Nick Xenophon (SA, Independent) Share this | Hansard source

Well, it seems to be the vocal one. We do not hear the others complaining about this. When sovereign risk is defined by Oxford online as ‘the risk of investment in foreign countries in which the political and economic situation might lead to a government expropriation of private assets’, I just cannot accept, given the history of this tax holiday, that the sovereign risk argument applies in the context of this particular legislation. My office has met with Woodside, but unfortunately I did not have an opportunity to meet with the CEO of Woodside. I would have very much liked to have met with him, and maybe after my comments today he will want to meet with me.

Woodside claims that it has been keeping prices low in the Western Australian gas market through a moral obligation. But now the government plans to remove the tax break it no longer feels morally obliged. Morality is an interesting notion. I must say I found the idea of Woodside cloaking its motives in morality somewhat baffling. At this point, it is important to remind the Senate that, in the past, serious substantive allegations have been made about the morality of this company. I refer honourable senators to an article and investigative piece in the Age on 5 July of this year headed ‘Woodside drill deep into an African money pit’. I note that Senator Christine Milne has been outspoken on this issue, and I commend her for raising some very important concerns in relation to Woodside’s conduct.

Let’s put that in perspective. This is the company that paid US$100 million to the ruling military junta in the African Republic of Mauritania in what was quaintly called a project bonus. This junta was not elected; it replaced the ballot box with bullets. I wonder what a military junta would do with US$100 million—I really hope they did not buy any bullets. If this tax change does not go through, will it leave the folk at Woodside more money to pay their project bonuses? It is my view that morality should exist irrespective of profits. If you are really moral, you are always moral. Your bank balance or your balance sheet should not have anything to do with it.

Let’s turn from morality to economics. With the price of petrol set by world markets, oil companies are restricted in raising domestic oil prices. The reality is 90 per cent of condensate is exported and less than half of one per cent of revenue comes from condensate’s contribution to the Western Australian domestic market—a market that Senator Cormann has been outspoken on. I commend him for that, and I want to deal with his concerns shortly because I respect them.

That said, I am very concerned by threats to pass on costs to consumers. I am concerned firstly by the potential to hurt families at a time when living costs have become increasingly tight. I am concerned by the way this reflects the lack of competition and the amount of market control exercised by these companies. I refer honourable senators to an article by Lenore Taylor, the national correspondent for the Australian, on 30 August this year, headed ‘Gas price inflated, watchdog warned’. The article led off:

WEST Australian gas customers may be paying inflated prices, according to a complaint to the competition watchdog that questions whether a joint marketing arrangement by the six North West Shelf partners is illegal.

Anyone who read that article would be very concerned about the arrangements. As a consequence, I met with the Treasurer, Mr Swan, last week. At the beginning of this week I wrote him a letter where I referred to my meeting with him on 18 September. I wrote to confirm and elaborate my concerns regarding the lack of competition in the upstream gas market as represented by the North West Shelf joint venture project.

I also raised the issue that this joint venture arrangement could pose a real risk that potentially breaches section 45 of the Trade Practices Act. Of fundamental concern is that, while the downstream gas market has been deregulated in keeping with national competition principles, the upstream gas market as represented by the North West Shelf project has not been deregulated. This means that gas buyers are fragmented and individually are not able to exert any degree of countervailing power against the venture.

In contrast, the joint marketing arrangements under which the North West Shelf joint venture currently operates mean that the joint venture can exert market power such that the joint venture potentially has the power to raise prices to pass on tax increases when contracts are renegotiated. I sought the support of the federal government to require the North West Shelf joint venture partners to immediately cease their joint marketing activity and henceforth undertake separate marketing of gas and other petroleum products produced by the North West Shelf project. I received a response from the Treasurer subsequently that confirmed that the ACCC, in response to a number of complaints received, is currently examining the competitive impact of the joint marketing arrangements of the North West Shelf venture project, particularly in the domestic gas market in Western Australia. He added that the government will look to respond to any recommendations made by the ACCC in the event that it identifies significant concerns with the North West Shelf venture. The Treasurer went on to say that he can confirm that the government will examine the remedies I suggested as part of this process.

Further to that, as I understand it the ACCC was written to by the Treasurer in relation to these arrangements. I will seek to table that document, but it seems that it is not with me at this time. Hopefully my office is listening to this speech and I can be provided with a copy of that letter, because I think, in fairness to both sides of the chamber, it is important that those documents be tabled, including my letter to the Treasurer, the Treasurer’s response and the Treasurer’s letter to the ACCC.

I move the second reading amendment standing in my name:

At the end of the motion, add “and the following matter be referred to the Economics Committee for inquiry and report by 10 November 2008:

The joint marketing arrangements on the North West Shelf project and their impact on competition in the upstream gas market and on prices paid by consumers.”

I have moved this second reading amendment—that the issue of the joint marketing arrangements and their impact on competition and on consumer prices in the WA gas market be referred to the economics committee for inquiry to deal with as a matter of some urgency—so that this matter can be properly examined by the Senate. Currently the companies drawing gas from the North West Shelf jointly market their product to the wholesale market. I believe this is anticompetitive and artificially drives up the price paid by consumers. I believe this is unacceptable and I believe there ought to be a more competitive arrangement in place.

Everyone pays taxes in this country. People with jobs pay taxes, retirees pay taxes and even the unemployed and children pay taxes in the form of GST. I believe it is time for Woodside, a company which has posted very significant profits, to pay its fair share of taxes. I also want to put this in context. I believe that those who have done well, who have made enormous profits from the boom in energy prices, ought to pay their fair share in respect of that. It is for those reasons that I support this bill. I hope honourable senators can support my second reading amendment so that this matter can be referred as a matter of some urgency to the economics committee.

I think we all need to reflect on what $2½ billion would do in our country. How many irrigators could $2½ billion bail out? How many hospital beds could $2½ billion supply? How many aged and disability pensioners would love just a tiny fraction of that $2½ billion? How many schools could be assisted with $2½ billion in our education system? I seek leave to table a letter I wrote to the Treasurer in relation to this bill and the Treasurer’s response to my letter.

Leave granted.

I support this bill, and I look forward to the committee stage of this bill.