Angus Taylor (Hume, Liberal Party, Minister for Energy and Emissions Reduction) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

Today the Morrison government is taking the next steps to lock in Australia's sovereign refining capability and our long-term fuel security to keep our economy moving. I'm pleased to introduce the Fuel Security Bill 2021 and the Fuel Security (Consequential and Transitional Provisions) Bill 2021 to the House. These bills implement key measures to deliver the government's commitment to long-term fuel security, supporting Australia to keep the economy and critical services running. The government has worked closely with the fuel industry and users on the design of these bills. The Morrison government has secured agreement from the Ampol refinery in Brisbane and the Viva refinery in Geelong to operate at least until mid-2027. Passage of these bills is critical to ensuring this agreement can be realised. This will protect 1,250 workers employed at the refineries and create a further 1,750 construction jobs for the major infrastructure upgrades. This package will secure our fuel stocks, protect motorists from future high prices and value the fuel security services Australian refineries provide. It will be done through establishing a fuel security service payment to lock in our refineries and setting out the key parameters for the minimum stockholding obligation.

The bill addresses the need to safeguard against fuel disruptions and the need to ensure Australians have access to reliable energy, both of which are essential to our economic recovery. The economic impacts of COVID-19 have reminded us that we can't be complacent when it comes to national sovereignty and self-sufficiency. Due to reduced demand, the pandemic resulted in a surplus of fuel products, particularly jet fuel, with demand dropping by over 80 per cent. Refineries faced challenges in reducing the production of petrol and jet fuel whilst maintaining diesel production. While Australia's fuel supplies have remained secure and affordable through the pandemic, we know we need to shield Australians from potential shocks in the future and enhance our national security in the process. Our economy relies heavily on energy from liquid fuels, and this will continue to grow. Growth is likely to be driven by increased demand for road and rail freight, agriculture and mining, and we want to see those industries continue to grow and prosper as they have in recent years. Diesel is our most important transport fuel, and Australians use more diesel than electricity. It is also the critical fuel source during an emergency, powering the trucks that move our food, our pharmaceuticals and our emergency services vehicles.

The bill will protect our ability to produce these vital fuels during an emergency. In a worst-case scenario, even if imports are disrupted, our refineries are able to provide the fuel needed to run our critical services through processing of Australian crude out of places like the Bass Strait and Cooper basins. We cannot be in a situation where we don't have this capacity in extreme circumstances. The minimum stockholding obligation will also safeguard levels of petrol and jet fuel and see a 40 per cent increase in our diesel stocks. This will provide certainty for consumers that extra stocks are at hand. Together, the fuel security services payment and the minimum stockholding obligation will secure our supplies into the future. These measures will also assist Australia's commitment to meeting our obligation as a member of the International Energy Agency.

Firstly to the minimum stockholding obligation, which will guarantee a baseline level of key transport stocks at all times. The obligation will see Australia's jet fuel, petrol and diesel stocks maintained at 2018-19 average consumption levels at the very least. The first stage commences on 1 July 2022. Diesel stocks will then be increased by 40 per cent from July 2024. This is due to the critical importance of diesel. It's the most important and versatile fuel needed to protect us during a disruption. Our farmers, our emergency services, our truckies, our industry all rely on diesel to keep moving.

The bill builds on our previous announcement to fund the construction of a significant new domestic fuel storage capacity through the government's $200 million Boosting Australia's Diesel Storage Program. The program supports the implementation of the minimum stockholding obligation by providing co-funding for the construction of the additional storage capacity that will be required by these measures. We will continue to work with industry over the rest of the year as we draft the subordinate legislation to support the implementation of the minimum stock holding obligation in readiness for 2022.

The bill also ensures the future of our local refineries and that will protect jobs, our economy and our ability to refine domestic crude oil in times of emergency. Viva and Ampol have agreed to remain in operation until at least mid-2027, contingent on this legislation being enacted. The government remains disappointed with the decisions of BP and ExxonMobil to close their refineries and the impacts this will have on their workers and their local communities. The government made clear its intention to support in September last year, with both BP's and Exxon's decisions coming after this initial announcement. Both Exxon and BP made clear that these decisions were based on commercial factors and were not a reflection of local policy settings. As Frederic Baudry, the head of BP Australia, said:

There is no amount of cash the government could have offered to us, given our own economic situation and strategy, that would have made this viable.

And at the time Nathan Fay, the chairman of ExxonMobil Australia, said:

We extend our thanks to the federal government for the significant support offered to Altona and other refineries. Our decision to convert our facility … is not a reflection of those efforts.

For Viva and Ampol, to put it very simply, without the ongoing support guaranteed through this bill, it is likely those remaining refineries of Viva and Ampol would have closed within the next five years. This would mean Australia would be 100 per cent dependent on overseas supply chains to meet our fuel needs. The retention of the refineries will also result in over 1,000 direct jobs being secured. If they had not been retained, we would have lost over 1,000 jobs and investment, of course, would have been taken out of local communities.

Locking in our refineries is a matter of national security, of Australia's sovereignty, our self-sufficiency at critical times and our resilience as a nation. The government is introducing this bill because we believe the role of our domestic refineries in our energy system is critical to our nation.

The fuel security service payment detailed in the bill will provide refineries an assurance that when times are tough they will be supported in the form of a payment which will limit their downside risk. To protect the taxpayer, the government will not be paying the refineries when they're making profits. In exchange for this variable level of support, domestic refineries will commit to remaining open in Australia until at least 30 June 2027, protecting Australian jobs and livelihoods as well as our fuel security. This can be extended to mid-2030.

Separately, they'll also be supported to bring forward major infrastructure upgrades to produce low-sulphur fuels from 2027, which was the original date, back now to 2024. We've brought it forward three years. The passage of the bill will ensure that the payments can commence from 1 July 2021, and the government's temporary production payment will cease at the end of June this year, so it's essential there is certainty for refineries as to this timing.

The bill enacts the commitments we announced as part of our 2020 fuel security package, which will see Australia safely through future disruptions. These measures will be overseen by a comprehensive regulatory framework that's to be implemented by the Department of Industry, Science, Energy and Resources. The minor bill will also amend four existing acts to reduce the regulatory burden on entities covered by the main bill. This will ensure the integrity and efficient implementation of the minimum stock holding obligation and production payments in an appropriate manner.

This package is supported by industry as well as the refineries. The businesses that keep our economy running understand the importance of fuel security and refineries. The Australian Trucking Association, for instance, has noted that this package is a big win for every road user. The Australian Automobile Association and the Federal Chamber of Automotive Industries have both welcomed the package, understanding the range of benefits it brings. The benefit of jobs and investment into our regions is also clear, with the AWU secretary Dan Walton saying of our package, 'It will save thousands of jobs, both directly at the refineries and indirectly for jobs supported in the community.'

Fuel is crucial across the economy, and this package will secure the future for all fuel-dependant industries—our truckies, our tradies, our farmers, our commuters, our miners—and of course, everyone who travels in Australia. Without the government's package supported by this bill, we will most likely lose our refining capacity and, with it, the jobs and national security that it brings. We all rely on fuel. We all need fuel security and that's why the government is committed to protecting it. I commend these bills to the House.

Debate adjourned.