Dave Sharma (Wentworth, Liberal Party) Share this | Link to this | Hansard source

I seek leave to speak again without closing the debate.

Leave granted.

Today I rise to make a statement concerning the Joint Standing Committee on Treaties report No. 187. The report contains the committee's review of nine treaty actions, and I would like today to highlight two of these treaties in particular: the prolongation of the MH17 treaty and the Israel double-taxation convention.

The MH17 treaty enables Australian involvement in the investigation of the downing and destruction of Malaysia Airlines flight MH17 over Ukraine in July 2014, in which 38 Australians were killed. This investigation is administered by the government of the Netherlands, where the involvement of foreign personnel in a criminal investigation requires a treaty level agreement. This is the fifth prolongation of the original treaty of August 2014, and, while the immediate response to the incident has concluded, the investigation and the preparation for the prosecution of the perpetrators in the Dutch criminal system are going. On 19 June 2019, indictments were announced against four individuals for their alleged role in the downing of MH17. The prolongation treaty that the committee considered reflects this new phase in the investigation. Unlike the previous prolongation treaties, this treaty does not specify an expiry date, enabling Australian personnel to participate in the investigation until it is concluded.

The Prime Minister of the Netherlands, Mark Rutte, and our own Prime Minister recently reaffirmed the collective and unwavering commitment of our country to stand firm on MH17 in defence of our shared values. I quote from their joint press conference:

Our two countries continue to stand united and resolute in our commitment to pursuing accountability for this tragedy and to achieving justice for the 289 victims and their loved ones.

Prime Minister Rutte was recently made an honorary companion of the Order of Australia by the Governor-General, at Admiralty House, in recognition of his exceptional leadership in establishing the MH17 investigation team. I echo here my own commendation for his actions. The prolongation of the MH17 treaty will allow us to continue to pursue accountability for this tragedy and to help achieve justice for the victims and their loved ones, including the 38 Australians and their families.

The Israel double-taxation convention establishes an internationally accepted framework for the taxation of cross-border financial transactions between Australia and Israel. Commercial ties between Australia and Israel have grown markedly over recent years. Two-way trade in merchandise amounted to approximately $1 billion in 2017-18, and, as of June 2019, Israel was the third largest source of foreign company listings in Australia, with 20 Israeli companies, predominantly in technology, listed on the Australian Stock Exchange. The convention will support and strengthen Australia's close economic, trade and commercial relationship with Israel by ensuring that tax residents and companies in both Australia and Israel are not subject to double taxation, while implementing measures to prevent tax minimisation. This agreement will also help strengthen the innovation relationship between our two countries, which is so critical to our common future. Both Australia and Israel are also parties to the OECD's Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, which provides an international framework to prevent taxation treaties from being used for tax minimisation. The Israel double-taxation convention is the latest addition to Australia's network of 44 tax related treaties. The convention is consistent with Australia's model tax convention on income and on capital, which, in turn, is based on an OECD model convention.

The committee supports all of the treaties considered in Report 187. The report also contains the committee's review of six minor treaty actions. On behalf of the committee, I would like to thank the other members of the committee, including the member for Fremantle, who is here today, and the member for Wills, for the constructive manner in which they worked on both this report and Report 186. On behalf of the committee, I commend the report to the House.

Josh Wilson (Fremantle, Australian Labor Party, Shadow Assistant Minister for the Environment) Share this | Link to this | Hansard source

I'm glad to make some comments on the tabling of Report 187, which covers six treaties. At the outset, I join the committee chair, the member for Wentworth, in recognising the work of the secretariat in supporting JSCOT through the process, and I thank the member for Wentworth for his comments about two of the treaties covered by the report, in particular the agreement that supports Australia's work in seeking justice in relation to MH17.

I want to make some specific observations, however, about the agreement between Australia and Hungary in relation to oil stock contracts. It's the second agreement of this kind; we concluded a similar agreement with the Netherlands last year. These treaties allow us to purchase oil tickets, which are, essentially, options on oil resources. A lot of people in the broader community would ask why we are doing that. We're doing that because, as a member of the International Energy Agency, we're supposed to maintain 90-days equivalent fuel consumption cover, both as a matter of such-sufficiency and as a matter of shared commitment to global oil security. Unfortunately, we are a long way out of compliance, and we have been for some considerable time. In December last year, we had 53 days of annual fuel imports, and our consumption cover at that stage was equivalent to only 18 days of petrol, 22 days of diesel and 23 days of jet fuel. Needless to say, that puts Australia in a position of significant risk, and we shouldn't kid ourselves that our liquid fuel security is anything other than fragile and unusual. If there were an issue affecting oil production or supply in the Middle East, or an incident affecting shipping lanes in our region, we would be in trouble.

Australia is extraordinarily dependant on liquid fuels compared to other countries. Yet, we are in a far worse position—indeed, I think we can say a unique position—when it comes to liquid fuel security, compared to other countries. The government's interim report on liquid fuel security, which was provided last April, six months ago, noted:

Australia is an outlier in the global community in the way we think about liquid fuel security. When we consider countries of similar economies, most see fuel security as part of their strategic capability and take steps to manage fuel security with that in mind.

Some other key points from the interim report include that, putting New Zealand aside, of all IEA members, we are the only net importer of oil that does not hold either industry mandated or government owned stocks. We're the only country in that position. At the same time, growth in liquid fuel demand is much higher in Australia than in similar OECD countries. Our mining and agricultural sectors are 90 per cent reliant on diesel fuel. Our transport sector is 99 per cent reliant on liquid fuels. We're behind other OECD countries when it comes to the uptake of vehicle fuel efficiencies and new vehicle technology. We have the third highest ownership of motor vehicles per capita in the OECD, but the market share of electric vehicles—which, of course, are not dependent on liquid fuels—in Australia is less than one-seventh of the share in Canada and the US. This is an important point: since 2018, there are no Australian flagged and registered fuel tankers. In fact, there are barely a dozen Australian flagged vessels of any kind, which is a serious sovereign capability issue in itself. That is a confronting list, and I don't think that anyone would disagree that it needs a serious, and I would say relatively urgent, government response.

I was interested to hear today in question time that the minister for energy appears to be relatively sanguine about our liquid fuel situation. He gave no indication to the House that the government has any particular sense of urgency or any meaningful reform in mind at this stage. The only specific reference he made in answer to a question was that work was currently being done between the Australian government and the IEA to modernise the oil stockpile methodology. I'm not sure what that means, but it sounds like we're hoping for an accounting trick to cover up the fact that we don't have enough fuel to get us through a crisis, should one occur. The minister's approach is in stark contrast to the expert view of retired air vice-marshall John Blackburn, who has said:

Energy security is a prerequisite for protecting our way of life and therefore I am of the view that markets cannot be held responsible for energy security which is a component of national security; Governments must take that responsibility.

Mr Blackburn's summary of Australia's current situation is as follows:

The bottom line is that, given the deteriorating security environment in the Asia Pacific region, we are in a strategic warning period for fuel security, we have a flawed NESA—

national energy security assessment—

that is out of date, there are no Government-owned strategic fuel reserves and no mandated industry fuel stocks. We're a 100 per cent reliant on market forces and there is no Plan B … apart from the helpful advice for everyone to make the "necessary preparations."

The final report of the Liquid Fuel Security Review is due by the end of this year—the minister for energy made that point today—and its findings are expected to shape the government's response to our genuinely parlous and fraught circumstances when it comes to liquid fuel security.

Through the agreement with Hungary, which is the subject of the Joint Standing Committee on Treaties Report 187, we now have the opportunity to purchase further oil tickets. That only adds a few days of additional supply. In essence, this purchase of oil tickets or the opportunity to purchase oil tickets represents a gesture of good faith on Australia's behalf as part of a commitment we've made to the IEA first to purchase these tickets and then to settle a full pathway to compliance by 2026. Needless to say, that second part of the equation, phase 2, is going to be the hard part. But it's long past time that we took steps to address our considerable energy insecurity.

We do hear in this parliament a lot about how the safety and the security of the Australian people must always be the government's highest priority. If you were looking at that claim through the prism of liquid fuel security, you'd be astonished to see the circumstances that we are in on the one hand and the lack of government action on the other. We are in a category all of our own. We are a continent nation a long way away from the rest of the world that is extraordinarily reliant on liquid fuels and that has very, very little liquid fuel that we can call on in a crisis. This is at a time when our demand for liquid fuels is growing and other measures that would militate against our current dependence, like the uptake of electric vehicles and other kinds of technology, is often scorned by members of the government rather than being seen as a necessity and an opportunity.

In the face of the circumstances in this country in relation to liquid fuel security, which can only be described, from a security point of view, as a market failure—as Mr Blackburn described—like climate change and like plastic pollution, the government is going to have to put aside its blind faith in the market and its blind hatred of so-called red tape and take action. But, based on what we've seen, I won't be holding my breath.

Debate adjourned.