Glenn Sterle (WA, Australian Labor Party, Shadow Assistant Minister for Road Safety) Share this | Hansard source

I rise to make my contribution to the Timor Sea Maritime Boundaries Treaty Consequential Amendments Bill 2019 and associated bills. Just for a bit of background, the Timor Sea Maritime Boundaries Treaty gives effect to a treaty between Australia and our very close neighbour Timor-Leste, recognising extended maritime boundaries for Timor-Leste and making new arrangements for petroleum development and revenues. This one supersedes arrangements made between Timor-Leste and Australia under the Timor Sea Treaty of 2013 and joint arrangements at Timor Gap for the purposes of petroleum development, which is called the JPDA—the joint petroleum development area.

In the new treaty, petroleum rights move from jointly Australia and Timor-Leste to exclusively Timor-Leste, except in the case of the special regime area. The treaty creates a special regime area across the gas fields known as Sunrise and Troubadour. This is with its own governance and regulatory authority that includes the protection of current Australian petroleum activities. The Greater Sunrise special regime area is a joint venture between Timor-Leste and Australia. Two international areas will be implemented for gas pipeline corridors, and the passenger movement charge amendment bill establishes that there will be no changes to exemptions that apply to the movement of people between our two countries.

The government will also introduce legislation to amend the taxation arrangements for companies that operate projects covered by the treaty. As part of the 2018 treaty, Australia provided that no Australian company will be worse off because of the treaty and the legislation—that commercial operators will continue on conditions or terms equivalent, which is very important. This legislation has not yet been introduced, but the government has shared an exposure draft with us and has provided a departmental briefing. They have indicated that we will need to pass the bill in this sitting period to ratify the treaty, which we're doing now. Currently projects in the Joint Petroleum Development Area are subject to an Australian income tax on 10 per cent of the income and to Timorese tax on the remaining 90 per cent. The Buffalo oilfield project is entirely within Australia's tax jurisdiction. Under the 2018 treaty this income will be entirely within the Timorese jurisdiction, and I think that's good news for the Timorese.

Due to this transition, projects will cease to have Australian assessable income. As such, they may no longer be able to claim deductions for depreciating assets they had invested in. Equivalent deductions are not available under the Timorese income tax system. Similarly, they may not be able to make other deductions or carry forward tax losses. To meet the requirement that these companies would not be worse off, this bill will allow these projects to continue to claim deductions. Any future investments after the entry into force of the 2018 treaty will not be deductible in Australia.

Labor warmly welcomed the signing of the historic treaty in March 2018 between Australia and Timor-Leste, establishing their maritime boundaries in the Timor Sea. The treaty brings to an end more than 40 years of uncertainty over our shared maritime border and vindicates the strong position taken by Labor to take decisive steps to settle our dispute with our neighbour, Timor-Leste. Labor believes that the maritime boundary dispute with Timor-Leste seriously strained our bilateral relations and that it was in the national interests of both Australia and our dear neighbour to resolve this dispute. We are therefore very pleased that this treaty is the first ever to be achieved by conciliation under the United Nations Convention on the Law of the Sea.

Australia and Timor-Leste have agreed that from the date the treaty enters into force—hopefully very soon—Timor-Leste will receive all future upstream revenue derived from petroleum activities from the Kitan oilfield and the Bayu-Undan gas field. Previously both Australia and Timor-Leste received benefits from the revenue derived from petroleum activities in the JPDA, including these two fields. As I said, in addition Australia and Timor-Leste have agreed that the Buffalo oilfield, which previously fell within the continental shelf of Australia, will now fall within the continental shelf of Timor-Leste and that Timor-Leste will receive all future revenue from that oilfield—very good news. The development of the Greater Sunrise fields is expected to yield significant revenue over the life of that project. The divergent revenue estimate of $2 billion to $8 billion is dependent on the terms of the development concept that is still to be agreed, and we're working our way through with Timor-Leste and the Greater Sunrise Joint Venture for the development of the Greater Sunrise fields. The exact financial benefit to Australia will depend upon a range of factors, including this concept as well as the economics of the project and prevailing market prices for oil and gas.

This treaty will give Timor enormous amounts of revenue—probably more than we ever give in foreign aid, and that's no mean statement. It will give them a new source of independence. It is very, very good news for Timor-Leste, and it's very good news for us, because what we are doing today is honouring what we say about our own approach to the international community—our approach to social justice and our approach to fairness and equality. It's exactly where Australia should be, and we can all collectively be proud of where we've landed with the consideration of these bills. The Senate should note that in the previous parliament these bills were referred to committee, and evidence was provided that the length of time required for a treaty, which recognised Timor-Leste's claims to be negotiated and signed, had, in some quarters, seriously undermined Australia's international standing.

It is important that Australia is recognised as a trusted partner with its closest neighbours. The Australian government has had six years to work on the treaty, and now there is timing pressure to pass the bill before the parliament to allow the treaty to come into effect by the 20th anniversary of the Timor-Leste Popular Consultation on 30 August 2019. The treaty enforcement marks 20 years since Popular Consultation, on 30 August 1990, that led to Timor-Leste's independence.

The government has also introduced a tax amendment to the treaty bill that ensures no Australian company will be worse off. That's because that's the best thing that needs to be done with this treaty. The treaty demonstrates Australia's commitment to international law and rules, Australia's intention to have robust bilateral relations with Timor-Leste and, seriously, to get the Greater Sunrise gas field developed.

I commend the legislation to the Senate. It really is a fantastic time for the prosperity of the Timor-Leste people and I wish them all the very best.