Kim Carr (Victoria, Australian Labor Party) Share this | Hansard source

These bills raise questions about Australia's fuel and energy policies, and they go beyond the specific contents of the bills themselves. On the face of it, they make technical and uncontentious changes to the maritime jurisdictions, allowing combined Commonwealth and state jurisdictions to exist in coastal waters for the purposes of greenhouse gas storage.

The first beneficiaries of these changes will be Victoria's CarbonNet and the Hydrogen Energy Supply Chain projects, which will sequester CO2 from the Latrobe Valley power stations in Bass Strait and generate hydrogen for export to Japan, a project I have strongly supported for some time. It will welcome development that, among other things, reflects many years of research on the technology of carbon capture and storage by the CSIRO and by the University of Melbourne and by the CO2CRC. It means that the mining of Victoria's extensive brown coal reserves can have a future and can contribute to the lowering of global emissions and not to increasing them. Hydrogen is effective as a zero-emissions fuel, and it is used in motor vehicles, for example, which see the emission of water vapour rather than other noxious vapours. All of this is undoubtedly good, but the export of hydrogen produced in this country is also a reminder of what we have to do to invest in the development of alternative fuels for use here.

It's troubled me that Australia being, I think, the ninth major energy producer in the world earns so little attention in terms of public policy on the development of fuel usage and storage. Of course, so little attention is paid in terms of the wider energy policy, particularly around the questions of the strategic value of providing energy security in this country. Most recently a glaring example of this failure to think strategically was the announcement by the minister for energy, Angus Taylor, that Australia will buy oil and store it in the US petroleum reserve in Texas and Louisiana. One consequence of the COVID-19 pandemic is that we have become more intensely aware of our dependence on fragile global supply chains. Of course that's no more evident than in our reliance on imported oil. Everything—quite literally everything—that keeps the economy moving depends on the availability of sufficient supplies of oil and the existence of sufficient refining capacity. We have gone backwards in both respects in this country. Minister Taylor's purchase of two days of consumption in the United States does not fundamentally change that equation.

The Sydney Morning Herald and The Age carried a report at the time of the minister's visit, which said:

US politicians have previously raised concerns about the idea of selling off fuel from the petroleum reserve to other countries. But the fact Australia's deal involves leasing facilities in the US—rather than shipping the oil directly to Australia—helped assuage some worries in Washington

To me, that quote summed up one of the major problems with this purchase. It is clear now that the new oil reserve is really part of another country's reserve. We have yet to discover how this will actually work and how it will actually work in Australia's interest. It's obvious from the point of view of Texas and Louisiana that Australian oil would not necessarily flow to Australia in times of emergency. The reason is that, of course, the strategic reserve is held by that country, in those states.

I asked a simple series of questions at Senate estimates around these matters, and I hoped to get some clarification. The officers have responded in writing to the questions which they took on notice, and unfortunately they were about as clear as the contents of a barrel of west Texas crude itself. I asked:

Please outline the main steps in the process from Australia's request for access to the arrival in Australia of the fuel

We were told it was done individually 'by the terms and conditions in the relevant commercial contracts'. That, of course, is subject to ongoing negotiations with the United States. I asked—and they were equally as murky in response—'Does the Agreement include minimum and maximum times for the delivery of SPR fuel to Australia?' I was told, 'This is subject to ongoing negotiations with the United States.' Finally—and this is a masterpiece of obfuscation worthy of the very best of Sir Humphrey Appleby—I asked:

What arrangements does the Australian government have in place to guarantee timely access to appropriate shipping to bring the fuel to Australia in an emergency?

I was told:

This is subject to ongoing negotiations with the United States. Through these negotiations, Australia will ensure any deal represents the best possible outcomes for Australians.

Of course we live in hope, don't we? We live in hope. A great deal appears to rest on the ongoing negotiations. As those negotiations have progressed, Mr Taylor should be able by now to enlighten us.

Australia has purchased from this reserve, it will be held a long, long way away from Australia, and we're not able to know exactly how long it will take to get to Australia and under what terms and conditions. What happens if President Trump, or whoever it is that leads the United States administration at the time, decides that in such a world emergency the United States' interests are greater than Australia's? Would that oil legally belong to Australia? And, if so, what would it matter? What would it matter? Have we not seen, in the last six weeks, vital supplies being held up at borders despite contractual arrangements by governments that felt that their people deserved consideration over and above any contractual arrangements entered into by another government? The naive belief that contract law is going to rise above the national interest of other countries—I find that quite remarkable. Yet that is the belief that is being peddled to us on a regular basis.

I hope that the operation of this faraway strategic oil reserve might become clearer when the fuel security review is actually released and when the government releases its response to this review's recommendations. But I asked a few questions on this matter as well, and we were told that the timing of the release is a matter for the government, and the timing of the response will depend on the timing of the release. This, of course, is a pattern that's emerged. Unfortunately, what we see from that pattern is that Australia's position has only deteriorated.

Australia, in 1979, became a member of the International Energy Agency, and we were required to have 90 days supply of fuel reserves on tap. What we have seen since that time is that our position has steadily deteriorated. The Australian National Audit Office undertook, for instance, a report into our net import stocktake in 2002. It decided that we had 310 days supply. By 2008, it decided that we had 101 days supply. In 2011 the Liquid fuels vulnerability assessment concluded:

With growing net imports, the ratio of stocks to net imports is likely to decline.

I understand that the minister now acknowledges that we have the equivalent of 52 days supply. That's a misleading figure, of course, because, if we look at the detail of where that's held, that includes supplies held on water, supplies held in a foreign country, supplies held in people's petrol tanks and supplies held in reserve by private companies. That doesn't take into account that, if we look at what's happening in terms of availability of specific types of energy reserves, it's less than three weeks for jet fuels, for diesel and for various other different grades of fuels. Think about the vulnerability if our shipping lanes were closed. Reports such as the one produced by the NRMA back in 2013 suggest that, in the pharmaceutical industry, the food industry and in many other key sectors of our economy that actually determine what sort of country we are and what level of welfare our people enjoy, we may in fact be down to less than a week's supply. When I asked officials, 'Have you done modelling on that to confirm those things?' they said, 'Oh no, we weren't required to.' Just last February I asked those questions. They said, 'We weren't required to examine the detail of those matters. So officially the government have not undertaken a study as part of this review.

We've seen the destruction of these fragile supply chains in the time of the pandemic. Circumstances have highlighted particular difficulties. It's unique in a way, because people aren't driving; they're not actually using transport for domestic purposes. It doesn't change the proposition that what was once considered only a theoretical model—that the international trading system could be thoroughly disrupted—has now been seen to be a real possibility. I'd say that way of thinking needs to be extended through to the implications of what might happen in times of real conflict, in which shipping lanes are affected as well, and what the consequences might be for us.

If the United States's strategic petroleum reserve is to be made available, under what circumstances would it be made available to Australia? What is the strategic thinking about supplying our fuel where we don't even have capacity to provide the shipping to get it to Australia in times of international crisis? What's the kind of thinking that leads us to make an assumption that those conditions are likely to change? What's the investment strategy that this government has undertaken to develop the storage capacity onshore? What's the strategic thinking that this government has undertaken to establish the refining capacity onshore?

When it comes to the development of energy security, you would think now would be an appropriate occasion on which to show some real leadership and to be able to demonstrate that it is actually cost-effective to think in longer terms than we have seen. The swiftness with which this pandemic has swept across the world shows what can go wrong with neoliberal assumptions about the way in which the capitalist system actually works. It surely is a wake-up call for us to think about what can be done to protect our national sovereignty, the welfare of our people and the living conditions of our people.

The present crisis has shown there is no substitute for proper planning by government and effective action by government. The prescriptions of neoliberal economics that have guided policymakers for a generation are no basis for building a secure and prosperous future in this country, where the national government is willing to take the initiative in fuel and energy policy. The government must be prepared to support the development of alternative fuels in this country as well as options for our own export industries. We must be able to develop a genuine fuel reserve on Australian soil, a reserve that will be readily available for the benefit of Australians in times of an emergency, where we can genuinely demonstrate our sovereignty and our independence from long and fragile supply chains.