Mark Butler (Port Adelaide, Australian Labor Party, Shadow Minister for Environment, Climate Change and Water) Share this | Link to this | Hansard source

I rise to speak on behalf of the opposition on the Liquid Fuel Emergency Amendment Bill 2017 and can indicate the opposition's support for this legislation, though I foreshadow we'll be moving a second reading amendment to the bill. The bill deals with Australia's obligations under the International Energy Agency's agreement on an international energy program. It has long been a bipartisan position for the Australian parliament to support the work of the IEA, which was established in the wake of the oil crisis of the 1970s and provides strong policy and industry advice on energy to governments and to the industry across the country. This bill forms part of the government's plan to ensure that Australia complies with the IEA's fuel emergency reserve requirements, which are an important part of that IEA agreement. In particular, there is a requirement, reasonably well understood, I think, across the industry, for Australia and all other members of the IEA who have signed that agreement to have available 90 days worth of emergency fuels—in this case, liquid fuels.

This bill deals with the fact that in Australia over a number of years, through declining domestic production, we have seen a number of refineries shut down, such that we only have four oil refineries still producing in Australia. Also, because of increased demand for liquid fuels through population growth and the mining boom, Australia's stocks are no longer sufficient to meet the 90-day requirement under that agreement and, indeed, Australia has been noncompliant with that stock-holding obligation since about March 2012.

This bill will facilitate processes to allow the government to ensure that we do become compliant with that requirement, particularly by increasing the reserve of fuel by entering into financial contracts that are essentially call options that enable fuel reserves to be held financially, obviating the need to require Australia to hold them physically onshore in Australia, which obviously involves a whole range of logistical costs of fuel transport and storage. In particular, this bill enables the government to enter into commercial oil stockholding contracts with either foreign or Australian entities. These contracts include purchasing rights to access oil stocks, which are known within the industry as ticketing. Ticketing is a type of commercial oil stock contract that is commonly used by IEA member countries, particularly in Europe. Under a ticketing contract, the seller agrees to reserve, on behalf of the buyer—which, in this case, if the legislation passes, would be Australia—a predetermined amount of oil in return for an agreed fee. During the contractual period, the buyer—again, Australia in this case—has the option to purchase those stocks with the price being determined by a market-based rate or, alternatively, could release the stock back into the global oil market. Ticketed stock is able to be held either offshore by a foreign entity or onshore by an Australian entity.

Importantly, this amendment is required to ensure that the government has the legislative authority for the expenditure of funds on oil stockholding contracts or ticketing contracts for the purpose of complying with the principles outlined by the High Court in the Williams decision back in 2013-14. The Australian government plans to purchase, as we are advised, 400 kilotons of offshore tickets through 2018-19 and 2019-20, which will involve the expenditure of $28.3 million over the forward estimates.

As indicated, the opposition supports this bill. The opposition values very highly the IEA's work and places great store in Australia's ongoing ability to comply with the obligations that Australia has signed up to through the various IEA agreements, including the stockholding obligations—the 90-day rule—which is included in the agreement I referred to earlier. This is important for all countries, but particularly important for an island nation situated in an increasingly volatile region of the world. We applaud the government for bringing this legislation to the parliament and indicate, as I said, that we will support it.

I move:

That all the words after ''That'' be omitted with a view to substituting the following words:

''whilst not declining to give the bill a second reading, the House notes:

(1) the Government's lack of national energy policy, which is causing an investment strike in new electricity generation; and

(2) the Government's failure to ensure an adequate and affordable gas supply for Australian industry while Australia becomes the world's largest LNG exporter''

While this bill is all well and good, there are much bigger, much more influential issues of policy in the energy sector that the government continues to prevaricate over. This government has presided over almost exactly four years of failure on energy policy since its election in 2013. The former Prime Minister, the member for Warringah, had a great plan about what he wanted to dismantle and demolish—and he did dismantle almost all of the former government's climate and energy policies, but he had no plan to put in place a replacement energy policy.

This government knew what it wanted to do by way of dismantling policy but has failed dismally to put in place any replacement energy policy. It is now well understood across Australia that Australia is in the throes of a deep energy crisis caused principally by a lack of policy certainty around energy. Power prices are not only crippling business investment but they are hurting households across the country. Every member in this House, I'm sure, is constantly approached by their constituents about power prices biting their household energy bills and their household budgets more generally.

The Reserve Bank governor gave some evidence to the House of Representatives Standing Committee on Economics back on 11 August about the importance of policy certainty in driving down prices for business and for households. Governor Lowe said:

There is uncertainty about the policy environment and that is delaying investment. That is not in dispute. The investment uncertainty is not just in electricity generation; it's affecting investment decisions in other parts of the economy, because businesses aren't sure about the future price of electricity, so it's another reason to wait. We talked right at the beginning, in response to the chair's question, about why business investment isn't picking up. Some businesses say, 'Well, we're not sure what the future price of electricity is, so we'll just wait to see if that works itself out.' The higher prices of electricity are also affecting household budgets, particularly for lower income households, who spend a disproportionately high share of their income on electricity. It's crimping their budgets and having an effect on consumption …

That is what the RBA governor said, and it reflects the fact that, over the four years of this government's tenure, wholesale power prices have doubled, feeding into household prices, which we saw increase on 1 July by as much as 20 per cent in states like New South Wales, following increases elsewhere in the Federation since this government came to power. The Reserve Bank governor was asked in that hearing:

So it would help if the Australian parliament sorted out this issue of a clean energy target and providing some policy certainty …

The governor responded:

… I couldn't disagree with the proposition that providing some certainty about the future structure of the electricity generation industry would be useful for the country, for investment, on prices and on household budgets. Yes.

That just adds to a cacophony of reports and advice—from Alan Finkel, the Chief Scientist, and his panel and many other think tanks and energy market bodies—all saying that this country has got to get some policy certainty around electricity generation to ensure investment flows to replace those ageing generators that are inevitably shutting down because of their age.

Meanwhile, yes, the Prime Minister brought the retailers to Canberra for another meeting last week, or the week before, and we do hope that will yield some behavioural change on the part of the retailers and allow consumers some ability to navigate their way through a very complex retail market, but it is no substitute for policy certainty around investment generation. I point out also that, meanwhile, for all that the Prime Minister professes in his concern about the impact on household budgets of rising electricity prices, he is continuing to press ahead with his intention to remove the energy supplement from 400,000 age pensioners, 109,000 people on the disability support pension and 105,000 carers, who would lose, if they are in a couple household, $550 a year specifically targeted to help them with the impact of energy prices.

In the context of this legislation and our second reading amendment, I particularly want to talk about some of the government's rewriting of history about the gas market over the last several days—and I have heard a couple of interjections from the backbench and from the minister about that again. I think anyone with a passing interest in the energy sector will have noticed manufacturers crying out in distress at the gas prices that they have seen in the market under this government, particularly over the last six to 12 months. There was a reminder only this morning, published on the front page of the Financial Reviewa story by Angela Macdonald-Smith indicating that manufacturers are continuing to be subject to contract offers of up to $17 or $18 a gigajoule for firm deliveries. That is still common and about triple the level of the expiring contracts that these manufacturers have been operating under for some time.

Anyone who has studied this at all knows the history of what's happened to the gas market over the past 20 years in Australia, particularly in the eastern Australian market. It was the Howard government, in its first year in office, that abolished export controls over gas. These controls had existed for a long period of time, controlling the export of our gas resources. The export controls were also lifted on a range of other commodities. But, importantly for the current debate, those export controls, lifted by the Howard government in 1997 to plant the seeds of an export industry in LNG, were lifted in the face of opposition from the Labor Party at the time. No controls were put in place. No national interest test was put in place. At the time, there was a consistent rejection of any calls for reservation or other controls on the export of our gas resources to ensure that there would be sufficient and affordable supplies of gas to Australia's manufacturing industry and to Australian households.

The inevitable consequence of opening up Australia to the global gas industry was that you saw price convergence with the global gas price, as you would have with any other internationally traded commodity. I was talking earlier about oil, and Australia pays the global price for oil because we participate in a global market. An inevitable consequence of the Howard government opening up Australia's gas market to the global market was that there was what's called export price parity, or at least the net back version of export price parity—the price paid overseas for our exports, minus the cost of refrigeration and transport. This is not rocket science; this is not something that governments of the day had to receive particular advice about. This is something that a year 10 economics student would be able to tell you, if you asked them.

Last week, I did an interview with David Speers, and he purported to have extracted from me the great revelation that, when the Labour Party were last in government, we had been advised that the Australian gas price would converge with the global price. This was some apparent great revelation. It's not a great revelation. It has been orthodoxy in the gas market for years, as is reflected in a number of statements by the Prime Minister and by different ministers of this government. It has been quite clear that from the time former Prime Minister John Howard opened up the Australian gas industry to the global industry we would see price convergence and Australians would be paying the same price as the global price for gas, as we do for oil and all other internationally traded commodities.

I want to be clear about what I was asked by David Speers, because I want to compare it to some of the narrative from the Prime Minister and other ministers of the government on export price parity. David Speers asked me about the energy white papers that were produced under the Labor government and whether there was any particular advice about the impact on prices and possibilities of supply shortages arising from the LNG operations being built in Gladstone. I said, 'Now, there would be a price impact. I think everyone always had eyes wide open about that, that we would move to the Asian export parity price.' Again, that is an orthodox economic position that a year 10 economic student would be able to tell you about at length, I'm sure. But I went on to say, 'But there were assurances given by the LNG operators that it would not impact supply to the domestic market.' Speers went on to say that our own white paper told us there would be an impact on prices, but I'd said we weren't warned. I responded, 'No. Everyone knew there was going to be an impact on prices, but the problem we are confronting now is that the pricing impact is not just moving into an Asian price, which might be $9 or $10 per gigajoule. The price we're actually seeing in the manufacturing sector is now $15 and even more than $20 a gigajoule because there is scarcity in the market.' I'm not sure whether some people don't understand the difference between export parity pricing and scarcity pricing or deliberately choose not to understand the difference because it makes for political stories, but it is quite clear that I had said we were not warned in the energy white paper about scarcity pricing. It was well understood by everyone who paid even casual attention to what was happening in our gas market that after the Howard government lifted export controls Australia would move to the global price, as we have in every other internationally traded commodity.

The then resources minister, Ian Macfarlane, said in 2014 on the ABC:

Gas is now being sold in Australia at an international price. That's the reality of a world market.

When Senator Canavan, then minister for resources, and the Prime Minister announced the Australian Domestic Gas Security Mechanism on 27 April 2017, Senator Canavan said:

So a more appropriate price would, of course, be what's known technically as the netback price: that is, the price that exists in Asia minus the costs of getting it there.

That is a much more appropriate benchmark.

And he said, importantly:

… in connecting our market up to the world that's what we were expecting and that's what was the promise, but we have not got there at the moment because of this export industry.

Again, there is the distinction between export pricing, export parity pricing and scarcity pricing. For the sake of completeness, on the same day, when the Prime Minister was interviewed about his announcement of a security mechanism by Steve Austin—not the Bionic Man, I don't think; another Steve Austin—he said of the mechanism:

It will ensure that the price of gas in Australia is at levels comparable to that in the international market, because it is a global commodity.

Later, in that same interview, he said:

… the point is, Steve, there is a global market for gas. We all get that.

That is no particular revelation—in spite of the treatment that David Speers and the ABC have given to the interview I did last week. There was no particular advice. I could've got that advice from a year 10 economics student.

What I was asked on Insiders in April earlier this year and during the David Speers interview was not about export parity pricing; it was about scarcity pricing. And that's because these LNG operations, particularly the GLNG operation, have started to impact the domestic market—the local supply of gas which, traditionally, manufacturers, power generators and households have relied upon. I just want to be clear about the interview that I did with Insiders that the ABC, David Speers and the government have said created some sort of conflict in my positions. Barrie Cassidy at this interview was talking to me about the impact of the LNG operations. I said:

… the supply crunch and its impact on gas prices is even worse than anyone had expected.

Barrie Cassidy then asked me:

Yeah, but you say, though that is you saw it coming a couple of years ago.

I had said that. We did when we developed our national interest policy in 2015. He said:

You're in Government about four years ago and you got plenty of advice then that the surge in exports would lead to these sorts of problems.

That was the proposition he put to me when we were talking about the supply crunch that has characterised the gas market over the last 12 months.

I said:

No, we didn't get that advice. We were given assurances by the industry that the establishment of export operations at Gladstone would not impact …

Then he interrupted my answer. I went on to say that we, indeed, were given express assurances from the gas industry that they would not impact local supply. Indeed, the LNG operations at Gladstone would be using so-called new gas. I said to Barrie Cassidy:

… they would be using new gas for exports and not impacting the existing gas supply to manufacturers and households …

Again, there is a distinction between export parity pricing and scarcity pricing that has arisen because of a supply impact being critically important.

There is some dealing with this in The Australian newspaper this morning, particularly about what it was that Santos, or GLNG, in its environmental impact statement indicated about what its operations might or might not do to local supply—old gas, if you like—that manufacturers, power generators and households had for many years depended upon. I will read an extract from Santos's EIS from, I think, 2010. It said that the project, being the GLNG project at Gladstone:

… may initially supply domestic gas markets, but it is not diverting gas from local markets to export markets. … Therefore the project has no direct implications for domestic gas prices. The gas to supply the LNG facility will come from newly developed CSG fields.

That was the advice provided to the previous Labor government, consistent with the advice expressed in the narratives that I read out from former Minister Macfarlane, former Minister—perhaps again to be minister one day—Canavan and the Prime Minister, when he was announcing the domestic security mechanism.

It started to become pretty clear to the manufacturing industry—and, increasingly, to Labor—over the past couple of years that those promises, particularly made by Santos, had not come to pass. One of the LNG operators in particular had found itself too short of so-called new gas to be able to satisfy its overseas contracts. We then developed as a policy a national interest test that would ensure that new gas operations would be subject to a national interest analysis. It was something rejected as far back as 1997, when the Howard government lifted export controls on gas and other commodities, and was again rejected in the 2004 energy white paper that was released by John Howard. Indeed, our position to adopt a national interest test was rubbished by the Prime Minister, who said that we were being leftist and raising potential sovereign risk issues around the gas operations that had been developed at the LNG.

In the energy white paper that was released in the same year—in 2015—by this government, again, any idea of a national interest test or domestic gas reservation was roundly rejected by a government who continued to try to reassure the manufacturing industry of Australia that there was no problem, that it was all fine. Of course, there was export parity pricing, but there was no shortage of supply and there would be no scarcity pricing in the market. Indeed, in 2016, the then environment minister approved, through an EIS process, a whole range of new CSG fields for Santos to be able to develop and divert to LNG export operations without any analysis of whether there was a shortage in the domestic market and whether that gas, instead, should be diverted to the domestic market rather than refrigerated and shipped overseas.

We're not going to take lectures from this government about a position that we've been articulating for two years now and to which we had to drag this Prime Minister and his government kicking and screaming. We hope that the domestic gas security mechanism, if it's ever triggered, does provide some relief to manufacturers, power generators and households in Australia. There is a reasonable assumption in this country that we will have secure and affordable supply to our own gas to continue those operations that employ many tens of thousands of Australians, provide electricity to Australian households and businesses and, through gas, provide direct energy to Australian households—particularly in gas-heavy states that you would be familiar with, Deputy Speaker Goodenough, like Victoria.

I do note, though, that the ADGSM, the Domestic Gas Security Mechanism, through its regulations, is supposed to be triggered 30 days from 1 July and no later than 60 days from 1 July. We are currently 65 days from 1 July, and there is still no indication as to when this government will deal with the gas crisis and decide whether or not it will trigger the security mechanism for 2018.

We and, I think, industry are concerned that this has become inextricably intertwined with the future of the Deputy Prime Minister, who—given the decision by Senator Canavan to step aside—now has authority for the implementation of this security mechanism. All of the questions that have been debated over the last couple of weeks by constitutional scholars over whether any decisions taken by the Deputy Prime Minister might be invalid if the High Court ultimately decides that his election was invalid raise even more uncertainty for manufacturing industries and many other users of gas in Australia.

Australia is in a deep energy crisis. The quotes from the Reserve Bank governor are only one contribution to a debate that is now, I think, genuinely a barbeque stopper in Australia, and it's certainly hurting business investment across many different sectors of the economy. The government have shown over the last few days—pretty true to form, I have to say, unfortunately—that their tactic is a blame game. They will just try to rewrite history, try to finally pass pretty orthodox statements about how the gas market operates and try to shift blame and any responsibility for taking some hard decisions themselves in their party room and implementing some very clear blueprints that have been provided to this parliament, this government and this nation about how we get out of this energy crisis.

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

Is the amendment seconded?

Gai Brodtmann (Canberra, Australian Labor Party, Shadow Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

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

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. If it suits the House I will state the question in the form that the amendment be agreed to. So the question is now that the amendment be agreed to.

Andrew Broad (Mallee, National Party) Share this | Link to this | Hansard source

It is a pleasure to speak on the Liquid Fuel Emergency Amendment Bill 2017 and to raise my concerns. I have to say that it does surprise me that there is bipartisan support for this when there should be some questions being asked around this bill. Having been a very practical person, I always take my role in this place and the defence and security of the Australian people very, very seriously, and I am not satisfied that Australia does have enough fuel in reserve.

I am also not satisfied that we have enough refiners, and I have noticed the significant wind-down of the refining capacity of this country for many, many years. As a grain farmer for a long time, 20 years, I know that there would be diesel shortages at times. A standard harvester now would use 1,000 litres of diesel a day, let alone the trucks on it. I remember at times ringing up to buy fuel by the semi-load, 30,000 litres at a time, and not being able to get it and being told that there would be rationing to get our grain harvest off. So I simply do not have comfort in the rhetoric that says Australia has over 50 days of fuel reserve. And I certainly don't have comfort in the ticketing mechanism as a way to deal with a significant global emergency. This appears to me like buying a boat with holes in it in case there's going to be a flood.

If there is one thing that we could learn from history it is that we don't learn from history. The lack of preparation from the House of Representatives in the 1930s for the conflict that took place in the 1940s is something I want to draw on as I bring out why my concerns exist with this mechanism as a way of dealing with our fuel reserves. On 7 December 1941, Pearl Harbor was bombed by the Japanese. On Christmas Day of that year, people who recently enlisted in the Australian Defence Force were combined with the 39th Battalion and rounded up two days later and put on a boat called the Aquitania. These 1,068 people were sent off to Papua New Guinea and they then went on to fight in Kokoda. But, on that boat, they didn't have enough guns for them. The House of Representatives, the government of Australia, had not prepared well enough make sure that we had enough guns for what actually turned out to be the defence of Australia.

To sit here in bipartisanship and support a bill that essentially says that we are having a ticketing mechanism that worked in Europe as the means for securing our fuel is not good enough. The ticketing mechanism was set up in Europe. Under the ticketing contract, a seller agrees to reserve, on behalf of a buyer, a predetermined amount of oil for the period of the contract in return for an agreed fee. During the contractual period, the buyer—in this case, Australia—generally has two options. The first is to purchase oil or part of the reserved oil stock with a price determined by a market based rate under the contract. The second option would be to release the stock back under the global oil market. That works in Europe when you have land borders, and that's where it was originally designed. If you have land borders you can literally truck fuel from one country, which is a small geographical area, to another country and ensure that everyone is meeting their obligations. I don't believe it works satisfactorily for a country that is an island.

We of course have chosen to put a lot of money into submarines, and submarines will become essential for keeping the laneways open for fuel to come into Australia. But I do note, even in the talking notes here, that in 2015-16 there is a boast here about how 30 per cent of Australia's oil never comes from more than one source. But the sources where we do get our oil—the 30 per cent—South Korea, Singapore, Japan, China and Malaysia and Taiwan—are all within the very same region that we are very nervous about a conflict at this point. So, when you start thinking it through, out of the list of countries that we source our oil from, there is only one that isn't in the region of a potential conflict zone, and that is India. So, we all stand here, in a bipartisan way, and say, 'We're meeting our obligations, because we've got tickets to access oil that we can turn into aviation fuel. We've got tickets to access diesel that we can run our tanks on, run our defence systems on, run or boats on, but it's all in the same region.' The tickets frankly may not be good enough for us. So, I guess my role in the parliament, which I take very seriously, is to raise at times a warning.

I also point out: we are a large geographical land mass with all our agricultural products in the regions and all our populations centred in three big cities—the population of Sydney is a bit over four million; the population of Melbourne is just under four million people; and the population of Brisbane is two million people. Our food is distributed on trucks running on diesel, and so we started to think this is not just an issue of our defence capabilities; it's also an issue of the ability to transport food to our populations that only hold very limited food reserves in those populations.

So, I do believe that, whilst ticketing perhaps ticks that box and saves the government a lot of money, we are skimping on our obligation to look after the security of the Australian people, and I think someone in this parliament needed to raise it. It astounds me that no-one on either side has raised it until now. So, in doing so, whilst I will vote in support of the legislation, I will be seeking a very strong commitment that both sides of the parliament will move towards increasing our oil refining capacity because of national security; that that oil refining capacity will be in different geographical locations, which limits the ability for them to be taken out in an air strike; and that we will be making a long-term commitment to move towards our 90-day obligation, which should be our obligation. This is simply, I believe, buying a boat with holes in it in case of a flood. This is maybe buying us time, but it is not addressing adequately the major risks that we have in our region. I want to put my resolve to that in this parliament and hope that other members of parliament also take their national security obligations as seriously as I do. Thank you.

Gai Brodtmann (Canberra, Australian Labor Party, Shadow Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

I commend the former speaker on his contribution and also the contribution that was made by my colleague, who is in the chamber with me today, the member for Eden-Monaro. I know that the member for Eden-Monaro has been very, very concerned about energy security in Australia for a very long time. He worked on it when he was serving our nation in the Australian Defence Force, and it's an issue that he's been raising ever since he has been a member of parliament.

The member for Eden-Monaro is greatly concerned about the fact that Australia's national security could potentially be compromised by our lack of energy security, which is why he's been pursuing so rigorously alternative options to secure energy here in Australia, to secure our nation, particularly in the biofuel area. There's a lot of innovation in this area in Australia, particularly in this region, the capital region. I think that it's an area of energy that we need to be taking a closer look at. I commend the work that the member for Eden-Monaro has been doing in pursuing policies on that, pursuing innovation ideas on that and pursuing options for the future, so that we can ensure that Australia, as an island nation, as was pointed out by the previous speaker, can have the energy security of the future to ensure our national security. It's national security and military 101 that you have to have energy security to ensure a secure environment. You have to have food security and energy security. It is absolutely vital. We know that liquid fuel is the lifeblood for industrialised nations in the absence of any other form of energy source. We rely on liquid fuel to support the industries that underpin our economy as well as the Defence Force that protects our national interest.

Australia's defence strategy has primarily focused outwards—the force projection, the need to protect our interests from external threat—which has meant our strength to patrol, monitor and surveil has been in our Navy and our Air Force. Our naval history started with the passing of the Colonial Naval Defence Act of 1865, which gave Australian colonies power to officially acquire warships and to raise and maintain seamen to serve in these vessels. A year later, Victoria took the lead on naval defence and applied to the British government for assistance in establishing a naval force under the provisions in the 1865 act. The request was agreed to, and the Victorian colony was awarded a grant of 100,000 pounds towards the cost of a monitor turret ship and an old wooden man-of-war named Nelson. Construction began in 1867 near Newcastle, in England, and the ship was completed two years later, commissioned as Her Majesty's Victorian Ship Cerberus, named after the three-headed dog which, in Greek and Roman mythology, guarded the gates to the underworld. How fantastic is that image—a three-headed dog guarding the gates of the underworld! On Sunday, 9 April 1871, having spent 123 days at sea, Cerberus finally arrived in Port Phillip Bay, with the arrival noted in the Melbourne Age:

As she came up she excited the greatest possible interest. As might be expected, she was not regarded as a handsome ship by any means. She appeared, as in great measure she is, a huge, long, square box, cut down straight at both ends, and surmounted by stunted masts, the tops of her turrets and her funnel.

I think there was a kind of mixed enthusiasm for the arrival of the ship! But the arrival of the Cerberus to the Victorian colony meant that the colony briefly possessed the most powerful warship on the Australasian station, which was the Australian naval command responsible for the waters around Australia. For over half a century, Cerberus was a regular sight at Williamstown and in Port Phillip Bay, where she spent her commission. In 1924 she was sold to a scrap company, where she was stripped of useful fittings and valuable metals, and in 1926 the hull was purchased by the Sandringham municipal council, filled with concrete and towed across Port Phillip Bay to be sunk at Black Rock, where she remains as a breakwater.

I was fortunate enough to recently visit the naval base down at Balnarring, in Victoria, named after Her Majesty's Victorian Ship Cerberus, which the Navy has operated out of since 1920. The base was commissioned in 1914. While I was at HMAS Cerberus, I was able to see the connection to Canberra, with some of the stunning buildings that house the mess and the CO's offices to this day. It's a very special site. The beauty about HMAS Cerberus is that the community can get access to it, because the local Anglican church and the local Catholic church are there, and on Sundays people can go and attend mass. The general community has access to the base every Sunday. It is a stunning base, probably one of the most stunning bases I have seen in the suite of the Australian Defence Force estate, which is vast, rich in history and extends throughout the country. But HMAS Cerberus would have to be one of the most impressive bases I've seen. As I said, it has a beautiful mess building, which was designed by John Smith Murdoch, who designed our Old Parliament House here, just down the road. HMAS Cerberus doesn't quite have the wedding cake that we have down the road, but you can see the connection with the design features there, particularly in Murdoch's obvious love of wood panelling. The mess is a stunning building. Quite tragically, it was extended in the 1960s. There was no architectural integrity in the extension, and it has, in my view, defaced that mess building at HMAS Cerberus. But I understand work is being done to fix that up so that it can be restored to its past glory. It is a very, very lovely base. I say to all Australians: if you have the opportunity to get there, either through open days or through worship on Sundays with the Anglican Church or the Catholic Church, then do take that opportunity. It's a very, very special place.

Murdoch's master plan for HMAS Cerberus was reminiscent of the military style of architecture developed for training establishments in Great Britain. He created this through open areas and building forms that instilled hierarchy, routine and unity. It was pleasing to see that Defence noted in its Cerberus redevelopment submission that any new developments will take into account the historical elements that Murdoch instilled into the buildings. The orientation of the proposed new buildings will also be consistent with the design principles first implemented by John Smith Murdoch and include axial and symmetrical emphases, the orientation of buildings to face the parade ground, as well as sympathetic use of scale and massing.

HMAS Cerberus is one of the leading training institutes for Navy personnel in Australia. The base has a permanent workforce of about 980 people with about 6,000 training places each year and over 300 courses, ranging in duration from one week to one year, with an average of 1,100 trainees at any one time throughout the year. It's a hive of activity in terms of young Navy trainees going through a range of courses in that facility. When I was down there recently getting a briefing on the PFAS contamination issue, I had the great pleasure of visiting the fire training facility. I understand this training facility is the only one of its kind in Australia in Navy. They have quite an impressive set-up there. The young trainees who are coming through, to go on to great and interesting careers in Navy, are put through their paces—and I'm glad it's them, not me!—and they get the chance to put out fires, be they fires from liquid fuels or other inflammables. For example, they have to put out fires in a very tiny area that has been flooded. Not only do they have the challenge of water streaming in and knocking them off their feet, but they are also in quite a confined space and, of course, they are also wearing very heavy protective safety gear. These young trainees managed to put the fire out without in any way getting affected—I take my hat off to them, because it would be a challenging environment for anyone. Well done to all those trainees who were put through their paces in that training. Well done also to the people who were training them. Speaking to those trainers, I know that they were very proud of the work they did. Some of them had been doing it for a very long time and had seen thousands of Navy trainees come through their school. I take my hat off to them as well, and I thank them for their contribution to training our future Australian Defence Force.

I'd also like to thank Commander Matthew Hoffman and those we met during the visit to HMAS Cerberus. I have a very strong interest in architecture, particularly architecture that has a connection with Canberra, as it does at HMAS Cerberus, and he not only gave us a tour of the beautiful architecture but also a really comprehensive briefing on the PFAS contamination issue there, as well as on some of the other challenges that the base is experiencing at the moment. He also gave us a broad overview of the great work they do in training young Navy personnel.

One of the main purposes of this legislation we are discussing today is a plan to return to compliance. I'm quoting there because I know that my colleague, the member for Eden-Monaro, has some concerns about the achievement of that aspiration, with our obligations as a member of the International Energy Agency. As part of the agreement under the international energy program, it requires members to hold stocks equal to 90 days of the previous year's oil imports. Australia has not maintained its side of the agreement since 2012. I am acutely aware of it, because of the many conversations with the member for Eden-Monaro about the fact that this has been actually allowed to happen. The fact is that people have dropped the ball on. How has this been allowed to happen in an island nation that looks outwards? We need our energy security for our nation's security. It is vitally important, which is why I endorse the member for Eden-Monaro's concern about this and the fact that he has had an ongoing concern about it. He is the reason I'm talking about this issue today, because he has been in my ear for a very long time on this issue. So I thought I owed it to him to get up and speak on this bill.

Part of this plan to 'return to compliance'—I say that in quotation marks—is the purchase of 400 kilotonnes worth of oil stock tickets in the 2018-19 and 2019-20 financial years. Australia's non-compliance has been attributed to decreases in domestic oil production and increases in fuel consumption. In 2014, an NRMA-commissioned report on the nation's liquid fuel security showed that Australia's liquid fuel stocks were heading towards 100 per cent dependence on imported liquid fuel and oil for transport, hence the member for Eden-Monaro's concern. With Australia becoming ever more reliant on oil imports, it has a chain reaction on many industries including Defence. An article in Australian Defence Magazine in 2015 noted the combined cost of Defence's liquid fuels is already the second biggest component of the sustainment budget, and, overall, Defence's energy profile is heading in a direction that is strategically unsustainable over the medium to long term.

As I noted before, Australia has been non-compliant as part of its agreement under the international energy program since 2012, meaning this government has had four years to address this issue and has failed to do so. We welcome this legislation, but we cannot take our eye off the ball on this. This is just a return to compliance, an aspiration. We cannot take our eye off this. We need to ensure that Australia's national security is assured through energy security, which is why we need to keep our eyes on this issue. We need to hold the government to account on this issue, and, as the member for Eden-Monaro has pointed out time and again, we need to start looking at alternative energy sources so that we can ensure we have our energy security and, through it, our national security.

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

I rise today to speak on the Liquid Fuel Emergency Amendment Bill 2017. This bill fulfils a number of important functions, and that's why the Labor Party is supporting it. The bill seeks to amend the Liquid Fuel Emergency Act 1984 to enable the Australian government to enter into commercial oil stockholding contracts, known as ticketing contracts, with either foreign or Australian entities. By way of explanation, as set out in the bill's preamble, ticketing is widely used by member countries of the International Energy Agency, particularly in Europe. Under the auspices of a ticketing contract, sellers agree to reserve on behalf of buyers, which equates to a predetermined amount of oil for an agreed fee. During the period of the contract, the buyer, specifically in this case Australia, has the option to purchase the stock. Price is determined by market mechanisms. Significantly, the buyer also has the option of releasing the stock back into the global oil market. Ticketed stock is either able to be held offshore by a foreign entity or onshore by an Australian one.

The reason this amendment is so important is it provides the legislative authority to spend money on oil stockholding contracts, according to the legal rules from the Williams case in the High Court. The purchase of oil stockholding contracts represents a return to compliance by Australia, with the IEA's agreement on an international energy program agreement, which is obviously a step in the right direction and a positive development for the country.

The agreement creates both rights and obligations. One obligation set down in the agreement is that IEA members hold oil stocks equivalent to 90 days of the previous year's average daily net oil imports. The government says it intends to purchase 400 kilotonnes of offshore tickets in the 2018-19 and 2019-20 years. This initial ticket purchase, the government says, will be the first phase of Australia's return to compliance with the IEA's 90-day oil stockholding obligation, something that can only be welcomed. As per the IEA requirement, the ticketing contracts will be supported by government-to-government level arrangements or treaties with the host country. This bill is important also because it empowers the Secretary of the Department of the Environment and Energy, on behalf of the Australian government, to enter into contracts for oil stockholdings. This means the secretary will have the ability to exercise the various contractual rights of the Australian government, and this will generally include the ability to exercise the option to purchase a ticketed stock or to release the ticketed stock back into the host country, as defined by the contract.

This bill seeks to partially restore compliance. But it doesn't get all the way there, and, quite frankly, it can only assist with one of the two possible emergencies that will affect oil stockholdings. There are two sorts of emergencies. One's a conflict in our region, particularly one that closes down the Strait of Malacca. This will obviously do nothing for that, and that's been pointed out by a couple of speakers already. It will assist if there is a shortfall, particularly a spike in prices. In that particular instance, this will have some merit, but it doesn't assist in the case of a regional conflict. I think it's quite right for the member for Canberra and even the member for Mallee to point that out.

I should point out that it's symptomatic of the energy fiasco this government has got into that a bill that it has put up is being questioned and opposed by the member for Mallee, who is the government's appointment, as the Chair of the House of Representatives Standing Committee on the Environment and Energy. Let me repeat that: the chair of the environment and energy committee, appointed by the Prime Minister, is questioning the energy policies of this government. This is how poor it is at running energy policy in this country. Without putting words in his mouth, I'll be interested in the position of the member for Hughes, given he's chair of the backbench energy committee for the government. I don't want to be Nostradamus, but it would be quite interesting if both the chair of the backbench energy committee for the government and the Chair of the House of Representatives Standing Committee on the Environment and Energy, appointed by the Prime Minister, both draw attention to serious concerns with the government's energy policy. I'm happy to be contradicted in the member for Hughes's contribution. I look forward to it, as I always do.

In the time remaining, I want to talk about the broader context for this bill—the energy crisis we face in this country and the four years of mismanagement we have had from the government in trying to affect that crisis. No-one should be lulled into a false sense of security that, if this bill passes, it will be anything but a bandaid solution to some of our myriad energy problems or that the gas crisis that this government has allowed to fester like an infected sore will be in any way substantially improved. Despite the Prime Minister and the energy minister trying their best to blame the last Labor government for their current predicament regarding gas supply, responsibility rests squarely with the Turnbull government and its short-sighted, inadequate energy policies and inaction and paralysis around these urgent problems. It's about time the energy minister admitted as much.

The government has presided over astronomical gas price rises that should make it hang its heads in shame. A few short years ago, Australian industry was paying about $5 per gigajoule for gas. It's now paying four times that much, with average costs hitting $20 per gigajoule in new contracts being negotiated right now. We've seen the government and the minister leap on comments from the shadow minister last week, comments that were just common sense. They were an accurate reflection of what the Labor government expected in 2010 to 2012, which was: when the LNG processing plants in Queensland open up, we would expect the domestic gas price in Australia to reach export price parity. If we're going to be exporting twice as much gas as we have for the domestic market, then obviously the prices are going to equalise over the long term. That's a statement of common sense. It's a statement of logic. That's all the shadow minister did last week. But what we're seeing now is prices well above export price parity. Export price parity would be somewhere between $8 to $10 a gigajoule. We've got gas prices at $20 a gigajoule. This is clearly scarcity pricing. This is clearly indicating that the market is broken.

Instead of actually taking action on this, we've got the minister, assisted by elements of the media, supporting the lies by Santos, defending the actions of Santos and aiding and abetting lies by Santos, the company that is most responsible for the gas crisis. Let me read onto the record what Santos said in their environmental impact statement pertaining to their gas export facility: 'This project is not diverting gas from local markets to export markets. Therefore this project has no direct implications for domestic gas prices.' It cannot be clearer. They're trying to point to other obscure references in EISs and other documents, but this is the base document. Let me repeat it: Santos have said that their project has no direct implications for domestic gas prices and is not diverting gas from local markets to export markets. That is a lie. Santos are perpetuating right now that they didn't say that and didn't give the assurance to the Australian government that their project would not increase gas prices in this country.

I find it interesting that the minister, who has been quite shambolic in his handling of the portfolio since he assumed it, is choosing to become a mouthpiece, a spokesperson for Santos, rather than trying to actually solve this energy crisis. Nothing demonstrates this government's hypocrisy around a gas crisis more than their failure to support Labor's national interest test. It is a national interest test that was passed at Labor's national conference in 2014, a national interest test that I have been supporting since 2013, and an interest test that was announced and formed as part of our 2016 election policy. What do we see from the other side? Claims that we were imposing sovereign risk on the country, that we were the Venezuela of the South Pacific and that we were somehow creating a crisis when one didn't exist. Well, they've been dragged, kicking and screaming, to recognise that there actually is a massive crisis and that Labor's national interest test has to be engaged with.

We've been sounding the alarm on this for four years and all we get from the other side is a blame game. Like every other policy area in this country, we get a blame game from the government. This is also symptomatic of their inaction around the broader electricity crisis because, obviously, gas prices feed into electricity prices, given that gas is the marginal generator in most scenarios. As a broader issue, the national energy crisis is a crisis of this government's making. This government has been unable, in four years, to develop a coherent energy policy, let alone a coherent energy policy that Labor could agree to in the interests of getting a bipartisan consensus on this—a consensus that is essential to providing investment certainty to end the investment strike in this country.

The Energy Council is the peak body for all of the generators in this country. It's not some out-there, hippy-dippy greenie group. This is the council that has people like AGL, Origin, EnergyAustralia, the Snowy Hydro and Pacific Hydro—the who's who of the energy industry are in this council. This council has made it very clear that the energy crisis in this country, the doubling of the wholesale energy prices in this country, is due to the policy uncertainty driven by this government. It's up to this government to fix it, quite frankly, but I have zero confidence in their ability, given the way they've mishandled the Finkel review. We're yet to know their position on the Clean Energy Target. One day they're pro building a new coal-fired power station in the north of Queensland, the next day they're going to build it in New South Wales or Victoria, the day after that they're going to force Liddell to stay open longer, and the next day after that the member for Warringah was talking about keeping Hazelwood open. They've had more positions on energy policy than there are in the Kama Sutra. It's this country, these workers, our pensions and our families that are paying the price for it. That is a great tragedy and it needs to end soon. It is a national shame. This government should be condemned by both this generation and future generations for their inaction on solving this crisis and for not playing a constructive role in combatting climate change.

I also want to touch on the role of the Greens in this particular crisis. We saw some posturing from the member for Melbourne earlier today. We saw some relevance deprivation syndrome. The major parties are talking energy policy and the Greens are being completely shut out, so we had a little 'Look at me, look at me' opportunity, where he put forward a piece of meaningless legislation that won't get supported by anyone to extend the renewable energy target, and lots of words about how Labor can't agree to a clean energy target with the coalition. Yet again, this shows the hypocrisy and the cynical opportunism of the Greens when it comes to climate change and energy policy. Let's revisit a bit of history.

In 2009, if the Greens had shown some ticker, some coherency and some commitment to future generations, we would have been able to legislate the Carbon Pollution Reduction Scheme—a Carbon Pollution Reduction Scheme that was supported by the great majority of the Australian people and by business groups, environmental groups and the trade union movement; a policy that would have legislated a carbon price through an emissions trading scheme that would have set us on a pathway to decarbonising the economy. It would have provided the policy certainty for the energy sector to invest so we wouldn't have the crisis we have right now. What happened? What happened is the Greens squibbed it, because they are rank opportunists. They would rather have this climate change crisis continue because it gives them a point of differentiation with the Labor Party. They would rather win the seat of Melbourne. They would rather contest inner city seats against the Labor Party than solve this national crisis.

They are the greatest opportunists in this parliament. I know that's a big claim because there are a few contenders, but they are the greatest and they are rank hypocrites. This nation, yet again, is paying the price for their failure to compromise. Compromise is not a dirty word. Skilled politicians are able to compromise as long as they are true to their values and always have the end goal in mind. Our end goal must be reaching a bipartisan consensus on energy and climate change policy in this nation. Other countries have done it. Germany has got it. Chancellor Angela Merkel, who is very conservative, has a Greens member as her energy minister. There has been a consensus in the UK for many years, so much so that the three major parties didn't even discuss climate change policy in the 2015 election because they all agreed on it.

We don't have to go out on a limb to say we need consensus and it is achievable if we see a bit of leadership. We need a bit of leadership and ticker from the government, who have squibbed it over the last four years, and a bit of commitment to values from the Greens and putting the national interest ahead of their petty, short-term political interests. It is achievable. I'm really proud that the Labor Party—and we've lost a lot of skin by doing this—have signalled a preparedness to compromise and signalled that we will put the national interest first rather than a grubby, vote-grabbing exercise, as the government and the Greens have done. This is an important policy and this is the way we must go forward on this issue. I commend the bill to the House but, unfortunately, it's another symptom of this government's mismanagement of energy and climate change policy in this nation.

Rebekha Sharkie (Mayo, Nick Xenophon Team) Share this | Link to this | Hansard source

I rise to speak on the Liquid Fuel Emergency Amendment Bill 2017 because it seeks to address a major issue of Australian national security. Australia currently holds no significant national liquid fuel strategy reserves to call on in the event of a disruption to the supply chain. As noted in the Senate inquiry of 25 June 2015—Australia's transport, energy resistance and sustainability inquiry—this makes Australia noncompliant with the International Energy Agency 90-day holding requirement, despite it being a requirement of our membership. In simpler terms, this means that in the event of a major economic shock or international armed conflict inevitable fuel shortages would result.

Australia currently does not hold any substantial fuel reserves within its borders to help it weather such a storm. This has been allowed to happen against the backdrop of a slowly multipolarising world. The Pax Americana of the post-World War II world appears to be eroding both from within the world's liberal democracies themselves and from the resurgence of powerful authoritarian states. The current nuclear brinkmanship between North Korea and the United States, and the very real possibility of a calamitous conflict brings Australia's vulnerability into sharp relief. It is in this startling context that I both welcome the steps this bill will take to build up Australia's strategic fuel reserves and decry how slowly it intends to achieve compliance with the International Energy Agency standards. As dreary as a topic as fuel reserves might sound, let me be clear: this is a very serious issue and an issue that will affect every Australian.

The Senate inquiry report that I referred to noted that Australia is almost totally reliant on liquid fuels for transport and transportation services which underpin significant economic activity, utilities and essential services. Any substantial disruption to Australia's transport fuel supplies would have a significant impact on safety, national security, national productivity and society.

Australia's declining crude oil production and refining capacity, coupled with its growing reliance on crude oil sourced from relatively unstable regions, is changing Australia's fuel-risk profile. Noting Australia is at the bottom of a long supply chain, the committee was repeatedly reminded of the vulnerabilities to the supply chain that result, quite apart from Australia's continuing inability to meet the International Energy Agency's stockholding requirement.

It is my understanding that Australia is currently the only member country to the International Energy Agency that does not have the fuel reserves that the agency believes to be necessary for an absolute minimum to safeguard our economy and way of life in the face of a disruption. To put that into a practical context, let us consider chapter 4 of the Senate inquiry report. In this chapter, the report referred to the federal government analysis of the Port of Adelaide which revealed:

… were a container ship to run aground at the entry to the port, off-loading the ship and its removal would take up to 14 weeks. The port retains up to 12 days of fuel stocks. The report revealed that, while the port remained blocked, only 10 per cent of Adelaide's fuel demand would reach Adelaide City after the first two weeks of supply ran out. Therefore, the state would have to survive on 10 per cent of its demand for up to 10 weeks. Air Vice Marshal Blackburn (Retired) explained the consequences:

If you lose 90 per cent of your fuel to a capital city for eight to 10 weeks, I have got to tell you that that is absolute chaos. It is not war. That is because there are single points of failure through our supply system.

I also note the major disruption that was caused at Melbourne Airport in November 2016 when a single shipment of aviation fuel failed quality controls. This followed two major aviation fuel shortages in 2015.

On 4 March 2017 this year, the Adelaide Advertiser ran a front-page article entitled 'Panic stations' which reported that police feared an outbreak of civil disorder as South Australians scrambled to stock up on essential items during the statewide blackout. Frantic emergency messages show, and details obtained by The Advertiser reveal, the true extent of how close South Australia came to chaos during the September blackout. The story went on to state that police warned of 'civil disorder if fuel is not available to public'. While the service stations had fuel in their tanks, there was no electricity to pump the fuel. If the disruption to fuel supplies created by a statewide blackout can cause the police to be seriously concerned about the possibility of a breakdown in social order, one can only imagine the widespread distress that ruthless fuel rationing would incur.

This bill does take some steps towards rectifying the situation by granting authority to the federal government to enter into commercial oil stockholding contracts with foreign or Australian entities, an arrangement commonly known as ticketing. However, the government's management of this issue is far from perfect. Firstly, they do not expect to achieve 90-day fuel reserve compliance until 2027—that's a full decade away, a full decade of global instability. In the meantime, oil companies in this country will progressively continue to close oil refineries and convert them to import terminals. Secondly, this ticketing system is but a conditional commercial arrangement which does not result in Australia holding physical reserves. This leaves us beholden to exactly the same breakdown of international commerce we are trying to avoid. I also cannot help but wonder whether these ticketing contracts also have force majeure provisions.

In conclusion, I welcome the government's willingness to remediate Australia's complete lack of strategic fuel reserves and work towards the 90-day International Energy Agency compliance. However, I question the efficacy of purchasing commercial tickets rather than holding physical stocks and, with the background of a challenging geopolitical environment, I strongly urge the government to greatly accelerate their efforts towards full compliance. We have increasing uncertainty in the world, and a decade is too far away.

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

At long last! In the outbreak of the last major war that we were involved in, Vietnam, the tank was probably the most important item of land warfare, and you would have an anti-tank weapon. Our anti-tank weapon was the Carl Gustaf rocket. They came from Sweden. Sweden said, 'We don't want you in Vietnam so we're not going to supply you.' So we had no anti-tank weapons in Vietnam in the First World War. We had 12 Beaufort fighters with which to defend Australia against an invading Japanese army that was turning out 1,000 planes a month. The Americans were turning out 25,000 planes a month. You would say, 'Well, there's no war on the horizon.' No! North Korea is making missiles and they now have a nuclear capacity to put on those missiles and they're flying them over Japan with gay abandon. Clearly, there is a person completely out of control. There was a bloke in Europe called Adolf Hitler who was completely out of control. He was a terrible man. Anthony Eden came back to Britain and said, 'Peace in our time,' but placating mad, crazy people is not going to create peace. As Winston Churchill said at the time: 'He who feeds the crocodile does nothing else except guarantee that, in the end, he will be eaten by the crocodile.' Those words apply today.

Let's compare the performance of the American government and the Australian government. We'll see who are the donkeys and who are the runners, and why they are the most powerful country on earth and we're going broke at the speed of 100 miles an hour. Every 11 years our national debt doubles. We've had a balance of payments and trade deficit for so long we've forgotten. We think 'current account deficit' is one word. America immediately moved—it's a fair while ago—when the threat from the Middle East was to cap their marginal oil wells. Something like 15 to 25 per cent of their capacity is capped oil wells. So, if they run into trouble, they can uncap them and put them into production. The United States already had ethanol—that was for health reasons—at around five per cent, on average. It was mainly concentrated in the big population centres, such as New York. 'Ozone non-attainment levels' was the technical term used. Then America switched to what is effectively 11 per cent ethanol content in their petrol.

Just how dumb a nation are we? So many people say to me, 'You can't have ethanol. Your car will break down.' All the cars are breaking down in America, are they? Are all the cars breaking down in Brazil? It has 500 million people—over a 10th of the world's population. One country has 60 per cent ethanol and the other one has 11 per cent ethanol. China has five per cent ethanol, Japan has five per cent, half of Indonesia has five per cent, and Europe has five per cent and is ramping up to 20 per cent.

To go back to America, they moved to get shale oil. Australia is one of the most shale-oil rich countries on earth. I represent the Julia Creek shale oil, which is the most lucrative and attractive shale oil in Australia. Almost by itself it could provide 10 per cent of Australia's oil requirements. But there are many other shale oil deposits in Australia not enriched by vanadium, as the Julia Creek shale oil is.

Let's just have a look at this. Julia Creek can produce 10 per cent. Hells Gate dam, which the government is looking at and the previous government initiated, can produce five per cent. STDS, the southern tablelands development scheme, is an irrigation scheme. There's one on the Herbert River and one on the Burdekin River. It can produce four per cent. Five per cent can come from existing ethanol plants. They can be ramped up to do five per cent. The plants are at Manildra and at Dalby in Queensland. The Bradfield scheme, using just some of the waters in the high-elevation rainfall areas which I represent plus the Mitchell River and Gilbert River—even if we only take five per cent of their water—can most certainly produce 15 per cent without any difficulty. The Mitchell River is the biggest river in Australia—it's bigger than the Murray-Darling and produces nothing at the present moment—and the Gilbert River is not all that much smaller than the Mitchell.

Let me make a side point. We are talking here about oil security but we are closing a sugar mill every two years in Australia. The fourth-biggest agricultural industry—or, arguably, the third-biggest agricultural industry—is slowly closing down because we can't compete against the Brazilians. Even they admitted in the hearings in the 1990s that they have a $1,000-million-a-year cross-subsidy into their sugar industry from the ethanol industry. That's their opinion. The Americans said it was nearly $3,000 million. So let's say a $2,000 million subsidy. We can't compete against a subsidy of that magnitude to Brazilian sugar.

In the grains industry, the Americans are getting a 16 per cent benefit because they have ethanol. Our grain producers don't get that. Once again, the grain producers are going down like ninepins. The biggest grain producer in Australia, Nicoletti, in Western Australia, has gone down. The third-biggest producer in the grains industry has gone down. The twentieth-biggest producer in the grains industry has gone down. So there is a 16 per cent benefit there and a 23 per cent benefit for the sugar industry.

But we're not here today to talk about that. We're here today to talk about a million people that have to get to work every day in the greater Brisbane area on petrol-fuelled, oil-fuelled and diesel-fuelled transportation systems. They simply can't go to work if there's nothing there. Infinitely more serious for North Queensland is: how the hell do we get our goods up to North Queensland? If you're on heart medication, as I am, and you don't get the medication, you die. I'm probably pretty well off, but there are maybe 20,000 people in North Queensland that are in a serious position: if they don't get that medication they die. How are you going to get the medication? Are we going to take it on horseback?

We have the same irresponsible governments that sent my battalion up to Kokoda with one machine gun—there was no artillery because we couldn't produce artillery pieces—and with 12 Beaufort fighters to defend Australia. People in this place were responsible for that treason. Infinitely more terrible is the situation that, if you blow up a couple of dozen tankers coming into Australia, you cripple this whole nation. We can't take a single weapon a single yard without some form of transportation—unless we're going to walk, of course.

We have an existing five per cent now from ethanol and some other alternative fuel sources. With the Bradfield, even if you only take five per cent of the waters of the Mitchell and Gilbert rivers it will give you another 15 per cent of your petrol requirements in Australia. The grains industry, without even noticing it and by fixing themselves up, can provide 12 per cent. Why is this not happening? Ethanol is cheaper. The last time I looked it was 84 cents a litre in Brazil, 94 cents a litre in the United States and 154 cents a litre in Australia. One country has 60 per cent ethanol and the other has 10 per cent ethanol; yet they are so much cheaper than we are here in Australia. I won't go into the issue of taxation but I wish someone would do a public debate because I will really smash you up if you use that argument. That is really stupid.

With the Julia Creek shale oil we have the ability to provide 10 per cent, and I'm sure that there's another 10 per cent locked up elsewhere in other shale oil deposits that we can produce from—the same as they do in America. From the Hells Gate irrigation proposal, near Townsville, we can provide five per cent of Australia's fuel needs. From the same scheme on the Herbert River, near Cairns, they can produce four per cent. So there's 30 per cent of your requirements. You already have five per cent from existing ethanol plants that can be ramped up. So there's 35 per cent. With Bradfield, on the Mitchell and Gilbert, if you start doing water schemes there, you get another five per cent. That's 50 per cent. With 12 per cent from the grains industry, you're on 62 per cent. America, at present, are on 75 per cent self-sufficiency. They were on 40 per cent when things got a little bit touchy with the Middle East and they immediately moved with great aggression to 75 per cent supply from their own resources of shale oil and ethanol. And, if necessary—and I'm not including this in the 75 per cent—they can bring onstream at any moment the capped oil wells.

Australia, until this moment, has done absolutely nothing. What do we people in here get paid for? What do you do to get paid a $200,000-a-year salary package? Surely, the most elementary thing is to provide safe transportation in this country. It is not as though each of you don't know. Each of you got the NRMA report, done by a retired admiral. But you should not have to get that report to know that this country is dependent upon tankers coming through Singapore, which is Chinese racially, and on both sides are countries of Muslim persuasion. There's a lot of friction in that situation. So those tankers have to come through Singapore, which is Chinese; an area where the people are committed to the Islamic faith. I'm not knocking that; I'm just saying that there has been a lot of sensitivity and abrasiveness there—and that's where our tankers come through. The South China Sea is reachable by missiles, and, as we speak, there are huge bases being built there by the Chinese.

What are we doing about it? Absolutely nothing. The port of Darwin, the only port we have in Australia that is in South-East Asia, was handed over and the bloke got himself $880,000 a year—and the government has done absolutely nothing about what can only be described, and will one day be described, as treason to this country. The Americans have 2,000 marines in Darwin to protect a port that is not now theirs. The minister at the dispatch box is grinning. He thinks this is funny. He thinks it's funny that his nation has no oil and no defence capability. He thinks it's funny that someone is getting upset about him being on his $250,000 or $300,000—or whatever ministers are on. Well, your days are coming to an end, my friend. Have a look at the polls. You're on 30 per cent.

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

I remind the member to put his comments through the chair.

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

And the ALP is on 30 per cent, and we people sitting here are also on 30 per cent. So laugh now, my friend, but future generations of Australia will remember that you sat there laughing while someone told this parliament that we need a secure supply of oil. It can be produced tomorrow for negligible government outlay.

I might add that, when they say we have to have foreign investment in Australia, I'd like to know why. I speak with authority, because I was one of the two people running Queensland at one stage. The great Sir Leo Hielscher—two of the four biggest bridges in Australia are named after Leo Hielscher—said, 'It's just money.' When we're talking about development—made money—he says, 'It's just money.' Of course it is, but you want to spend all your money building ring roads around Sydney and Melbourne and tunnels in Brisbane and not on development. $25 billion of superannuation money is going offshore into the American stock market, which is nothing more than a gambling casino. In the good old days, 60 per cent of all superannuation moneys went into government securities, which then went into building dams, railway lines and ports. (Time expired)

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I'm pleased to rise to speak on the Liquid Fuel Emergency Amendment Bill 2017. The reason for this bill is the International Energy Agency places an obligation upon all their members to have a stockpile equivalent to 90 days of their imports of oil. For many years, since we became a member of the International Energy Agency, it was something we didn't have to worry about here in Australia. We had our Bass Strait oil on stream and we were almost, for most of that time, either oil self-sufficient or very close to it. In the year 2000, the supply of oil from Bass Strait started to dry up, but, contrarily, while our supply was drying up, our demand for oil in this nation was increasing. Today, we face a prospect in this nation where we are more reliant on imported oil than at any time in our nation's history. Even before the discoveries of the Bass Strait oil, we are now more reliant on oil than at any time of our history.

As for meeting our obligations under the International Energy Agency, it was estimated in April 2017 that we only had 51 days' equivalent worth of oil imports against a requirement of 90. That makes us the only member of the International Energy Agency to be in breach of those obligations. The first question is: how relevant is that 90 days? Ninety-one days doesn't make you secure; 89 days doesn't make you insecure. It's an arbitrary line about where it is. As well as an international obligation, we also need to be looking out for Australia's national interest. What level of oil do we need in the country—a reserve holding in stocks—that could get us through a crisis?

In relation to that, I note that the Australian Institute of Petroleum has argued that that 90-day requirement should be reviewed, considering it was set back in 1974 and that global oil markets have evolved sufficiently in that time. The Australian Institute of Petroleum has questioned the logic of investing in oil stockholdings, suggesting that there 'is no evidence that the substantial cost of emergency stockpile is justified on energy' grounds, noting that 'Australian fuel supplies have not been disrupted' even during global supply disruptions. Similarly, Caltex has argued that increasing Australia's oil stocks to 90 days of net imports 'would make very little difference' to Australia's fuel security and suggested that the high cost of investing in a strategic fuel reserve 'would need to be met either by increased fuel prices or diversion of public funds'.

There would be a very, very significant cost to this economy, to this nation, if we were to meet that 90-day requirement with physical stocks of oil in this country. Effectively, by going with the mechanism of purchasing tickets, we are running the gauntlet on our nation's national security of ensuring that we have enough liquid fuel in this nation. In contrast, we look at what they have done in the USA. It wasn't that long ago in the USA that the term 'peak oil' and their concerns and their reliance on imported oil from the Middle East was a major political issue. In fact, it was President Obama who said, 'We can't drill our way out of oil,' while others said, 'Drill, baby, drill.' Thankfully, that is what the USA did. They developed new techniques of drilling. I would like to quote a very significant quote. It is from Allen Gilmer, the co-founder and executive chairman of Drillinginfo. He said of the new discoveries of oil in the Permian Basin in West Texas—and this seems almost contradictory:

We should view the Permian Basin as a permanent resource—

of oil—

The Permian is best viewed as a near infinite resource—we will never produce the last drop of economic oil from the Basin.

That is what their situation is in the States. Here in Australia, we have Labor and the Greens wanting to stop every possibility of oil exploration. We have members of the Labor Party in this debate talking about how they are concerned about oil security in this nation, and yet at every opportunity their state colleagues seek to block, with their Greens mates, oil exploration and gas exploration in this country. That puts our nation at a significant risk, and it imposes a significant cost to the economy.

Then we had the amendment moved by the hapless member for Port Adelaide, the shadow minister for energy. I would like to read part of his ill-considered amendment to the House. He said:

… the Government’s lack of national energy policy … is causing an investment strike in new electricity generation …

This just shows how completely out of touch the shadow minister for energy is. There is no investment strike; there are billions and billions of dollars—I estimate, on the back of an envelope, around $7 billion—worth of investment in new generation facilities, in wind turbines and Chinese solar panels. There is no investment strike in those, but the problem we have is that those sources of energy generation are intermittent and are unreliable. Whatever investment we have, we must have it backed up, and backed up 99.9 per cent, if not 100 per cent, by dispatchable power.

What are the Labor Party doing? They say they want to close down all the coal-fired power stations in this nation. We don't have enough dispatchable power in the marketplace at the moment, and the Labor Party, with their friends the Greens, want to close down the rest of the coal-fired power stations in this nation. How are we going to get the electricity to run this economy? It's not only liquid fuel that we should be concerned about in the security of this nation, but there is also electricity that we should be concerned about in this nation. Without electricity, you cannot run your hospitals, you cannot run your public transport systems, you cannot run your list of high-rise buildings. This economy grinds to a halt if we cannot continue to supply it with enough electricity.

What do the Labor Party do? They want to invest this nation's precious capital in building more intermittent and unreliable sources of electricity generation. We have seen that with the cost of the Renewable Energy Target and federal schemes, which was a $60 billion subsidy—by 2030, a $60 billion subsidy. And that is only the federal subsidy!

On top of that, you have to add the state subsidies—even the Grattan Institute has estimated an additional $14 billion subsidy. It's simply a reverse Robin Hood: taking from the poor and giving to rich green people $14 billion worth of subsidy. Then you have the hidden costs of hooking all these wind turbines and solar panels up to the grid—billions of dollars of further cost to the economy. And then there's the cost of what it does in distorting the market. When you force intermittent and unreliable electricity generation into the grid, the more you put in, the higher the cost because you have to back it all up 100 per cent. That is why the Prime Minister is correct to look at projects like Snowy 2.0, the expansion of the Snowy Hydro Scheme, because you have to back it up.

We have a crisis in this nation. We have a crisis with our liquid fuel, with our greater reliance on imports; we have a crisis in electricity generation; and the third place, which is also mentioned in the member's amendment, talking about the government's failure to ensure adequate and affordable gas supply—whose fault was that? It was the state Labor government of Queensland and the Rudd-Gillard government that were clearly warned that, if they went down the track of opening up all the gas exports without putting steps in place to ensure that we had sufficient supply in Australia, gas prices would skyrocket, and that is exactly what happened. So we have three issues putting the energy requirements of this nation at risk, all caused by the Labor Party.

As for the member for Port Adelaide's motion about the investment strike in new generation, the simple reason there is an investment strike in dispatchable power, be it coal or gas, is that anyone that invests in a new coal-fired electricity generation plant knows that they need a commercial return over at least 30 years, and they know that, in that time, there is a grave risk of a mad, left-wing, Green-Labor government taking control of policy in this country and pulling the rug out from underneath them. That is why there is an investment strike.

We need to do better. We need to acknowledge that the cost of energy is one of the most important things for driving wealth creation and prosperity in this nation. You combine that with human ingenuity and risk-taking—it is low-cost energy that is the force multiplier that creates wealth. If we want to fund all the social programs that we talk about in this parliament, like continuing to fund the National Disability Insurance Scheme at a cost of $22 billion a year, and if we want to fund our health care, our hospitals, our schools, our roads, our public transport, our aged care and our pensions—if we want to fund all those things, we must have low-cost energy in this country. And yet every single policy lever that Labor can put their hands on pushes up the price of electricity to Australian consumers.

We need to get drilling. We need to understand that the oil capacity development that we have in this country has fallen off the edge of a cliff. We need to ensure that we get our gas drilling started again. We wish that the Labor members from Victoria would talk to their state counterparts about the nonsense of pursuing a 40 or 50 per cent state renewable energy target and the dangers to the economy of locking up all their gas supplies, but we don't hear a peep from them. All we hear is that they don't want to pursue the Paris targets, which the government's agreed to, of a 26 to 28 per cent cut; they want to pursue a 40 per cent cut. I would like a member of the Labor Party to explain to me how we are going to get a cut of 40 per cent in our liquid fuels? You may want a 50 per cent Renewable Energy Target in electricity, but what are you going to do to liquid fuels? How are you going to get that cut of 40 per cent in this nation's liquid fuels? How will you get it in aviation? How will you get it in trucking?

Mark Coulton (Parkes, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour.