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

I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

This Bill amends the Excise Tariff Act 1921 to address uncertainties that have arisen regarding the application of Crude Oil Excise to condensate production. Condensate is a light crude oil extracted from natural gas.

In the 2008-09 Budget, the Government announced its decision to remove the long­standing Crude Oil Excise exemption that had applied to condensate production, with effect from midnight (by legal time in the Australian Capital Territory), 13 May 2008. The intention of that measure was to increase the return to the Australian community for allowing private interests to extract non-renewable energy resources located in the North West Shelf project and onshore Australia and was estimated to raise $2.5 billion in revenue over the three years to 2011-12.

The measures included in this Bill, together with those in the Excise Legislation Amendment (Condensate) Bill 2011, clarify uncertainties that have arisen following the removal of the exemption. These uncertainties relate to two elements integral to the operation of the Crude Oil Excise regime, namely, the prescription of 'condensate production areas'—which define the areas over which excise is applied—and the determination of the Volume Weighted Average of Realised prices or the 'VOLWARE' price—which are the prices used to calculate excise liability.

In November 2008, the Tax Commissioner prescribed the 'Rankin Trend', as a condensate production area through by-law, with effect from 13 May 2008. The Rankin Trend is located within the North West Shelf project area and encom­passes a number of spatially related reservoirs. It was prescribed as a single condensate production area on the basis that the Rankin Trend reservoirs form a single field.

Doubts have subsequently been raised regarding the validity of the Rankin Trend by-law. These doubts relate to the area the Rankin Trend encompasses, with claims that it is of uncertain size and could be interpreted as being significantly larger than the area intended when it was prescribed.

The Excise Tariff Amendment (Condensate) Bill amends the Excise Tariff Act 1921 to address any uncertainty regarding the area encompassed by the Rankin Trend. It does this by introducing a statutory definition of the Rankin Trend within the Act as being the area including those reservoirs previously identified as forming a single field. The amendments also allow for additional reservoirs which commence production to be added to the Rankin Trend condensate production area by regulation in circumstances where the Resource Minister is satisfied they form part of the Rankin Trend field, and after considering what effect, if any, this may have on the efficient exploitation of the resource.

These amendments serve only to clarify and confirm the current application of Crude Oil Excise to condensate production, consistent with the original policy intent, and have no revenue impact.

The measure will take effect from midnight (by legal time in the Australian Capital Territory), 13 May 2008, consistent with the original 2008-09 Budget measure.

Full details of the measures in this Bill are contained in the combined explanatory memorandum.

This Bill amends the Petroleum Excise (Prices) Act 1987 to address uncertainties that have arisen regarding the determination of Volume Weighted Average Realised prices or 'VOLWARE' prices—which are the prices used to calculate excise liability.

Under the Crude Oil Excise regime, a VOLWARE price is required to be determined for each month by the Minister, or a person authorised by the Minister within a specific time. A written notice setting out the terms of these price determinations must also be provided to the relevant producer or producers, although no time period for so doing is specified. It has been suggested that, if a written notice setting out the terms of a price determination is not provided to producers, then the determination itself is invalid.

The Excise Legislation Amendment (Condensate) Bill amends the Petroleum Excise (Prices) Act 1987 to clarify that a failure to provide written notice of a VOLWARE price determination does not affect the validity of the determination.

The amendments also extend the ability of producers to seek a review of VOLWARE price determinations by allowing them to seek a review within 28 days of receiving a written notice.

These amendments serve only to clarify the existing operation of the law and have no revenue impact.

The measures will take effect from midnight (by legal time in the Australian Capital Territory), 13 May 2008, consistent with the original 2008-09 Budget measure.

Full details of the measures in this Bill are contained in the combined explanatory memorandum.

Debate adjourned.