Rick Wilson (O'Connor, Liberal Party) Share this | Link to this | Hansard source

As I was saying prior to the interruption for members' statements at 1.30, the fuel security service payment is one of two key components of this legislation. The fuel security service payment will be a payment to the refiners to limit the downside risk. This payment will cease when the refining margin reaches $10.20 per barrel. It will increase to 1.8 cents per litre when the margin per barrel is as low as $7.30. That is the cap. It will not increase beyond that measure. For the refiners to be able to access this payment and this support they will have to agree to continue to refine fuel in Australia until the middle of 2027. That is the incentive, I guess, for the remaining refineries to continue to produce fuel here in Australia. That is a particularly important part of this package.

The second part of the package, one that's particularly important to my electorate and me, is the minimum stockholding obligation. This is an obligation for industry to retain levels of petrol, diesel and jet fuel to increase by up to 40 per cent by 2024. The reason this was brought to my attention was that, when we were in the middle of the COVID lockdown in April last year, we were preparing for seeding in the electorate of O'Connor, which is a vast agricultural electorate. We were faced with a situation where we had closures and shutdowns happening all over the place, farmers were preparing to sow their crops and no-one really knew whether trucks would be allowed to get through. We didn't know whether fuel supplies were going to be shipped to his country. It caused incredible angst amongst my communities, particularly the agriculture communities but also the mining communities.

As the season unfolded and the crop went in we were able to get access to the supplies that were needed for those farmers and those croppers, but it was much broader than that. The woodchip industry requires large amounts of fuel. Just getting general freight from the city to Albany and Esperance and other parts of my electorate is 700 kays. To Kalgoorlie it's 600 kilometres. Just to sustain these communities with food and general supplies requires an enormous amount of fuel, particularly diesoline in this case. We got through that, but it did bring home to my communities just how important was having a guaranteed supply or a much larger stockholding of fuel.

To illustrate the importance of getting that crop in, last year the Western Australian grain crop, which was sown in that April-May period, produced around $6 billion worth of grain, which was mostly exported. That was the sowing of the crop component and the producing of the crop. Once the crop is harvested, we have to get that crop to port. Once again, that requires large amounts of diesel, whether that be for road transport—around two million tonnes of that crop is transported by road—or for locomotives.

It's not just the grain industry that was exposed. Western Australia last year produced something like 228 tonnes of gold. Australia is the second-largest producer of gold in the world, and of course that gold last year brought in many billions of dollars of export income that was, once again, critical to the recovery of our economy, and we're seeing that ongoing recovery at the moment. So the importance of having the strategic fuel reserves was brought home in no uncertain fashion last year.

The towns of Albany and Esperance already have significant storage facilities which are not being fully utilised by the various fuel supply companies. As part of this program I'm looking forward to seeing some investment by those fuel companies in the upgrading of those facilities and in the bringing on of refurbishment to make sure that those fuel supplies are stored in the regions where they are required, in the region that produces the wealth of this state, and are available for our primary producers across my electorate of O'Connor and Western Australia and Australia more broadly.

That's all that I wanted to say on this bill in my short contribution. I just wanted to draw the parliament's attention to (a) how important it is to have these strategic stocks of fuel stored around my electorate and (b) the incredible contribution that primary producers—be they farmers or foresters—the tourism industry and the mining sector make to not only the economy of Western Australia but the economy of Australia more broadly.

Ms Catherine King (Ballarat, Australian Labor Party, Shadow Minister for Infrastructure, Transport and Regional Development) Share this | Link to this | Hansard source

I, too, rise to speak on the Fuel Security Bill 2021, particularly in support of the amendment moved by the member for McMahon. This bill is an important bill. It extends support in an attempt to ensure the continuation of an essential Australian capability, to protect jobs and to ensure that Australia can continue to function in times of international strife and disruption. As all in this place know, Australia's fuel security is now at probably its most precarious level in our modern history. The COVID induced drop in demand has exacerbated underlying structural pressures in Australia's fuel refineries. We don't store enough fuel in this country, and we are fast losing any capability to refine fuel ourselves.

On 14 September 2020, as part of the 2020 budget, the Prime Minister and the energy minister announced an initial fuel security package. At the time, the government claimed the package would 'back local refineries to stay open wherever commercially possible'. Just six weeks later, BP Australia announced the closure of the Kwinana refinery. Then, in December 2020, the minister for energy announced that the government would bring forward the production payment to 1 January 2021, with $83.5 million to be paid over six months. In that announcement, the minister claimed that the government was 'taking immediate and decisive action to keep our domestic refineries open'. Less than two months later, ExxonMobil announced the closure of the Altona refinery. Two fuel security announcements in three months did nothing to stop the closure of two refineries, leaving us with only two refineries across the whole of this nation. This isn't a government that just got into power; this is a government that has been in power for eight long years, and it has absolutely neglected this important national security issue and our national capability.

The bill we're debating here is the government's third attempt. We hope, for the nation's sake, it is third time lucky. These bills will support the continued operation of our two remaining refineries through providing a subsidy when the market is low and imposing minimal stock obligations on fuel importers. The bill will also bring forward refinery infrastructure upgrades and accelerate the review of fuel standards in Australia, something that is long overdue. While these measures are welcome and Labor will support them, the bill does not do nearly enough to make up for this government's past failures.

To quickly sum up, half of Australia's remaining refineries have closed since the government's initial fuel security announcement in September 2020. Even after this package, Australia will remain non-compliant with its International Energy Agency obligation to hold 90 days of oil reserves, meaning we depend disproportionately on imports, and Australia still lacks a sovereign shipping capability, leaving us reliant on foreign owned and operated tankers. Hundreds of workers have lost their jobs. Australia's fuel security is worse than ever, and the government is still not doing enough to address the situation. This dire situation is the result of years of neglect. This neglect has played out not only in the closing of refineries but also in dirty, low-quality fuel and a consumer and industry fleet that is unable to accommodate the world's most modern and clean engines in this country.

It is well known across industry that Australia is a First World nation running on Third World fuel. We are one of only six nations in the OECD without fuel emissions standards. Our average emission intensity for passenger vehicles is 45 per cent higher than Europe's. The standards of our 91-, 95- and 98-octane fuel have been banned in Europe for over a decade. Our trucking fleet is older and dirtier. We can't import the most economical modern vehicle engines, because our petrol and diesel are not clean enough for them to run on. And these standards are due to remain unchanged for years to come in this country. At the same time, the government is standing in the way of electric vehicles, leaving Australia even further behind the pack when it comes to the future of vehicles across the world. The government should have got on with this years ago, encouraging electric vehicles, supporting and encouraging the upgrade of fuel refineries and ensuring that we have an adequate supply on our own shores. But the government has failed to do that.

This bill will take some action in bringing forward upgrades and accelerating the fuel standards review. But, given this government's complete failure and its record, it's hard to believe that this will be enough. They've made three announcements in eight months, but they haven't done the follow-up of securing our nation's fuel supplies, and this failure has left this country in a very vulnerable position. Fuel is important for what it does. It helps the transportation of goods, materials and people across our vast nation—our trucks, our ships, our cars, our buses, our trains and our planes. Australia runs on fuel. Our society cannot function without fuel, but we have very little here. Particularly with our limited refining capacity, we need to ensure that we have sufficient stocks onshore to maintain our society and our economy.

But once again, under this government, we are falling behind. Under International Energy Agency agreements, Australia should have 90 days of fuel reserves available at all times. Australia has not had 90 days of reserves since 2012—eight long years of this government, but not once have they met the minimum benchmark. Last year the government made an announcement, as they often do, telling us that they would do something about this. 'Finally the government cares about our fuel security,' we thought. Instead, the government—comically—announced that they would purchase $94 million of fuel to be stored not in Australia but in the United States. I don't know whether the government consulted an atlas before they made that announcement, but if they had, they might have realised that storing our strategic reserve of fuel on the other side of the Pacific Ocean wasn't particularly strategic. The fuel wouldn't be accessible in a crisis. That doesn't fix the underlying problem of fuel insecurity.

Australia relies on just-in-time fuel deliveries. It's worked for us, but one day it won't. Over the past year we have seen just how quickly things can change. It isn't hard to see how 'just in time' can easily become 'far too late'. The government's job is to prepare for these occasions, to future-proof Australia from those emergencies, not to bury their heads in the sand and pretend everything is always going to be okay. What will be essential when things go wrong and when our fuel is too far away is a fleet of ships on which our nation can actually rely. An Australian flagged strategic fleet is a key plank in assuring Australia's fuel security and broader supply chain security. But this government is leaving it to languish. Over recent years Australian shipping has all but collapsed. Over the past 30 years the number of Australian flagged vessels has shrunk from 100 to barely 10. While other maritime nations support their shipping industries, this government stands idly by and has in fact introduced policies to make it worse.

Norway has 519 vessels carrying the Norwegian flag. The United Kingdom has 1,157 flagged vessels, and China has 4,608 flagged vessels. If other nations can maintain a merchant fleet, so can we. In fact, it is essential that, as an island nation, we do so. But instead of supporting Australian shipping the government continues to open Australia up to foreign flagged vessels and crew without thinking of the importance of our own capability, not only to import our vital supplies of fuels and other essentials but also to move goods around our country and for the security of this nation. They twice sought to rip up the reforms made by the Labor government that were aimed at protecting Australian shipping, under the guise of reducing costs. This parliament twice rejected those governments' so-called reforms, calling out the legislation as bad for Australian passengers and freight, bad for Australian workers and bad for Australia's national security. All the while, each and every coalition transport minister over the past eight long years has undermined the policy settings that were put in place by the former Labor government that sought to enhance and rebuild Australian shipping. In particular, the repeated misuse of temporary licences by this government has enabled foreign flagged ships with foreign crews to trade along our coastline—work that can and should be done by Australian maritime workers who are paid Australian wages at Australian conditions.

Australia relies on shipping to move 99 per cent of our imports and exports, including our fuel. It is critical that we maintain the sovereign capacity to import these supplies and transport them around the nation. Whether it be conflict, natural disaster or pandemic, history has shown us that we cannot always rely on other nations to carry our essential goods on their flagged ships. We are an island nation. We are a trading nation. We are a maritime nation. We have the fifth-largest shipping task in the world, and under this government we are increasingly dependent on imports.

In times of crisis it is essential that we have an Australian fleet that we can rely on. That is why Labor has been calling on the government to consider the establishment of a strategic fleet that would not only protect our economic interests but also provide the training opportunities that we critically need to bolster our maritime workforce. The government needs to listen. This bill might do some good to address fuel security, but without addressing Australian shipping it cannot be enough. Whenever we do talk about shipping I am reminded of the workers of the MV Portlandmen who have borne the worst of the Morrison government's shipping failures. For those that don't recall, the MV Portland worked off the coast of Australia for 27 years, hauling alumina from Western Australia to Alcoa's Portland refinery. Then at 3 am one morning they were awoken by security guards, escorted off the ship and forced to watch as a foreign crew boarded the vessel—their workplace and their home—to take it for scrapping in Singapore. They lost their jobs, like so many other Australian maritime workers, to overseas operations which pay their staff a couple of dollars an hour. The same work is still being done. It will always need to be done. But it is not being done by Australians and it's not being done by workers receiving decent wages.

The Morrison government's failures have a national security cost, but they also have an undeniable human cost. Next week, these and other maritime workers will be coming to parliament, and I encourage all members to meet them and hear the story about what happened to them and their jobs. The government needs to do more to support them and their industry, because it is in their economic interest as well as in our nation's national security interests. As an island nation in uncertain times, with only two refineries, limited onshore fuel reserves and no strategic fleet, it is simply untenable. This bill is welcome, but it does too little. Labor is committed to rebuilding our capabilities. If this pandemic has taught us anything it is that we must build back better, that we have to build resiliency into Australia's national economy and that we have to have the capabilities as an island nation to look after ourselves. If it has taught us anything it is that we have to be a nation that makes things, and part of that has to be to rebuild a strategic fleet to keep our nation secure.

The Morrison government should follow our lead and finally take some real action towards securing Australia's fuel supply and better preparing our nation to meet its future.

Tim Wilson (Goldstein, Liberal Party) Share this | Link to this | Hansard source

It's a great privilege to be able to speak on this bill, the Fuel Security Bill 2021, this afternoon and on the importance of fuel security for the nation. When I speak to Goldstein residents, there are a number of issues of concern to them that come up. One of them, critically, is how we secure the Australian national interest in terms of strategic threats, economically and in a defence capacity, and make sure that we have the reserves we need as a country so that we can hedge our risk and be confident going into the future. There are a lot of issues that come under those banners. People are concerned about environmental risk—the various challenges we face and how they could degrade the future of the country. We have people who are concerned about supply chains and the technologies that we're going to need for the future, including having access to the materials we need as a nation to have a viable manufacturing sector—one that can be resilient and strong and can support the Australian economy, in terms of jobs and our national security. That was highlighted at the start of last year in terms of access to certain types of materials, particularly PPE, at the beginning of the COVID-19 pandemic.

One of the issues that regularly gets raised with me by constituents is fuel security, and it gets raised on different sides of the ledger. It gets raised with me in terms of the fuel dependence that this country has, traditionally on different types of petrochemicals, and what the need to diversify means for the future of Australia, economically and environmentally. I have a lot of sympathy for the constituents who raise those issues, because I want to see a diversification of our energy sources, much more so than the science deniers on the other side of this chamber, who seem to be only obsessed with limiting supply down to a narrow scope. I'm a great believer in hedging risk and going with technology where technology can take us. As I've said many times, I believe the future is going to be awesome. The question is whether you're prepared to embrace that technological innovation.

I welcome the discussion that so many people have raised in the areas of stationary energy, whether it's in terms of hydroelectric power, gas or renewables—not just as energy outcomes in themselves but as part of the discussion about how they can be used to build the transport fuels of the future, particularly around the potential for renewables to be part of the solution of moving to hydrogen power. That won't just deal with some of the challenges we have in a stationary energy capacity. If you look at the long-term future of things like transport energy, it's going to be dependent, at least in part, on hydrogen and its potential. Particularly if you look at the long-term risk of electric vehicles and some of the challenges we have around battery technology and recycling, as well as resource constraints around things like lithium-ion, we need fuels like hydrogen to be part of that future.

There are also more traditional concerns that people raise with me, such as our fuel security, not just for domestic industry but also for the fuels we're going to need for our national defence. This is not an academic exercise. If you look at the greenhouse gas emissions profile of the Commonwealth, a lot of it is actually absorbed in the defence forces, which use a high volume of transport fuels: shipping and bunker fuels; avgas, which is a critical ingredient for things like the Air Force; and traditional petrochemical fuels, diesel and the like, for fuelling things like tanks and other vehicles. Fuel security matters not just for our economy but also for our national security, and hedging that risk is going to be critically important for the future. But that, of course, requires a long supply chain. We have supply chains where we have domestic reservations and domestic supply. We import a large part of our fuels, particularly from Singapore, but people are increasingly concerned about what happens in an environment where those trade avenues are blocked off—it needn't be through conflict; it could simply be through some sort of blockade—and whether that will cut the country off from the rest of the world.

One of the great strengths of our country, on many levels, is that our geographic location means that we can hedge that risk by importing fuels from just about anywhere else on the planet, because there are so many different avenues for shipping routes. They're not all desirable. No-one is arguing they are all desirable, but, in the case of crisis, we have options. Many other countries do not. In fact, as a completely outside comment, a couple of years ago, I went to Armenia, a landlocked country that essentially has three out of four borders closed. It does not have the same luxury of options as we do in terms of its geography and its capacity to access open markets. We have options directly from the Middle East, directly from Singapore, directly from South America and directly from the United States, which is one of the reasons at the start of last year the government took an option to buy some fuel reserves in the United States. It gave us more options. But it's not just about having access to the fuel; it's also about having access to the shipping of it. But they're more critical in terms of refining—so that we can domestically provide resources to the Australian economy and to our national security. That's what this bill is about.

This bill is about completing the supply chain so that, if you're in the refining business, you have an incentive to continue to operate in Australia against a backdrop where we've seen a number of refineries close. We're maintaining and conserving that domestic capacity so that we can provide that degree of security for our country. As I said, it has a big impact in terms of our defence, but it also has a big impact in terms of other sectors, like agriculture, transport and mining, which are the foundations of the Australian economy and the foundations of wealth that lead to the employment of Australians. It compounds in terms of other sectors, like manufacturing and a service based economy, and ultimately provides the wealth which we all enjoy so that we can have a wealthy and prosperous country and provide the health and education services and other essential services that Australians need.

The objective of this bill is to lock in commitments from refineries so that they have clear incentives to operate, and, if there is an environment where there's a shortfall, that, of course, they get the incentive they need to continue to operate as a backstop as part of a safeguard for the interests of the nation. I've had some constituents write to me and say, 'I don't agree with what the government is doing here,' because they are concerned about environmental factors. I do understand that, but the reality is the primary basis of doing this is as a backstop for the security of the nation.

Of course, we have to make trade-off decisions and serious decisions in this parliament about the long-term interests of the nation, and that is what this bill does. It's quite clear what the impact will be. We'll stop the closure of remaining refineries operating in Australia for the next five years. It will result in 1,250 direct jobs not being lost and a further 1,700 jobs, or thereabouts, not being lost in the construction sector. Of course, it will stop a negative impact through higher prices in all fuel dependent industries. Just about every industry has fuel at the heart of its competitiveness. It's always been one of the foundations of what has made this country economically strong—not just that we've got extractive industries, agriculture and primary industries that create the wealth but also that we've got a competitive energy market that's enabled the realisation of that wealth. If you remove the competitive energy, or even the accessibility of energy, you undermine the very core of the Australian economy. When it comes to bigger discussions around stocks, it of course underpins that sense of security and confidence for the country. The way it's doing it is by providing payments directly to companies, should they end up in a situation where they drop below a certain threshold, particularly below a certain threshold in terms of a competitive price.

It's quite clear what many of the interests in this space think, because they're aware of the risks that come if we don't implement this policy, but, more to the point, what it does for the confidence of the economy if we're to back it in. I'd hope the members opposite, despite their virtue-signalling—sorry, it's not even virtue-signalling; virtue-signalling implies that there's some sense of virtue, and this is just partisanship-signalling. It's an amendment to whip up the troops, as it were, to get them excited as they watch their leader fail and flail as a consequence of their lack of vision for this country and their absence of any idea about what they want to progress. There are no other issues they want to put on the table—unless they would like to revisit the previous election agenda. We can debate that out as much as you wish. I'm quite happy to debate that.

We had the member for McMahon complaining before about Labor's last election defeat. He was, of course, the architect and the author. We see other members, like the member for Gellibrand over there, who are doing an outstanding job of ensuring that members of the coalition are re-elected, and we wish them all the best in their continued success! But we're going to get on with governing for the interests of Australia. That is the basis of this legislation. We just hope that they might, at some point, put down their partisan weapons and decide to be positive contributors. In this debate so far, that has not been the case. We hope that might change, but we know from the lessons of history that, if you want to look at future behaviour, the best indicator is past behaviour, and we know that's less likely to occur. But that's okay. That's their issue. The Australian people are ready to judge you, opposition members, very harshly at the next election, and we look forward to it.

Let's face it, they're not normally friends of mine. They're not normally fans of mine or of this government. In fact, they're normally fans of the former Leader of the Opposition, the member for Maribyrnong, and the Australian Workers Union and what they're saying the Morrison government is doing. It must have come as a knife cut in the heart of the Australian Labor Party when the national secretary, Dan Walton, of the Australian Workers Union said of the Morrison government's Fuel Security Bill and associated legislation, 'We are extremely satisfied.' They know what's on the line: their workers, their jobs, their members and, of course, the health and security of our country. He went on to say:

The security of the production payment provision, along with the investment to make cleaner fuel, will underpin longevity for both refineries. Today's announcement will save thousands of jobs, both directly at the refineries and indirectly through jobs supported in the community.

That's one of the things that has been lost by members of the opposition on this bill. It's not just that we're locking in arrangements to ensure that we guarantee the security of supply, for the Australian economy, of certain fuels for refining, but we've also increased the obligations and standards that come with it. So you're going to have cheaper, better, more environmentally sustainable and less particulate fuel supplies in this country. It's, literally, security and environmental responsibility in one. This is what we do as a government. That is not what they do as an opposition.

Let's get beyond just the naked vested interests of the workers union and look at some of the other sectors that have voiced their similar support. The Federal Chamber of Automotive Industries, whose interest, principally, is in making sure that we have an environment sympathetic and supportive to motorists, said:

Australian motorists and the environment will be beneficiaries of the Federal Government’s plans to support the operations of fuel refineries in Geelong and Brisbane …

They said it was a 'significant and positive step'. Good on them. They're right. Let's go to the Australian Trucking Association. There are many people who work in the trucking industry and they're a critical part of making sure that we have the supply chains, so when you go to the supermarket you can get some milk or apples, some fresh food, so that the next generation can stay young and healthy. They have said:

Diesel and liquid fuel security are critical to Australia’s economy—98 per cent of the energy for the transport sector is sourced from liquid fuel.

…   …   …

This is a big win for every road user.

Correct. If there are higher costs, what happens is they flow through to the prices Australians pay—you pay—when they go to the supermarket or when they go to purchase goods and services. The Australian automobile Association says:

The Government is right to be focussed on Australia’s need to comply with our International Energy Agency obligations, and it is right to be helping fund construction of an expanded network of fuel storage depots around Australia.

That's what this bill also does. At every point, this government is delivering: security of our national energy supply, competitiveness in our national energy supply, making sure that we back the industries that need support right now—particularly, frankly, in the great state of Victoria—as part of a plan to rebuild Australia's future.

Milton Dick (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

I don't know why the member for Goldstein wants to be patted on the back when refineries have closed down in Australia under this government. Refineries have been shut down under this Liberal government. As he skulks away from the chamber, I want to place on record my disappointment with how the government has handled fuel security in this nation. The Fuel Security Bill 2021, which we will be supporting, does two things. First, it introduces a capped fuel security service payment to Australia's two remaining refineries. Second, the bill imposes a minimum stock obligation on fuel importers. So why are we here tonight? Let's unpack what the government have done and why they should be criticised, not congratulated, for their failures on fuel security, including half of Australia's refineries since October. It is an indictment of this government that we have closed refineries.

COVID-19 has highlighted the importance of Australian self-sufficiency. We've all seen that. We've seen that in our communities; we've seen that in our local businesses. We need to ensure that, when the worst-case scenario happens, we've got the capacity to care for our citizens and to keep the critical services and operations going. It's clear that a secure fuel supply is absolutely vital to these goals. Fuel runs this country. You can't rely on anything else to get things around the country from A to B, whether it be food, supplies, groceries, construction supplies, medical equipment—the list goes on. But we've got to have the capacity to transport these vital items from one end of the country to the other. If we lose this capacity, our economy and our country grind to a halt. If COVID-19 has proven anything, it's that we cannot take anything for granted.

The member for Goldstein spoke a lot about supply chains. We've seen, particularly over the last 12 months, that supply chains can be suddenly and unexpectedly disrupted. As Australia is an island nation, we must equip ourselves with the tools to manage such a situation. But, even before the pandemic, many would have thought that this is just common sense. We exist in a complex and interconnected world, and, of course, we should be positioning ourselves so that interruptions to global supply chains will not cripple our nation. That's a no-brainer. However, the Morrison government have waited until now to take these steps to shore up our fuel security. They've literally waited until we are teetering on the edge of being entirely dependent on foreign imports to run our country's cars, planes, ships and trucks. Our refinery sector is haemorrhaging capacity, and the Australian workers who rely on this industry for their pay cheques are ultimately paying the price. This situation did not come out of the blue. Through the long eight years of the Morrison government, we've fallen further and further down the hole of foreign dependency. We've seen press conferences and shiny announcements promising to address this issue, but, as the workers at closed oil refineries know all too well, these promises were simply broken promises.

I want to go back in time a little bit to around six years ago, when a Senate inquiry recommended that the government carry out a comprehensive review of Australia's fuel security problem. After dragging their feet for three years, the government announced in 2018 that they would undertake this review, which they promised would report back in 2019. The interim report landed on the desk of this government in April 2019. There it sat, gathering dust for the next two years. The government are yet to release this final report, breaking their promise to deliver it in late 2019. We know that this is normal behaviour from the Morrison government: delay, distract—'Look over here; we'll announce something over here; we won't follow through'—just to get everyone's attention off the main issues. This government is good at managing the PR, the spin and the headlines, but it forgets that it actually has a job to do to manage the country. Fuel security is one of the basic elements we need for a secure economy, yet the government chose not to act. When given the chance in 2019, the government chose not to even deliver the report. As a direct result of the government's negligence, we are now nearly entirely dependent on global supply chains to keep our country functioning.

The interim report the government left to gather dust, as I said in my earlier remarks, highlighted key issues that could have been addressed over two years ago. Australia is seriously non-compliant with our international energy obligations for domestic fuel stocks. This is a truly dire situation. We're required to have 90 days of domestic fuel stocks to protect the Australian people and economy against global oil shocks. We've fallen embarrassingly short of this target. We have just 58 days. So, in the eight long years that the Morrison government's been in power, our economy, our national security, our jobs and our nation's families have been left vulnerable to international fuel shocks. If such a shock comes before this government is able to get its act together, then the impact on Australian families and the price they pay for fuel will be devastating.

Over the last 12 months, COVID-19 has served to deeply entrench this issue. The drop in demand for fuel brought about by the pandemic, underlined by the structural pressures on Australia's fuel refineries, has borne that out for the whole nation to see. Over the past eight months, we've seen three announcements on fuel security from this government yet we've also seen our situation grow increasingly dire. We are now significantly dependent on refined oil imports. While the government has called press conference after press conference to present these so-called solutions to the Australian people, the situation has only gotten worse. The writing's been on the wall for years as fuel refineries have closed and our dependence on imports has increased. This was not done in secret. It was not done behind closed doors. Everyone saw this happening, except the Morrison government.

Addressing fuel security, as far as I'm concerned, should be an immediate and urgent priority of any government. Yet it was not until September 2020 that the government announced a fuel security package to address these key issues. At the time, the Prime Minister and Minister Taylor made the claim that the package would be 'backing local refineries to stay open wherever commercially possible'. Just as we see with every announcement this government makes, it was not backed up by results. Six weeks later, on 30 October, BP announced that its Kwinana refinery would close.

Then, in December 2020, we saw another flashy announcement by this government, with Minister Taylor stating that the government would bring forward the production payments to January 2021, with $83½ million to be paid over six months. I want to refer to his statement. The minister said that 'the government was taking immediate and decisive action to keep our domestic refineries operating'. So what happened with this 'immediate and decisive action to keep our domestic refineries operating'? Within two months, on 10 February 2021, ExxonMobil announced that its Altona refinery would also close. What we're seeing here is a pattern. 'Yes, we're going to take action. Yes, we're going to do the media conference. Yes, we're going to stand with workers.' But for what? The refineries closed. The refineries closed on this government's watch, placing our fuel security at risk.

Finally, in May this year, the Prime Minister and Minister Taylor made their third fuel security announcement in just eight months, revealing decisions that had been taken but not announced in the 2021 budget to shore up our nation's failing fuel security.

The Morrison government have had opportunity after opportunity to act and have simply failed to do so. Those on the other side will want to use the COVID-19 pandemic as the convenient scapegoat for the dire fuel-security situation that they find themselves in. They will want to claim that this is the reason these measures are being introduced now and not years ago—when they were needed. I repeat: the writing was on the wall years and years ago. But, hard as the government may try, they cannot explain away their lack of leadership and their abject failure to act until the pandemic.

We've seen eight long years of empty announcements and policy failures on this issue. Let me summarise. In 2015, there was the Senate inquiry. In 2018, three whole years later, the government announced that they would do the review. In 2019, the interim report was handed to the government. Then nothing. The report highlighted dangerous deficiencies in our fuel security and recommended action. This was a report given to the government to say, 'This is the action you should take,' and they didn't do anything. They did absolutely nothing until, of course, the very last opportunity, the big photo op, presented itself. This Prime Minister never misses a photo op. Last September's announcement delivered nothing in terms of fuel security and nothing in terms of job security for fuel sector workers.

The government likes to play this role, as we heard from the previous speaker the member for Goldstein, of the hero of Australia—the friend of the worker rushing in to save jobs. Their record on fuel refineries renders this act completely ridiculous. I want to place on record tonight the reason the government was pushed into this action. It was pushed to act because of the hard work and the fierce advocacy of the Australian Workers Union, who had to put significant pressure on the government to deliver these changes. We owe a huge vote of thanks to the AWU delegates who came to Canberra, who pressured the government, who stood up for their members, and who, alongside members of the opposition, made sure the government heard those concerns. I particularly want to highlight delegate Mick Denton from Ampol in Lytton, who is now our Labor candidate for the federal seat of Petrie. He played a critical role in getting these vital measures across the line.

Hon. Members:

Honourable members interjecting—

Milton Dick (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

That's right—a real worker standing up for mates. I can hear the rubbish from the member for Fisher, disrespecting blue-collar workers. We know how much they hate unions, how much they hate workers—how much they despise workers. We absolutely know that. They're screaming and yelling because I've mentioned a fierce advocate, Mick Denton, who will stand up for workers in his electorate of Petrie and who will fight for the rights of workers to make sure their jobs are protected. I know they don't like it, I know they're antiworkers, I know they don't like blue-collar workers, and I know that because we see their actions time and time again.

So it's because of the leadership, through our national secretariat, of the Australian Workers Union—my union that I'm a proud member of and have been for about 25 years—that those workers interests are protected. If it were up to this government—they were shown the warning signs years ago—those workers would all be out of jobs now. What about all the workers at those two refineries that have been lost? Have we heard one single apology from those opposite about those jobs that were lost? Absolutely not. Those workers were thrown on the scrap heap by the Morrison government—completely rejected.

The workers that have fought for this, through the Australian Workers Union and their fierce advocacy, are people like Steve Baker, the state secretary of the Australian Workers Union in Queensland, and people like Daniel Walton, the national secretary.

Honourable members interjecting—

They hate it when we talk about workers. They are resolute in their opposition to working people. We know that time and time again. We saw that in how they treated refineries in the electorates where the Altona Refinery is based, we've seen it in Western Australia, we've seen it in Victoria. We've seen it, we hear it and we live it. There's no secrecy about this, about how much they despise workers and blue-collar workers. We know that. Their actions and their hysteria tonight simply prove that.

The state of our fuel security is an embarrassment. It's an embarrassment to the Prime Minister, who likes to talk big on national security. It's an embarrassment to a government that appears to have an ideological opposition to any kind of alternatives, but perversely refuses to properly protect our traditional fuel supplies. It's an embarrassment to a government that has, after eight long years, delivered absolutely nothing to Australians except a wage slump, record debt and a fuel situation that leaves us completely dependent on foreign supply.

Labor welcomes this package of bills, but it comes far too late for the refineries that have been shut down and closed forever by this government. They should hang their heads in shame. They shouldn't be yelling at me when I'm defending workers. They should be standing up in this parliament to make sure that our fuel security is guaranteed and the jobs of the future are protected.

Andrew Wallace (Fisher, Liberal Party) Share this | Link to this | Hansard source

If that wasn't a preselection pitch, you'll never hear one! What a preselection pitch that was!

Mr Dick interjecting—

Well, there you go. You're trying out for the next term—if you get that far! When the COVID-19 pandemic struck, in early 2020, I said to many people in my local community that Australia's greatest assets in this situation are the Pacific Ocean and the Indian Ocean—and, of course, a stable and effective democracy. Over the past 18 months, we've seen the Morrison government, with the support of all Australians, make the most of these advantages, natural and by design, to keep this country safe and to deliver arguably the best health and economic outcomes in the world.

At times of crisis, the natural barrier provided by the waters that separate our island continent from the rest of the world can of course be an important ally. The 200 kilometres between the northern tip of Far North Queensland and the southern shores of Papua New Guinea makes for an important logistical barrier to invasion from hostile powers, for example. The need to enter Australia via a port or airport makes it easier for us to deny entry to people who wish us harm and to keep out pathogens and biological hazards that would threaten our very way of life.

From World War II to COVID-19 we have used this country's natural moat to keep the world's problems at bay. However, the oceans that divide us from the rest of the world are a mixed blessing. Whilst they help us to keep out the things we don't want, they can also prevent us from getting access to the things we desperately need. Whether it's a global pandemic, instability or diplomatic failures in another region of the world, or, most seriously, an armed conflict or blockade in the Asia-Pacific, Australia is a relatively vulnerable country and it's vulnerable to having our supply chains cut off at the water's edge.

Fortunately, thanks to Australia's fantastic farmers, we have a large surplus of food and, as our national anthem reminds us, our land abounds in natural resources of every kind. However, when it comes to oil based liquid fuels, as a nation we are vulnerable. Petrol, aviation fuel and, in particular, diesel are fundamental to our very way of life. In a crisis they become even more important. The Morrison government is investing $270 billion in Defence procurement over the next 10 years to ensure that if, God forbid, our shores are ever threatened, Australia can defend itself. However, without diesel and aviation fuel, the high-tech products of that investment will have no choice but to sit idly by in their hangars, on wharfs and in sheds. Without fuel, we are effectively defenceless. Without diesel, we cannot transport from country to city the abundance of food and fibre that we produce, and we can't move medical supplies or feed for livestock or manufactured goods to where they are needed. If our roads are Australia's arteries then diesel is this country's lifeblood.

Fortunately, we have not suffered a major fuel supply shock for more than 40 years. However, with an increasingly complex and challenge geopolitical environment, it may only be a question of time. According to the department of energy, Australia currently imports 90 per cent of our liquid fuels. While we do produce our own crude oil—some 21,578 megalitres in 2019-20—most of it is exported for refining elsewhere. Much of our imported fuel comes through areas of potential future conflict, such as the Middle East, the Korean peninsula and the South China Sea. The answer is to ensure that we have substantial supplies of fuel stored here in Australia and that we have the refining capability to produce our own fuel when it is needed. The Bass Strait and Cooper basins can supply the crude oil we need to run essential services, as long as we have our own refining capability and stored supplies to provide necessary supplements during an emergency. Unfortunately, as it stands, this is not the case. According to the International Energy Agency, at the last measure—in March of 2021—Australia had the equivalent of just 64 days worth of fuel imports available. At times, as Senator Molan has eloquently highlighted, our stocks of refined fuels have dropped as low as 24 days of petrol and 17 days of diesel. This is simply not enough, particularly if you consider that the use of fuels in a conflict far exceeds the amount used in peacetime.

The Morrison government has been very aware of this challenge and has taken significant action to deal with it. In April last year, the government took advantage of historically low global fuel prices to purchase $94 million worth of crude oil from the United States Strategic Petroleum Reserve. By June 2020, Australia held just 30 days of petrol consumption cover, the highest level since electronic record keeping began in 1989. Jet fuel increased to 29 days of consumption cover and diesel stocks remained stable at just 20 days of consumption cover. Though these levels were higher than historically, we cannot pretend that such levels of supply are adequate. In January this year, the Morrison government went further, announcing an investment of $200 million in the Boosting Australia's Diesel Storage Program, which will deliver an additional 780 megalitres of onshore diesel storage capacity. These grants of up to $33.3 million will ensure that we have the additional physical storage that we need over the next three years to significantly boost our supplies of diesel. However, we don't just need the fuel tanks; we need them filled.

The bill before the House today will ensure that our extra capacity is kept brimming with fuel. The bill introduces a minimum stockholding obligation on businesses which import or refine oil products in this country. The bill lays out that, if you want to operate in this sector in Australia, you must do your bit to ensure that we have the fuel stores that we need. The government will set a national daily consumption target for gasoline and kerosene, based on the average daily consumption from 2018 and 2019—that is, before the COVID pandemic struck. The government will set a diesel target some 40 per cent higher than these average levels to reflect how critical diesel would be in a crisis. Each operator refining or importing these products in this country will then be given a specific obligation, based on the size and nature of their operations, to store in Australia a certain proportion of these daily usage targets. The government has consulted on these obligations with industry and has ensured that, through the Boosting Australia's Diesel Storage Program, we are helping operators to comply with their new obligations. The industry is ready to go on this, and this bill will lock in the agreement to ensure that we have the stocks that we need.

Alongside these reserves of fuel, we also need the capacity to refine the crude oil that we produce ourselves in this country to ensure we can keep essential services operating in the longer term, whatever the circumstances. In recent months this capacity has been put under serious threat. Refineries in Australia operated by ExxonMobil and BP were closed at the beginning of the year, leaving us with just two significant facilities remaining. Today we have only Ampol's refinery in Brisbane and the facility operated by Viva Energy in Geelong. These represent the last of our sovereign capability and the only thing standing between us and a total reliance on overseas partners for fuel. Both Ampol and Viva Energy have made it clear that without support from the government our remaining refineries will be forced to close. The Morrison government is determined to ensure that that does not happen, and the bill before the House is the means by which we can guarantee it.

The bill will deliver a fuel security service payment to the operators of these refineries when they are doing it tough. The amount of government support the refineries receive will depend on their profitability at the time. When they are making a margin of at least $10.20 per barrel, our refineries will receive no service payment from the government. When margins fall below $7.30 per barrel and refineries are making a loss, they will receive 1.8 cents per litre. When times are good, the taxpayer will be protected from providing unnecessary subsidies, but, when times are tough for the refineries, this vital industry will receive the support that it needs. The government has secured agreement from the operators of our domestic refineries that the passage of this bill and its fuel security service payment will guarantee that their facilities remain open until at least 2027, with an option to extend the arrangement to 2030. In short, the bill before the House will make the difference between an Australia which is entirely reliant on overseas corporations and foreign powers for our fuel and an Australia with a guaranteed capacity to refine our own at home for much of the next decade.

The choice is a stark and obvious one. No-one wants to see a significant disruption to international trade. Certainly, no-one wants to see conflict in our region. However, as the Romans said in years gone by, if you want peace, you must prepare for war. Australia must never be vulnerable to a naval blockade or worse. We must have the ability to refine our own fuels and we must have the stores we need to cover any shortfalls. This bill is a central part of the government's strategy and another step in the right direction to deliver fuel security in this country, and I commend it to the House.

Richard Marles (Corio, Australian Labor Party, Deputy Leader of the Opposition) Share this | Link to this | Hansard source

I rise to support the Fuel Security Bill. As a former shadow minister for defence and having served in a number of portfolios which have national security responsibilities, I want briefly to add my voice to those of others about the significance of having fuel security in this country. In the mystical lottery of nations, Australia absolutely won the jackpot. What we have as a nation is a whole continent to ourselves. That really is the fundamental fact which is at the heart of any proper analysis that tries to understand Australian strategic policy. What it means is that every critical activity that we undertake onshore leverages the advantage of having our own continent, our own island, with all the incredible national security advantages which come from that. Equally, every time we lose a critical activity and every time we lose industrial sovereign capability, we remove the most significant natural advantage that we have.

It is hard to conceive of a more critical fundamental activity than having the capacity to supply our own fuel. It's fundamental in so many ways in terms of how our economy operates. This bill and the package that it underpins will ensure the continuation of the two remaining refineries in our country, which, with our own oil reserves, will enable us to survive for a considerable amount of time, particularly with the refining of diesel, were shipping lanes to be disrupted. It puts us in a manifestly different position than were we to have no refining capacity at all. So, from a national security point of view, this legislation is fundamentally important. It is deeply essential.

It would be remiss of me not to point out that, as supportive as I am of this legislation, the package has come too late for the two refineries that have closed within the last 12 months: ExxonMobil's refinery in Altona and BP's refinery in Kwinana, in Western Australia. That is a pity, and we are less capable for the loss of those refineries. But, at this moment, it is important to acknowledge the significance of this bill in underpinning the future of the Ampol refinery in Brisbane and the Viva refinery in my electorate of Corio, in the northern part of Geelong.

After making those opening remarks about the national security implications of this bill, I really want to spend the bulk of my time tonight focusing on that refinery in my electorate, because it is so central and significant to the lives of people in Geelong. The components of what was then the Shell refinery which was built in Corio, in the northern part of Geelong, actually were intended to be assembled in Indonesia. They were shipped out to the island of Sumatra, at a site near Pangkalan Brandan, just prior to the Second World War. With the onset of the Second World War, it was impossible to construct the refinery, but, remarkably, at the conclusion of the Second World War, the unpacked refinery, as it were, had not been touched by the occupying Japanese, and so the asset that Shell had there was still intact. That said, there was some hesitancy on the part of Shell in London about following through on the construction of the refinery at that site, given the political uncertainty in the region as it was.

So, from there, Shell's head office in London decided instead to ship the items to Australia and to establish the refinery in Geelong. The federal government at the time agreed to let those components come into Australia free of duty, and indeed the Indonesian authorities at the time allowed for the components to leave Sumatra. The plant was then constructed on a 132-hectare site which had formerly been grazing land, in 1951. It was constructed by a Dutch contractor called Werkspoor, and there was an agreement between the Victorian state government and the ACTU at the time to enable labour to come in from the Netherlands to help in the construction, given that the skills that were required to construct the refinery were not present in Australia at the time. In combination with that, the harbour trust built a pier at the site and organised for the dredging of Corio Bay, which allowed ship access to the site. Its construction is, in a sense, one of the great stories of Australian migration. It speaks so much to the history of this country as an immigrant nation. A thousand workers from 14 countries around the world, but particularly from the Netherlands, were involved in the construction of the refinery, from 1951 to the point of the refinery being opened, in March 1954. To this day, there is a Dutch community in the northern suburbs of Geelong, in Corio and Norlane, who owe their origins to those workers who came out to help build the Shell refinery, as it was, in the 1950s.

My father was a teacher at Geelong Grammar School, which was adjacent to the refinery site. It's where I grew up and spent my childhood. So I actually grew up right next to the refinery, and it forms a large part of the memory of my youth. I can remember, in days when there perhaps weren't quite the same environmental standards as there are now, getting on my bike, riding around the refinery and picking up yellow blocks of sulphur, I think it was, which I happily took back to my parents and put on the kitchen table. They obviously were completely horrified with what I'd managed to retrieve and picked it up with plastic gloves and made sure it went into the bin straightaway. But such was my youthful joy, or glee, over this miraculous establishment next to where we lived.

When I was older, a student at the school, there was a clock tower that I used to be able to go up at night-time. From there, the view of the refinery was something to behold. The thousands of lights and the flame above it made it look like some kind of fairy kingdom. It was our own personal display, for that end of town, and it really was a remarkable sight to behold. There was, and still is, a red-and-white smokestack, and on the very many journeys that we would take from Geelong—and this is a story that is very familiar to people who live in Geelong—you would know, on returning, that you were approaching home when you could first see that smokestack on the horizon. It was the very literal symbol of Geelong and home on the horizon—that we were about to arrive home. It was, in a sense, a beckoning. It was a beacon for where home existed.

So, for many of us, there is a deep personal connection that we feel to the site. In April 2013 Shell announced that it intended to sell the refinery. At that time 450 people worked onsite. We thought, at that point, that the refinery might close and would instead turn into an import terminal. But, fortunately, in February 2014 it was announced that Shell had been able to sell the refinery as a going concern to Vitol, and in August 2014 Viva Energy Australia was established to operate the refinery, which it has been doing ever since. To this day, 400 permanent staff work at the refinery, along with another 350 permanent contractors. Viva contributes something like $200 million through wages to the local economy. They've also been very focused on investing in the site. They've committed to investing the better part of $1 billion over a five-year period to the upgrade of the site through a number of significant works. Indeed, since taking over they've already spent $600 million on the upgrade of the site.

When you do a tour of the site it is an extraordinary example of industry, of human ingenuity. There are pipes going in every direction. What's remarkable to me is that there is, right there, some of the highest-level tech manufacturing that occurs in this country today, but presumably somewhere is a pipe that was taken from Europe to Indonesia back in the 1930s or 1940s. In that sense, the refinery itself is a kind of living site. It has matured as the city has grown up.

What all of that story and sentimentality, I suppose, says is that the refinery is principally about producing a product, which, as I said at the outset, is fundamental to how our economy operates. It's a place that employs hundreds of constituents of mine and provides a significant contribution to our local economy. All of that is deeply important, but it's actually much more than that. An industry of this kind—a place of this kind—goes to the culture of the town in which it exists.

In that sense, it's not unique. There would be major facilities of this kind in various settings around the country, where people would have the same kind of emotional attachment. But its shape, its size, its landscape, its skyline defines the place in which I live. It defines the memories of my childhood. It defines how we see the world, in Geelong, in which we live. In Geelong Trades Hall there is a mural of Geelong, and right in the centre of it is that red and white smokestack that I refer to as a symbol of what Geelong looks like. That's what this refinery is. It is profoundly important to the shape, the size, the place that is Geelong.

While speaking to this bill and supporting the important national objective that it has—and it's a very important national objective, in giving us the national security that we need—if I'm to be honest, at an emotional level, much more significant to me is what the impact of this bill will mean on the continued existence of the Shell, now Viva, refinery at Geelong, its contribution to the local economy, the jobs that it provides to constituents of mine but its place in the soul, in the landscape, in the identity of Geelong. While nothing lasts forever, that this will now be the case for many years to come is, for me—and I know to everyone in my electorate—a very welcome development indeed.

David Gillespie (Lyne, National Party) Share this | Link to this | Hansard source

I rise to speak in favour of the Fuel Security Bill 2021 along with the Fuel Security (Consequential and Transitional Provisions) Bill 2021. Our nation runs on diesel and petrol, and our airline industry relies on jet fuel. It's a fact of life that 90 per cent of our transport fuel is liquid fuel. Our nation also uses plastics in everyday life, and gas and liquid fuels are part of their formation. Liquid energy security, therefore, is a critical issue for the nation. We've had five refineries close and we have two left: Ampol in Queensland and Viva in Geelong. The COVID crisis has exposed the vulnerability of our supply chains in so many areas, none more prescient and relevant than our liquid fuel supply chain.

This bill incentivises our two remaining refineries to upgrade their refinery capability, to make both pure and cleaner fuels, diesel, petrol and jet fuel, particularly in regard to the amount of sulphur in them. The bill creates a fuel security services payment that has a collar and a cap, a top and a bottom limit, which is variable, to support production when production is at a loss-making amount, as in financial loss making. The collar is at $10.20 per barrel and has a cap of up to 1.8 cents per litre when it's $7.30 per barrel. So they are only getting the assistance when they are making a loss, not when they are already making a profit.

The amount of petrol used annually in Australia is considerable. It's about the same as diesel. It's 16,170 megalitres for petrol and 16,211 megalitres for diesel. A megalitre is a million litres. Long term, we really do need to address our fuel security. As you know, we have relied on a lot of our crude oil from the Bass Strait. That is receding as a source of oil production and gas. That's why we are looking at exploring elsewhere, around the country, on land and at sea. People will only realise how critical that is if we have another disruptive episode in the supply chain.

As we are an island, we rely on trade going around the world in an uninterrupted fashion. You saw what happened to international trade when the container tanker blocked the Suez Canal in Egypt. It was really quite frightening. You can imagine everyone saying we will create so many thousands of jobs in the upgrades of these refineries and maintain employment in them. But, really, if there's no liquid fuel in Australia, could you imagine? Food transport, all industrial transport and the whole trucking industry are dependent on diesel as are everyday tradesmen and commuters, school children. Agriculture would cease to function if we didn't have liquid fuel security. It's more than just 750 jobs in the refineries themselves and over 1,000 people in improving their capabilities; it's millions of Australians who rely on liquid fuel.

The second measure in these bills, besides the fuel security services payment, is the minimum stockholding requirement, which mandates the minimum level of major transport fuel stocks that the fuel companies must keep onshore. This requirement commences on 1 July 2022 and is set at the pre-COVID-19 average consumption levels. But by 2024 that will have to rise to a 40 per cent increase in diesel holdings. We have energy sources in coal and gas, solar and wind, but liquid fuels deliver 50 per cent of our energy use. There is no way that our existing power stations, wind turbines, solar panels or hydroelectricity or pumped electricity would be able to replace all that liquid fuel energy with electrical energy. We would be building many, many more power stations; hence its great importance.

We on this side have also supported development of future fuels with the hydrogen project. We have supported biofuels by giving them a lower tax rate. Bioethanol has a lower excise at 14 cents a litre compared to that on diesel and petrol, and biodiesel also gets a discount. There are consequential amendments to several other bills that will allow the Australian tax office, the consumer competition commission and the department of energy to check on the implementation and the integrity of the minimum stockholding obligation, and the fuel security services payment. There are changes to the Competition and Consumer Act, the Tax Administration Act, the Fuel Quality Standards Act, and obviously these consequential changes are equally important.

But it's interesting, almost scary actually, how thin the margins are that we have operated our liquid fuel security on for so long. This bill is so timely and so important. It's one of the most strategically important bills that will pass through this parliament, and I highly commend it to members to all get behind and support it. I don't think we will have any objections from either the opposition or the crossbench. But to put things in perspective—that just-in-time philosophy—recently the Northern Territory fuel supply dried up because a boat was delayed. Several years ago a major trucking company advised me that Melbourne and Victoria almost ran out of diesel because one or two tankers got diverted elsewhere. So we can't rely on that any more.

The massive increase in stockholding is really important, and it will make it much safer and more secure for Australia to operate with 90 days of oil and diesel in reserve, onshore. I don't think having it all allocated on a floating tanker or in Europe or America is enough. We need to have it onshore, available for everyone, because we're living in a very uncertain world, and the coming decades—

Debate interrupted.