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

We are considering the Excise Tariff Amendment (Condensate) Bill 2008 and the Excise Legislation Amendment (Condensate) Bill 2008 as part of a cognate debate.. The tariff amendment bill seeks to amend the Excise Tariff Act 1921 to apply the crude oil excise regime to condensate produced in the North West Shelf project area and onshore Australia. The proposed changes are to be applied retrospectively from midnight on 13 May 2008. The excise legislation bill seeks to amend the Excise Act 1901, the Petroleum Excise (Prices) Act 1987 and the Petroleum Revenue Act 1985.

The proposed amendments to this bill set out the relevant formulae and methodology to allow the calculation of the condensate price for excise purposes. The government has estimated that the effect of these amendments will raise an additional $2.5 billion from the North West Shelf venture alone over the next four years and continue thereafter to raise an additional $625 million each year from the joint venture for the life of the North West Shelf project.

This $2.5 billion tax grab from the North West Shelf project is a blatant repudiation of the 1977 decision when the then Liberal Treasurer, the Hon. Phillip Lynch, announced in his budget speech that condensate marketed separately from crude oil should be exempt from excise. There was a reason for this decision and it was not taken lightly. This decision was designed to encourage new exploration of oil and gas and to ensure that it was economically viable to recover a greater volume of our oil and gas reserves. Had we not had this decision, these reserves would have been uneconomical to recover and left in the ground—hardly good news for the state of Western Australia.

But in its increasingly arrogant style—and one which has become a hallmark of the Rudd Labor government—it failed to consult industry and it failed to consult other affected parties on this tax grab. But worse than that, it failed to research the adverse financial burden that will be imposed on the people of Western Australia—not anybody else—as a consequence of higher energy prices. Confirmation of the Rudd government’s arrogance is found in the August 2008 Senate Standing Committee on Economics report on the two bills currently before the Senate. On page 33 it is noted:

No discussions took place between Treasury and the North West Shelf venture to discuss the implications of the change.

Clearly, this tax grab was more important to this high-spending, high-taxing government than consulting and researching the actual impact of the decision on the oil and gas industry and on the people of my state. Another example of the arrogance of the Rudd Labor government is again set out in the Senate committee report on page 33 in the following terms:

... the measure had been drafted by the Department of Treasury without any reference to the relevant expert department, the Department of Resources, Energy and Tourism.

That is the absolute height of arrogance from a government. It even failed to consult with its own departmental experts. The effect of the failure of the Rudd government to adequately consult relevant parties has caused the resources industry to raise the issue of sovereign risk in Australia as it applies to this industry. This tax grab has shaken industry and raises the obvious question: whether the Rudd Labor government can be trusted in its dealings with the resources industry.

I note that in an article published in the Age on Thursday, 15 May 2008 on page 6, relations between the government and Woodside petroleum were said to be at a new low. The article stated in part:

Relations between the Federal Government and Woodside’s feisty chief executive Don Voelte have sunk to a new low following the budget decision to rake in billions of dollars from the Woodside-managed North West Shelf joint venture by introducing an excise on condensate ... output.

Dubbed the ‘Voelte tax’ or ‘Woodside tax’ by industry watchers, the surprise tax change will boost government revenues by $2.5 billion over the next four years although its impact is much greater when reviewed against the 20 years-plus life of the project, Australia’s biggest single resources development.

The article, when referring to Mr Voelte’s comments, said:

This is not a loophole which is being closed, or a free ride which has come to an end. This is a negotiated fiscal arrangement which formed the basis of Australia’s largest resources development.

It is obvious that the Rudd government has failed to recognise and understand that continued investment in Australia by the resources industry relies on confidence being maintained by global industry and global investment institutions in Australia being a safe, stable and reliable place to invest.

When global industry and global investment institutions are making a decision on whether or not to invest billions of dollars in a resource project in Western Australia, they look to certainty in the arrangements and agreements they negotiate. They do not want to be dudded somewhere down the track. Clearly, they resent the ground rules being changed at the whim of an envious government and will take such actions into account when considering further investment.

The issue of sovereign risk was raised in an article published in the West Australian newspaper on Wednesday, 16 July 2008 on page 6 under a banner headline ‘Condensate Tax Slug on North West Shelf a Third World Decision’. The article states:

The Rudd Government’s move to slug WA’s multi-billion-dollar North-West Shelf gas project with a $2.5 billion condensate tax will damage Australia’s sovereign risk to such a point that investors will put the country—

that is, Australia—

in the same league as Third World nations, the petroleum industry warned yesterday.

The article goes on to say:

Two of the project’s partners, Woodside Petroleum and BHP Billiton, and the Australian Petroleum Production and Exploration Association have attacked the Government’s surprise budget decision, accusing the Rudd Government of an ill-thought out and uneducated move that could seriously threaten future investment in Australia and—

worse than that—

send the cost of domestic gas soaring.

In failing to properly research the actual impact and burden of this $2.5 billion tax grab, the government has also betrayed the people of Western Australia by not recognising—and this is what happens when you do not consult properly—that the imposition of this tax will now form part of the cost structure of the North West Shelf Venture and will be passed on to consumers of the product—that is, Western Australians. There is a reason for this—that is, we in Western Australia get about 65 per cent of our gas supply in the domestic market from Woodside, and it is consumers of this product who will bear the brunt of this tax grab. Mr Rudd, on behalf of Western Australians, thank you very much!

The government has been warned by some of the venture partners that this tax heist will have to be passed on to consumers, and yet when questioned about this in the parliament the government equivocates on the issue of price increases and is in a state of denial, with its feeble attempts to answer questions relating to consumers of North West Shelf Venture domestic gas having to pay increased prices due to this discriminatory tax grab. Having read the Senate Standing Committee on Economics report and statements of some of the venture partners, I am at a loss to understand the basis of the government’s assertion that the $2.5 billion tax grab from Woodside and other venture partners will not be passed on to gas consumers. The government is in denial. To try to sustain its tenuous position and hide from the fact that consumers in Western Australia will have to pay higher prices for domestic gas sourced from the North West Shelf Venture, the government seeks refuge in quoting, in my view, out of context a few words stated by Mr Voelte when he gave evidence before the Standing Committee on Economics in Perth on 11 August 2008. Mr Voelte said:

What I can say is that our current domestic contracts are in place and will be honoured.

In my view, the words are clear and unambiguous. They confirm in simple, legal terms the position of the venture partners in respect of current domestic contracts. It is clear from Mr Voelte’s statement that the venture partners are bound by some terms of the existing contracts. Quite properly the venture partners have acknowledged that they will honour their current legal obligations. It is self-evident that a failure to do so could attract legal redress. However, nowhere in the evidence given before the committee can the government point to the venture partners stating that they will not exercise their undoubted commercial right to pass the burden of this sneaky Labor tax grab onto consumers as new contracts are negotiated or current contracts renegotiated.

This tax grab destroys the credibility of the Rudd government and shows that they are not trustworthy, given that they broke a 30-year, time-honoured agreement on the exemption of excise of condensate produced from the venture project. The bad news for consumers of the state of Western Australia is that they are the ones who are going to have to bear the brunt of Labor’s tax grab, because we are the only state that relies on the North West Shelf Venture partners for the majority of our domestic gas supply. It seems to me that the burden of this tax grab, which the government claims is in the national interest, will discriminate against WA householders as they are the only ones who will be hit with increased gas prices. Because in WA we use a large volume of gas to generate electricity, this tax will cause the price of electricity to industry and to householders to rise. And let us not forget that WA is already paying the price for the abysmal mismanagement by the former Labor government of the state’s south-west interconnected electricity system, which relies heavily on the North West Shelf Venture gas as an energy source.

Only recently Frontier Economics, in a confidential draft report commissioned by the WA Office of Energy, entitled Electricity retail market review: electricity tariffs, dated April 2008, advised that the A1 tariff—that is, the electricity tariff for small users—would need to rise in 2009-10 by 38.05 per cent and in 2010-11 by 17.19 per cent, excluding the tariff equalisation contribution. If the tariff equalisation contribution is included, then the A1 tariff will have to rise by a huge 47.48 per cent in 2009-10 and 15.31 per cent in 2010-11. These are the projected prices for electricity before we have to add in the additional electricity price rises which will occur as a result of the $2.5 billion tax grab. What do you think the average Western Australian is going to say about that? Better than that, what do you think the pensioners, who are also going to experience an increase in their domestic gas price, are going to say about that?

Did the government Treasury officials take these potential tariff hikes into account before embarking on this $2.5 billion tax grab? The answer has to be no, because there is clear evidence that the government failed to research the actual economic impact on consumers, and in particular householders in Western Australia, of the financial burden that will flow from this tax grab. The government has failed to recognise that the impact of this tax grab will not only feed but fuel inflation. This tax grab confirms yet again that the Rudd Labor government is heading down the familiar Labor path, and we have all seen this path before, of a high-taxing, high-spending government. The inflation figures since this government came to office prove this point.

There are a number of other issues that need to be considered regarding the potential impacts of these bills. They include the removal of the excise eroding what are already thin margins for the domestic gas market. The removal of the excise will be a disincentive for venture partners to sell gas into the domestic market as the domestic margins are so low that it will quite simply be better to deal in LNG. As to the claims that Woodside is a cash cow with record profits, whilst Woodside may record record profits, the $12 billion-plus Pluto LNG project alone sees Woodside reinvest straight back into Western Australia, and reinvestment back into Western Australia provides benefits for the national economy.

This tax grab is all about the politics of envy and it will increase the price of domestic gas in Western Australia. Increased gas prices and increased electricity prices will hurt Western Australians. Not only that, it will hurt in particular the pensioners. This tax grab shows that the Rudd Labor government is not to be trusted and has forgotten the people of Western Australia. More importantly, take note of the recent election result in Western Australia. Labor has been kicked out of office due to its arrogance and its failure to listen to and stand up for the interests of Western Australians. This should be a clear warning to Mr Rudd and federal Labor, whose own failings in Western Australia were a contributing factor to the election loss.

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

I rise to speak in favour of these bills, the Excise Legislation Amendment (Condensate) Bill 2008 and a cognate bill. I just find the hyperbole from Senator Cash quite amazing. For her to talk about arrogance and lack of consultation on behalf of the Labor Party after the record of the Liberal government for 11½ years is quite breathtaking. To talk about trust and to talk about an election is also quite breathtaking. The Australian public have put their trust in the Australian Labor Party to run this country for the next three years. These bills are an important component, a key component, of the government’s 2008-09 fiscal position.

The North West Shelf Venture is Australia’s largest resource infrastructure development. It has involved $25 billion in capital expenditure over the last 30 years, and more than $10 billion is being committed or is under consideration. The North West Shelf Venture comprises wholly owned subsidiaries of some of the biggest resource and energy companies in the world: BP, Chevron Corporation, Shell, BHP Petroleum, Mitsui and Mitsubishi, and Woodside Energy operate the project. The North West Shelf gas and oil fields are a natural resource asset of unparalleled riches in Australia’s resource-rich history. The oil and gas resources of the North West Shelf are not private property; it is an asset owned by all Australians, and the wealth it generates should be shared between the venture partners, those who invest in the recovery of the resource and the Australian people. While the energy resource in the North West Shelf project is quite vast, it is not infinite. It is a non-renewable resource and it is in the national interest that the Australian community receive a fair share of the wealth that this project generates.

These bills see a return to the Australian people of $2.5 billion over the forward estimates to the period 2011-12. The bills end the exemption from the crude oil excise regime granted to condensate produced in the North West Shelf production area. Those exemptions were granted by the Fraser government in 1977, so they have had a favourable position since 1977. The exemption was intended to encourage the development of the liquefied natural gas industry in the North West Shelf and thus can be seen as a form of infant industry assistance. Times have changed since 1977 and it is time that a tax anomaly that has grown with the continuation of the exemption from the excise of condensate produced on the North West Shelf is brought to an end. The excise exemption under current circumstances distorts the excise regime on liquid transport fuels. At a time when the government is expected to maintain the integrity of the budget, it is essential that we remove tax anomalies and distortions. Condensate is a form of light crude oil and it is put mainly to the same purpose as other forms of crude oil: the production of petrol. It is a product in every major respect, apart from its origins, identical to other forms of crude oil, yet it is excise exempt. When condensate from the North West Shelf is co-mingled with other forms of crude oil, it is subject to excise. These commodities should be taxed consistently.

The LNG industry in the North West Shelf project area is now mature. It is highly profitable and oil prices are at or near record highs and will remain there. Over the last five years, production in the North West Shelf project area has returned record profits to the venture partners. The excise exemption has served its purpose. It is time to move on and develop modern incentives to assist the development of new projects rather than persist with a crude subsidy in the form of excise exemptions for mature and highly profitable projects. Just how profitable the North West Shelf project area is can be gauged by the profits made by the operator, Woodside Petroleum. Woodside recorded a record year in 2006. Net profits after tax were $1.472 billion, up 29 per cent from 2005. Revenue was $3.81 billion, up 39 per cent. Net operating cash flow was $2.349 billion, up 37 per cent. However, 2007 was not quite as good: net profits were $1.03 billion and revenue was $4.004 billion, up five per cent.

On 27 August this year, after the economics committee concluded its inquiry into these bills, Woodside announced its results for the half year to 30 June 2008. They are astonishing. Revenue was $2.574 billion, up 45 per cent on the first half of 2007. Reported net profit after tax and significant items was $1.016 billion, up 67 per cent on the first half of 2007. Interim dividend was 80c per share, up 63 per cent on the first half of 2007. Earnings per share were up 62 per cent on the first half of 2007.

Oil and gas companies around the world—ExxonMobil, Shell, BP, Chevron—are all making previously unimaginable profits in a climate of constrained oil supply and record or near-record high prices. The industry spent a lot of time in the Senate economics committee inquiry arguing that their profits are substantially offset by increased costs. Their contentions are just not supported by the results. In Woodside’s recent half-yearly director’s report to shareholders, there is no mention of the threats to profitability posed by increased costs. Rather, the report focuses on the likelihood of increasing exploration, increasing capital expenditure, increasing production and a very, very rosy outlook for profits. It is all good news for Woodside Petroleum.

Given that Woodside’s half-yearly report was released nearly 3½ months after these bills were introduced into parliament, one might expect that the removal of the excise exemption would be mentioned in the director’s report, especially if it was going to produce the nonsense that we have heard about what is going to happen to Woodside from the other side of this house. We have a feisty managing director in Don Voelte, but did Don Voelte say that this was going to destroy the company? No, he did not. Did Don Voelte say it would reduce investment? No, he did not. Did Woodside tell the Senate committee one thing and shareholders another? We have to ask ourselves that question, because what was told to the Senate committee is not what was being told to the shareholders. Perhaps the position of Woodside is that which is forecast by independent analysts. Dr Richard Griffiths put in his submission to the committee:

In a situation of steeply rising petroleum prices worldwide, it is unlikely that increased excise will do much to dampen the profitability of oil and gas production.

If senators care to check the profitability of all the North West Shelf Venture partners, they will find that they are in a similar position to Woodside. It is the role of government to pass new laws and change regulation in response to changed circumstances. The circumstances that prevailed in 1977 at the time of the excise exemption for condensate from this project have long since passed.

The argument that there is now some sovereign risk to these major international companies and their operation in Australia is a nonsense. A great deal was made during the course of the committee inquiry into these bills raising this very perception—that there was a sovereign risk to investment in Australia. Sovereign risk is an important element in investment decisions. Political instability, capricious and selective government decision making, oppressive use of state power and other elements of sovereign risk all add up to an environment that discourages investment. But to suggest that these bills create a climate of sovereign risk is absolutely ludicrous.

Australia is a free and democratic country. It observes a constitutional separation of powers. It has predominantly transparent decision- and policy-making processes and it has a very, very responsible federal government. Australia ranks about 21st amongst the natural-gas-producing nations of the world. It would rank at or near the bottom of those countries representing sovereign risk. Look at some of the countries who are producing gas and tell me whether Australia is a bigger sovereign risk than these countries for investment: Russia, the No. 1 producer; Iran, No. 4; Algeria, No. 5; Turkmenistan, No. 9; and Indonesia, No. 10. Is Australia a bigger sovereign risk than these countries? Nobody in their right mind would come here and argue that proposition. Ahead of Australia in gas production are Saudi Arabia, Uzbekistan, Malaysia, China, United Arab Emirates, Qatar, Argentina, Mexico, Egypt, and Trinidad and Tobago. Anyone who would argue that any of these countries represent less sovereign risk than Australia, or anything even comparable to Australia, is not on this planet.

The other fear factor—the Liberal fear factor again—is that domestic gas prices will rise. Again, we have pensioners rolled out for some cheap political points by the opposition. Arguments have been raised that the removal of the condensate excise exemption will lead to higher domestic gas prices in Western Australia. This is plain wrong. According to the proponents of these arguments, domestic gas prices will rise because the removal of the excise exemption will lead to increased administration costs and that these will be passed on to domestic gas consumers. These costs were never quantified by any submitter or any witness to the inquiry. They remain intangible; they remain unknown; they remain this great enigma. The real position, as put to the committee by Treasury, is the following:

Liquid petroleum gas, which is one form of gas that is used—

in Western Australia

… is priced in WA by reference to a world price for liquid petroleum gas—as it is in the rest of Australia. In the case of natural gas supplied to small use customers in Western Australia that is subject to regulation by the Western Australian government under the energy coordination gas tariff regulations

If there is something the other side knows about the new Western Australian government and what they are going to do to gas prices in Western Australia, let them be upfront and put it out here today. There is no argument for any increase to any part of the community because of this government proposal.

Rather than assisting mature and profitable projects, it is time to reassess the incentives government can provide to encourage new projects. Taxation regimes need to change over time to account for changes in economic conditions. The overall taxation regime facing the gas industry will be considered by the Henry review, and these bills create a level playing field ahead of the Henry review. These bills do not create a climate of sovereign risk. I would put my money on Australia ahead of Turkmenistan any day. The industry is liable to pay excise on extraction of a non-renewable resource that should benefit all Australians, and the industry has the capacity to pay. That is the reality.

There is bound to be opposition from anyone who is about to be taxed on something they have previously enjoyed tax free or at concessional rates. That is what this debate is about. The debate is as old as civilisation, with big business saying, ‘We don’t want to pay any more tax.’ It is about the Liberal Party supporting big business over the needs of the community and the real needs and long-term needs of pensioners in this country. The only really strong argument against these bills is that no-one likes to pay tax. I noticed that Senator Abetz in the economics committee said that no-one should pay any tax. I do not know what economic school that comes from, but it is not the economic school of reasonable approaches and economic fairness and equity. No-one in this place would retain any shred of respectability if they argued anything other than that this is a fair and reasonable position to adopt in the interests of this country, in the interests of the nation and in the interests of the community.

If you accept an argument that you can never change the taxation system on a company that has received special consideration from the state from 1977 until now then we are in real trouble. Woodside Petroleum and these giant oil companies that are making massive profits out of our resources can afford to pay fair and reasonable tax to this country to allow this government to meet its budget requirements and to shield this country from the crisis that is happening elsewhere in relation to the international economy.

It is an absolute nonsense to come here and argue on behalf of these major international oil companies at the same time that you are arguing against tax relief for ordinary Australians on the Medicare levy. That is just a nonsense. It typifies what the other side have been about since I have been here. It is about looking after the big end of town. Nothing shows this more than their opposition to a bill that says, ‘Make those massive companies who are making superprofits pay reasonable tax, the same as other oil companies, in the interests of the community.’ How can you come here with a straight face and argue against that on the basis that you are looking after the community? What you want to do on the other side is look after the Lamborghini drivers, look after the Maserati drivers, look after the big end of town. You do not really care about the need to ensure our hospitals are well financed, our education system is looked after and ordinary Australians get a fair go.

These are national resources. They should be taxed in the national interest. We are simply saying bring the taxation on this company into line with the taxation on other oil companies and make sure that they pay their fair share so that we are in a position to make sure that we have a budget that is providing the surplus that shields us from the worst aspects of the international crisis. There is no reasonable argument against this bill. The arguments we have heard are arguments for the big end of town against ordinary Australians, and it is not good enough. (Time expired)

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I rise tonight to support the proposed end to the exemption on the tax on condensate and to say that I am very pleased that the free ride has come to an end, because that is what this has been for a very long time—a free ride for this industry. Before I hear any more people here telling us how hard it is going to be for Woodside and for the other multinationals on the North West Shelf, I would like to remind the House that on 28 August this year Mr Voelte, the CEO of Woodside, announced a record half-year profit of $1 billion. Then we hear, ‘Oh dear, the industry cannot pay its taxes.’ What is more, we hear that the industry is doing it so tough that it is going to have to pass on the additional costs to householders, except that that claim by Mr Voelte was contradicted in evidence to the Senate Standing Committee on Economics by the chief executive of the North West Shelf Venture, Eve Howell. Asked whether the tax rise would be passed on, she said:

What I can say is that our current domestic contracts are in place and will be honoured.

And on and on it goes. This is an argument about equity. I could not agree more with Senator Cameron, and I note with interest the remarks by Senator Cash earlier in relation to Western Australia’s pensioners. I want to talk about Western Australia’s pensioners and the nation’s pensioners. I want to talk about Western Australia’s public schools and the nation’s public schools. I want to talk about health funding around the country—in Western Australia and everywhere else.

I would like an answer from the coalition to the question I put to them last night in relation to the luxury car tax. If you oppose the imposition of taxes, where are you going to get the money for the $30 rise in the pension? Where is that money going to come from? I did not get an answer from the coalition last night. I asked them: do you intend to spend the surplus? Is that what your intent is? If so, let’s hear it. Let’s hear where the money is going to come from, as they are big on wanting to deliver services and grandstanding on what might impact on pensioners.

The reality is that if a nation is to have the consolidated fund capacity to deliver services around the country the money has to come from somewhere, and the money ought to be coming from those who can afford to pay, especially when those who are making megaprofits are doing it from the nation’s resource. It is not a privately owned resource. These are global commons we are talking about here, and in this context they are Australian commons. These companies have been given the privilege to exploit part of Australia’s wealth and, in return, they ought to return an appropriate amount of revenue to the public purse so that we can deliver services which make us proud as a nation, which give our young people the opportunity to meet their full potential, which address the issues in Indigenous communities, which provide health care in rural and regional Australia and which will allow us to roll out public transport around the country. It is not as if we do not have an arms-length list of all the services that we need to deliver. Yet we hear from Mr Voelte that, in spite of the fact that they made a record half-year $1 billion profit, the company cannot afford to pay. On the contrary, this company can afford to pay and the other multinationals up there can afford to pay as well.

It is absolutely laughable to think that we are still giving this subsidy. It was given in the first place as a form of infant industry assistance and that status has long gone. How ridiculous to imagine that a subsidy you got for industry development should still apply to a company which can announce a record $1 billion half-year profit. The point is that when you give subsidies like this you take away from others. We should be making the transition to the low-carbon economy. In that transition to a low-carbon economy, those companies, especially those that are exporting natural gas, are the ones who are going to make megaprofits in the short term, because it will be seen as a transitional fuel. I would argue that we need to be rapidly moving to the renewables. Nevertheless, there is no scenario in which Woodside could convince anybody that their future prospects are for anything other than having absolutely golden dollars rushing in for them. There is no other way that you could look at it.

On the other hand, those renewable energy companies which do need the infant industry assistance now are told they cannot have it because we would prefer to continue to subsidise those making multibillion-dollar profits. How ridiculous is that? We are seeing some of our best innovators go overseas because we apparently cannot afford to commercialise solar energy. Companies they are going off to Germany for example. Solar Heat and Power have gone to California. We are told there is tremendous potential in wave power and in geothermal. We know that we have got the potential to go there. These are the infant industries that need the same kind of assistance that was being talked about 31 years ago for the LNG industry, which was the whole purpose of this subsidy in the first place. I am a supporter of developing and bringing on Australian innovation and commercialising it here to the public benefit. But if you are going to do that you have to have an industry policy which phases out that assistance and brings it on for other things that are coming on line.

That is why, for example, I am a strong supporter of a national gross feed-in tariff for renewable energy. I recognise that in the early stages you have to provide a framework which will enable people to take up the technology. But my bill, in terms of the feed-in tariff, allows the minister to set the tariff so that it can be changed over time to reflect the extent to which the various technologies become commercialised, are rolled out and are profitable, so that they do not continue to experience the same level of support over time. That is the most logical and rational industry policy. But, no, what we hear from the coalition is, ‘We must reduce company taxes, we must reduce income taxes, we must protect the wealthy from any luxury taxes at all and we must continue to subsidise the fossil fuel sector’, whilst at the same time saying, ‘We support small government. Let the market decide.’ It is interesting, isn’t it? We hear ‘let the market decide’ every time, until we hear that the subsidies might be taken away. If you took a very hardline economic view, you would take away all subsidies from these industries and say, ‘Let the market decide.’ But, no, when it comes to the privileges that these companies have had, to the detriment of the taxpayer and of the delivery of services, what do we get? We get; ‘Let’s keep the handout.’

What is even more disgraceful in the case of Woodside, in particular, is that, at the very same time that they are saying that they do not want to lose this free ride that they have been given over many years, they also want another free ride in terms of climate change. At exactly the same time as Mr Voelte was out in the media saying how dastardly it was to take away this industry assistance program from his multibillion-dollar-profit company, he was also saying that, in climate change terms, Woodside should be exempted from any costs associated with carbon trading and, at the very least, be given free permits. I say: why? Why shouldn’t the fossil fuel industry pay in the manner in which they need to pay in order to get the transition to the low-carbon economy? The ideal scenario, actually, is to remove all subsidies from fossil fuels and shift those subsidies to those infant industries which need to be rolled out, which need to create the jobs in Australia and which will create the jobs in Australia but which are actually creating many more jobs overseas because we have not put in the enabling legislation here. We should be shifting those fossil fuel subsidies.

For the benefit of the Senate, I would like to refer to a report that was done that showed that the total energy and transport subsidies in Australia—this was in 2005-06—were between $9.3 billion and $10.1 billion. I will repeat those figures, because it is extraordinary that this community should be subsidising the fossil fuel industry in Australia to the extent of $9.3 billion to $10.1 billion. What would it do for the pension, for public schools, for public health or for a public transport system in Australia if we removed those subsidies from the fossil fuel producers? Why should we do it? Firstly, because of the climate imperative to move to a low-carbon economy and, secondly, because if we are going to respond to climate change then we have to be able to invest the money in those technologies which will get us into the future and out of the fossil fuel economy that we have.

We hear from the coalition, particularly the Western Australians, about how it would be a terrible thing to increase the resource tax—the rental, if you like—for a public resource; this is, as we said, the Australian commons. But I would just like to remind the Senate that in the Western Australian election we had the Liberal Party in Western Australia saying that they were going to increase mining royalties. Can you believe that? That seems to be a little inconsistent here. You have the Liberal Party in Western Australia saying that they would be prepared to increase the mining royalties in that state—and good on them; so they should. In the middle of a commodities boom, when those companies have made so much money and are going to make even more—because we know about the global demand for commodities and for petroleum based products as the world responds to peak oil—the Western Australian Liberals had the good sense to say, ‘These companies are not paying enough for the public resource and should pay more,’ and good on them. What a pity that we do not have the same level of consistency with the national representation in this Senate from the Liberal Party from Western Australia as we clearly have from their state Liberal Party colleagues.

When the new Western Australian government takes on the treasury bench, it will be very interesting to see whether they think they have enough money for public health, public education and so on, because, interestingly, Western Australia will be compensated under this arrangement. If everybody is going to suffer so much in Western Australia because we get rid of this concession, how do you account for the fact that there is going to be money compensating Western Australia for loss of revenue in relation to this particular bill? I have not heard so much nonsense in a long, long time. Talk about fiscal irresponsibility!

I heard Senator Cameron say that Senator Abetz, for example, had said in the committee that no-one should pay any tax. I wonder what economic school that comes from. It is the Fannie Mae and Freddie Mac school of economics that the coalition are obviously graduates from. It is: take as much as you can, set up the most deregulated financial market that you can, get the government out of the way and maximise the profits. Then fall in a great big heap and take everyone else down with you and go to the President and say: ‘Let’s have some money to bail the country out of this mess. Let’s nationalise the mess that we’ve made.’ That was the solution, and that is the completely discredited economic world view of the old economic rationalist. If anyone here is old fashioned in terms of an economic analysis or an appropriate economic model, it is those who have argued for deregulation and small government. In terms of the level playing field, it is hypocritical to stand up arguing time and time again against the progressive technologies on the basis that they should stand on their own feet and not be subsidised and, at the same time, to spend between $9 billion and $10 billion on subsidies for the fossil fuel sector, which has never been making greater record profits than it is right now.

So I am pleased that the government has taken this on. I am pleased to be standing here for the Greens today supporting the getting rid of this exemption, which has no place in trying to get an equitable distribution of resources—an equitable regime whereby we tax those who are renting the public resource from us so that we have the money to invest in the services that this country needs and so that we have industry assistance money to assist genuine infant industries and take them to the next stage.

I am also pleased to be saying that we should be moving out of the fossil fuel subsidies. My only concern about the way the government might spend this revenue that we are getting through this change—in getting rid of this free ride, this subsidy—is that it may become a revolving door. I suspect that that is what is going to happen: that Woodside will be over here saying: ‘You’re taking away that much money from us. We want the same amount of money back in terms of free permits under an emissions trading scheme, we want exemptions—as many as we can get—and we want as much money as you can pour in for carbon capture and storage or anything else we want to spend money on.’ Companies will expect the government to come back and, under the low emissions technology program, under the Prime Minister’s carbon capture and storage hub program, to have the money come in one side of the revolving door and go straight back out to the very same companies that the government is taking the money from.

I just want to put the government on notice here. There is an obligation to spend the revenue raised on the services that Australians want, need and deserve. If we are going to be a country which prides itself on the fair go—if we are going to be an egalitarian society—we need to raise revenue from those who can afford to pay in order to spend it on services so that everybody in Australia gets a fair go and everybody has decent health and education services. I am very interested in Senator Cash’s concern for the pensioners of Western Australia, so I particularly put to her: where is the coalition going to get the money from to increase the pension? I think it is a really important question if you are not prepared to raise revenue through taxation measures—through getting rid of a fossil fuel subsidy; a free ride that has gone on way too long.

There have been changes made to this subsidy over the years. One of the changes was meant to result in about $77 million and it ended up with a windfall gain of $1 billion. For all Mr Voelte’s talk, did he ever reduce the price of gas to the people of Western Australia when Woodside was making record profits? Did he go up there and say, ‘We no longer need to charge you so much because we are making so much’? Of course not. But now, of course, he wants to pass on to the pensioners of Western Australia the full costs that Woodside might incur. So if you are genuinely concerned about pensions, if you are genuinely concerned about public education and public health, then either support getting rid of this free ride to companies making multibillion dollar profits, or at least have the decency to tell this parliament where the money is going to come from.

You are not responsible in economic terms unless you are prepared to recognise that, for expenditure to occur, you must raise revenue. I would also be interested in the philosophical view of the coalition on what principles should underpin the raising of revenue. I have not heard that from the coalition at all. All I heard is that we should have lower company tax lower income tax and we should continue the subsidies to multibillion-profit-making firms. I have heard an occasional afterthought about pensions, schools or hospitals but it is really just a token gesture, because if you look at where the real money goes you find that the real money goes off to multinational companies owned outside of Australia, largely, with shareholders overseas raking off megaprofits to the detriment of our children, our frail aged and our communities.

Debate interrupted.