Matthew Canavan (Queensland, Liberal National Party, Minister for Resources and Northern Australia) Share this | Hansard source

Thank you, Senator Whish-Wilson. In respect of your specific question, I don't have any information at hand, I'm sorry, about exactly how the issue was discovered or how it was brought to the government's attention. I'd have to take that on notice. Obviously I'm happy to go through the detail of the reasons for these proposed amendments.

I might just take this opportunity to indicate that the government will not be supporting the Greens amendment. Primarily we'll not be supporting this amendment because the provision that the Greens would like to oppose is all about providing consistency in our taxation law and honouring a commitment the Australian government made to oil and gas producers doing certain exploration activities around 10 to 15 years ago. Just to explain it to the chamber, the designated frontier area tax incentive is the issue at question here. It was a measure that was in place from 2004 to 2009. It was designed to attract and provide an incentive for investors to do exploration in remote offshore areas, or frontier areas—areas that might otherwise find it difficult to attract interest and investment given their high-risk nature.

As part of the tax incentive, the resources minister had the power, under subsection 36B(1) of the Petroleum Resource Rent Tax Assessment Act 1987, to designate, in writing, offshore petroleum acreage release areas, in the years 2005 to 2008, as designated frontier areas. The requirement to designate these areas in writing was not met for the 2005 acreage release. The then minister for resources had provided in-principle agreement to the designation of areas for the 2005 acreage release prior to commencement of the relevant provisions of the Petroleum Resource Rent Tax Assessment Act 1987. However, a subsequent process to formally designate the areas in writing was not undertaken once the provisions had commenced, although the areas were publicly, clearly and consistently promoted as such. Consequently, though four exploration permits were awarded over areas promoted in 2005 as designated frontier areas, they were not technically designated as frontier areas.

To remove any doubt regarding the validity of claims under the tax incentive scheme, the amendments made by this bill confirm the legal designation of those areas as designated frontier areas. There will be no detriment to or negative effect on any other parties as a result of the amendments and there are no new obligations that will be applied retrospectively. This program was fully costed and budgeted for during its original inception in 2004. These amendments relate directly to the Australian government's commitment to providing a robust and stable investment environment. The companies that bid on this acreage did so taking into account a range of relevant considerations in making their investment decisions, and the DFA—the designated frontier area tax incentive—was one of those considerations. If we failed to provide the taxation law certainty extended by these amendments, it would unfairly and unjustly undermine the original investment decisions. Genuine and consistent application of taxation law is a principle as equally applicable to offshore petroleum companies as it is to anyone else.