Paul Scarr (Queensland, Liberal Party) Share this | Hansard source

This is not my first speech, and I'm delighted to have the opportunity, on the first occasion that I'm speaking to the chamber, to endorse this piece of legislation coming before the Senate. I'd like to make three preliminary points prior to talking about the specifics of this bill. Firstly, Australia has a great and rich relationship with Timor-Leste and also the people of Timor-Leste, and that relationship goes back decades. Senators may have heard of Sparrow Force. Sparrow Force was a force of commandos who went into Timor-Leste after Pearl Harbour was attacked at the outbreak of World War II, and with support from the people of Timor-Leste they fought valiantly over many months, fighting against the Japanese invaders. Famously, the commander of the Japanese forces said, in an address to these commandos, 'You alone are the ones who have not surrendered.' And they didn't surrender, until the last moment, when they had no options available and they sought evacuation from the island. Then, of course, was the fight for independence of East Timor and the great support this Australian country gave to the people of East Timor during their most difficult time. And now we have cemented that relationship through the passage of this treaty, and we're now considering the legislation before the Senate here today.

The second preliminary point I'd like to make is that I come from the resources industry. For the past 12 years I've been a senior executive in the mining industry, and I've worked in some of the poorest countries in the world, including Laos. I understand from firsthand experience the difference that the resources industry can make to some of the poorest people on the face of the earth. Natural gas provides an opportunity for the people of East Timor to generate the revenue streams they need to provide the schools, the hospitals, the defence force and all the other public services which we in this country take for granted. It's a great opportunity for the people of East Timor to have the benefit of those revenue streams. It also provides an opportunity for their young people to participate in a great industry, the oil and gas industry.

I note that there's discussion at the moment as to whether or not the gas will be further processed in East Timor or in Australia. I think that's great. I think it would be a wonderful thing, a great thing, if the gas were processed further in East Timor and it provided job opportunities and economic activity for the people of East Timor. Ultimately, that is a question for the project proponents, which I note include a great Australian company, Woodside, and also the East Timorese oil and gas company. It's a question for those joint-venture participants as to whether or not they want to process that gas in East Timor or in Australia. But I dearly hope that there is an opportunity for young people in East Timor to develop skills, have the benefit of learning from some of the best in the industry in relation to the oil and gas industry and be able to take those skills forward for themselves and their families.

The last point I would like to make on a preliminary basis is to give my thanks, as a senator from Queensland, to all of the officials who were involved in the negotiation of the treaty and the legislation. I note, based on my experience, that there's probably nothing more complicated in the professional world of the resources industry than cross-border tax issues. This legislation deals with those issues. It removes any doubt with respect to the tax consequences flowing from the treaty and the legislation, and it provides certainty to the proponents moving forward with respect to the tax basis upon which they can proceed with the development of this gas field.

I think it's fair to say that this issue has been something which has come between, at various times, the people of Australia and East Timor. It's been an issue which has caused great controversy with respect to our relationship and it really is a wonderful occasion that we've been able to solve this and that East Timor is going to get the benefit of some of those gas fields. I hope that the project proponents bring forward and develop the oil and gas fields as quickly as possible for the benefit of their shareholders, for the benefit of the government of East Timor and the government of Australia, and also for the people who may enjoy direct benefits from those projects in terms of employment and also their families. I hope that that can progress as quickly as possible.

I would also like to pay tribute to Australia's then Minister for Foreign Affairs, the Hon. Julie Bishop, who was intimately involved in the resolution of this issue. She was our Minister for Foreign Affairs when the treaty was actually signed and I think, once again, this chamber and the people of Australia should note the great contribution that the Hon. Julie Bishop has made to this country and its relationships with some of our closest countries. That includes not just Timor-Leste but also Papua New Guinea where I lived and worked for 2½ years. I know the Hon. Julie Bishop also had a great relationship with the people of Papua New Guinea as part of her remit as foreign affairs minister.

What is the treaty? The treaty achieves three basic things. Firstly, it resolves what was a difficult issue around where the maritime borders and boundaries were between Australia and Timor-Leste. Secondly, it recognises both state sovereign rights in the creation of the Greater Sunrise special regime for the joint development, exploitation and management of the Greater Sunrise gas fields. Thirdly, it provides for transitional arrangements to provide regulatory certainty and continuity for affected oil and gas projects in the Timor Sea. The treaty makes clear that the outcome represents a mutual accommodation which was without prejudice to either side's legal position. Now we find that the treaty is going to be legislated for in this place, and both parties will be able to move forward.

The revenue implications of the treaty are significant, significant for the people of East Timor. Australia and Timor-Leste have agreed that, from the date the treaty enters into force, Timor-Leste will receive all future upstream revenue derived from the Bayu-Undan and Kitan in the existing Joint Petroleum Development Area. Previously, both Australia and Timor-Leste received benefits from revenue derived from petroleum activities in this area—90 per cent to Timor-Leste and 10 per cent to Australia—but from the time of passage of this legislation 100 per cent of the benefit of that upstream revenue will now go to Timor-Leste. That is a very positive outcome.

Australia and Timor-Leste have also agreed that the Buffalo oilfield, which previously fell within the continental shelf of Australia, will fall within the continental shelf of Timor-Leste. Accordingly, Timor-Leste will also get the benefit of all revenue generated from that oilfield. Again, that's an extremely positive thing for the people of Timor-Leste.

In terms of implementing the legislation, this bill deals with a number of further matters that need to be dealt with on a consequential basis. That includes issues dealing with, for example, the section of the Bayu-Undan pipeline international offshore area and creating a new pipeline licence to enable Australia to exercise jurisdiction in an area of foreign continental shelf.

The purpose of the government amendment is to give effect to an understanding reached, between the governments of Australia and Timor-Leste, on the decommissioning of the section of the Bayu-Undan pipeline that will sit on Timor-Leste's continental shelf. You can see that spirit of cooperation between the Australian government and the government of Timor-Leste in resolving this extremely complicated issue. That's a very positive thing, and I applaud it.

Timor-Leste, while recognising Australia's exclusive jurisdiction over the regulation of the entire Bayu-Undan pipeline, has expressed its preference for this section of the pipeline to be decommissioned by removal and, noting the removal of property from petroleum title areas is the base case in Australia, Australia has agreed to this approach. It was fit and proper that Australia do so. That amendment will ensure that this section of pipeline must be removed before the Australian licence for the pipeline, and therefore the responsibilities of the licensee, will end.

There are a number of other consequential matters that are dealt with in the bill, including in relation to a passenger movement charge. This will also assist with respect to persons departing from Australia for the purpose of travel to the Greater Sunrise Special Regime area in connection with petroleum activities. They shall be exempt from the passenger movement charge, as was previously the case with a person travelling to the Joint Petroleum Development Area.

Then there are some important issues dealt with in the Treasury Laws Amendment (Timor Sea Maritime Boundaries Treaty) Bill 2019. Schedule 1 of this bill amends the tax law to fulfil Australia's taxation related obligations under the treaty, to provide conditions equivalent to participants in 'transitioned petroleum activities' in the Timor Sea. That is extremely important. It is important that the project proponents are kept whole, with respect to their expectations regarding taxation treatments. It's an extremely complicated issue but a very important one for the project proponents, and they will be kept whole in the way they're treated by the respective revenue authorities in Australia and Timor-Leste. That is important for their commercial expectations being met. I applaud the government of Australia and the government of Timor-Leste for reaching that accommodation.

This is the sort of accommodation that promotes investments in countries. Coming from Queensland and having seen the experience of the Queensland government in dealing with the Adani mining project in Queensland, I wish it were accommodation provided to all mining and resource project proponents seeking to invest in this country and in this region. It's important to give investors the confidence that they can go ahead with investments. I applaud both the government of Timor-Leste and Australia in this regard.

Finally, I return to the opening comments I made about the special relationship—and it is a special relationship—between Australia and Timor-Leste. I have friends who actually served in the Australian Defence Force in East Timor during the troubles. They are extremely proud of the service they gave those people and extremely proud of the service they gave this country. I absolutely applaud the efforts of the Australian government and the efforts of the government of Timor-Leste in initially reaching the treaty and coming to an agreement on the treaty. Now, with this bill before the house, hopefully the projects which are encompassed by the treaty in this bill can be advanced for the good of the people of Australia and for the good of the people of Timor-Leste.