, with the goodwill of companies, Australia and Timor-Leste, these things can be worked out. As was pointed out in some of the evidence before the committee, it is very necessary for the viability of Timor-Leste that they responsibly expend the money they have so that they have an income stream after 2025.

It is not good that this arrangement between our two countries was not able to reach a resolution. It is Timor-Leste's right to pursue the cancellation and renegotiation of this treaty. Let us hope for their sake, with goodwill from Australia, that that can be achieved, considering all the struggle that Timor-Leste went through—and many people on this side of the House were very strong supporters of their independence, as was the government—and considering the heroic efforts of the 4,000 Australian soldiers who went over there in extremely difficult circumstances. Down to the lowest corporal, as the then CDF told me, they avoided a war with Indonesia by not clicking their weapons to turn the safety off. With all of that prehistory, let us hope that this issue can be resolved.