Slade Brockman (WA, Liberal Party) Share this | Hansard source

I'll ignore the introduction from my fellow senator from Western Australia. This is a very important bill and it reflects a very important relationship in Australia's history. Senator Wong, who courteously listened to my first speech, would know that one of the key issues I wish to focus on in this place is the trade relationships that are so important to us.

Whilst this particular treaty is focused on more than just trade, it is a very significant relationship and one that reflects Timor-Leste's greatest economic asset—I'll restart that: their greatest economic asset is their people, of course. In the oil and gas reserves between our two great nations lies Timor-Leste's most important economic asset and the most important economic link between our two nations. That is fundamental to ensuring that what is a young democracy—a country that is a democracy that Australia played a very significant role in helping to achieve its democratic wish—has the financial resources to ensure that that nation can grow, develop and become, in the international realm, all it can be.

Those oil and gas reserves, particularly, represent the greatest asset of a close neighbour in a region where Australia is a significant economy but where its linkages to its near neighbours are vitally important, both to their future success and to Australia's future success in the region. Those of us on the backbench who do wish to speak on this bill recognise it as being a very important, very fundamental part of the future success of our nation.

Timor-Leste is a young nation. Timor-Leste is 20 years old, as my colleague from Western Australia pointed out. Australia played a fundamental role in ensuring that Timor-Leste could achieve its democratic wish. It achieved formal independence only on 20 May 2002. This is the blink of an eye in the history of democracies worldwide and certainly in this region. It represented a fundamental change for that nation. The first democratic legislative elections were held on 30 August 2001. Ninety-one per cent of Timor-Leste's eligible voters played a part in that election. That effectively elected a constituent assembly, provided for under the East Timor constitution.

I wish to talk briefly about the role Australia played in that process, because it was very significant. In fact, we were the frontline of support for Timor-Leste's transition. It came through the UN-run process for the independence referendum. Australia, through the support of INTERFET, restored security to Timor-Leste at a time of great import to that young nation. It enabled the nation to stand itself up. It enabled the nation to put in place the institutions and organs of governance that were required. Nobody around the world would doubt—and none in this place would doubt—the difficulty of that transition to democracy. We have seen it fail in other places time and time again. The support of Australia through that INTERFET process and then the, perhaps a bit slower but no less important, negotiations over the maritime boundary and over the development of the Greater Sunrise field and the related oil and gas fields between our two nations were a key step in that nation having the financial resources to stand up, to become part of the international community and to take its place as an independent sovereign nation in the global environment.

The treaty is historic, and it is vitally important that it does pass through this place. It's a historic agreement for Australia; it's a historic agreement for Timor-Leste. It establishes that permanent maritime boundary between the two countries and a stable framework for resource development in those oil and gas fields between our two nations. Under the treaty, the oil and gas fields in question will transition from joint Australia-Timor-Leste or exclusive Australian jurisdiction to Timor-Leste's exclusive jurisdiction. The treaty provides that the existing petroleum activities will continue under conditions or terms equivalent to the arrangements already in place. Whilst it does not overturn or change those conditions that are in place, it gives a level of certainty and formality to the relationship and to the ongoing work both our nations and the private sector are doing between our two countries.

The bill also, importantly, gives effect to the tax arrangements required for the treaty to enter into force and fulfils Australia's obligations under that treaty. This matter was looked at by a Senate committee; it went to the Senate Economics Legislation Committee in February 2019. In short, the bill is an important reflection of Australian government policy—bipartisan policy—in this place that will see the treaty implement the boundaries between our two nations, and it also obviously puts in place the passenger movement charge amendment, as required under the treaty obligations.

Schedule 1 of the tax bill is important. It amends the tax law to fulfil Australia's taxation related obligations under the treaty and to provide conditions equivalent to participants in the transitioned petroleum activities in the Timor Sea. Under the boundary transition, affected companies cease to generate Australian assembly income and instead generate Timorese income. This disadvantages companies that could no longer be entitled to offset Australian tax assets such as depreciation, deductions or accumulated tax losses against future Australian assessable income, but they will still pay tax on that income in Timor-Leste. The tax law changes will allow affected companies to preserve their tax positions in the Australian system to the extent they will not be recognised in the Timor-Leste system. Obviously this is a very important transition arrangement for the companies involved. Again, the companies involved have invested significant sums of money—billions of dollars—in developing those resources to the advantage of Timor-Leste and to the advantage of Australia. Ensuring the tax arrangements as we transition to the full treaty is vitally important. The affected companies will be no better off but, importantly, they will be no worse off in terms of the taxation arrangements. There are also consequential amendments that will need to flow through.

The PRESIDENT: It being 2 pm, the debate is interrupted in accordance with standing order 57. The debate may be resumed at a later hour and the senator will have leave to continue speaking when the debate is resumed.