Michaelia Cash (WA, Liberal Party) Share this | Link to this | Hansard source

My question is to the Minister representing the Minister for Resources and Energy, Senator Carr. I refer to Minister Ferguson’s spokesman’s comments on Woodside’s possible investigation by the ACCC as reported in the Australian yesterday. Given the huge impost all Western Australians will face from Labor’s condensate tax grab, can the minister advise on what basis the government will be directing the ACCC to review the appropriateness of the North West Shelf Venture partners joint marketing arrangements?

Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

Thirty years ago a few companies got a tax exemption for condensate. I repeat: that was 30 years ago. That proposition is no longer needed and is now delivering windfall gains not available to anyone else. These are windfall gains that belong to the Australian people. After 30 years of this tax exemption, the North West Shelf project is now mature and profitable, and the companies benefiting from this concession are enjoying huge profits from rising international oil prices. There are members opposite—Liberals opposite—who seem to care more about the windfall profits that are gained from one project than they do about lowering inflation and interest rates for working families who are doing it tough. For example, the windfall gain between 2001-02 and 2006-07 was around $1.4 billion and would now, on present-day figures, be even higher. If Woodside had paid the condensate tax this year their profit would have been $950 million instead of $1 billion. That is still $340 million more than its profit this time last year.

The proposition is simply this: the measure that the government has proposed removes a tax exemption for condensate which is not, as was stated yesterday, a tax on gas. Those opposite have been told this measure will not be putting up gas prices. The CEO of the North West Shelf Venture told the Senate: ‘Our current domestic contracts are in place and will be honoured—and that is for many, many years; they are long-term contracts.’ The Treasury have made it clear to the Senate Economics Committee that they do not expect there to be any impact on prices outside those contracts.

Michaelia Cash (WA, Liberal Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Minister, thank you for the history lesson but isn’t this just a case of the government standing over the North West Shelf Venture partners and threatening them because they are daring to, like any other business is entitled to, pass on taxes to their consumers?

Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

The position, as I have outlined, is that there are long-term contracts in place which Woodside said it will honour. This was a particular exemption given to Woodside effectively over 30 years ago which only a few companies were able to attract and is no longer needed. The proposition that these arrangements will be passed on to others strikes me as in contrast to what the company itself has said about its own long-term contracts.

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Superannuation and Corporate Law, Senator Sherry. Can the minister please update the Senate on why, now more than ever, it is critical that the government’s budget measures are passed in full?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

That is Senator Cameron’s first question, and a very important question it is. Global market financial turmoil is still creating considerable uncertainty in the global economy. What is known as the US subprime crisis, which has caused financial markets and indeed share markets around the world to decline rapidly and in some areas to go literally into meltdown, is still continuing. When I was in the United States—Washington and New York—last week, all the signs were that that is going to continue. We are going to have a continuing period of global financial market uncertainty. It is in this context that we need a strong budget surplus to provide a buffer against global turmoil. We need to ensure that the Reserve Bank in Australia has room to move, we need to finance critical national building investments for the future and we also need to keep downward pressure on inflation. That is why we have built a strong budget surplus for this financial year of some $22 billion. That is very, very necessary in the context of the reasons that I have outlined.

Part of this budget surplus of $22 billion over the four financial years identifies savings of some $33.3 billion. The Labor government have identified savings of some $33.3 billion, including $7.3 billion in savings in this financial year. We are proud to boast that we are fiscal conservatives. We have taken the current state of economic circumstances very seriously indeed. It is the height of economic irresponsibility for the Liberal opposition to be tampering with this budget surplus, vandalising the budget surplus—

Nick Minchin (SA, Liberal Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

$20 billon!

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I am just going to get to some remarks by Senator Minchin. Senator Minchin is laughing, of course. A former finance minister in the Liberal government is laughing. I want to go to some comments by Senator Minchin yesterday. Yesterday Senator Minchin asked a question about what difference—and he is shrugging his shoulders—$1.5 billion makes to the budget. He said:

How on earth can a reduction in the surplus from $21.5 billion to $20 billion possibly be described as ‘vandalising the surplus’?

Senator Minchin has lost all connection with reality and fiscal responsibility, if indeed he ever had any. He certainly had it at the beginning of his period as finance minister but it very quickly evaporated in the latter part of his period as finance minister. Senator Minchin, $1.5 billion is a considerable sum of money and a considerable part of the budget surplus that we believe is necessary to contribute to a substantial budget surplus, given the current economic circumstances we face.

Nick Minchin (SA, Liberal Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Out of $1 trillion of revenue!

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Senator Minchin scoffs at $1.5 billion, but that is just the impact in this financial year. The ongoing impact would be $6.2 billion off the budget over the next four years. Senator Minchin continues to interject and shout and try to make the argument that this is of no consequence to the Liberal opposition. He just shrugs his shoulders—$6.2 billion off the budget surplus. It is of no consequence to Senator Minchin and the irresponsible Liberal Party vandals who are attempting to substantially reduce the budget surplus.