George Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | Link to this | Hansard source

Mr Acting Deputy President Ludlam, before speaking to this bill let me just make the point that, I am informed, contrary to the customary practice there was not a discussion this week between the government and the opposition to identify those bills listed in the non-controversial bracket of debate that were to be treated as non-controversial. The listing on the red of the nine bills before us is something, I am informed, which was done unilaterally on the basis of the government's understanding of the opposition's position rather than pursuant to agreement. In particular the No. 10 bills on the red, the Work Health and Safety Bill 2011 and the Work Health and Safety (Transitional and Consequential Provisions) Bill 2011, I am told, are in fact the subject of amendments to be moved by Senator Abetz. I do not know how that was allowed to happen. This particular time of the week is reserved for non-controversial legislation, as we know, and the government should not presume to list legislation as non-controversial without the explicit agreement of the opposition. Perhaps the process went awry for unexplained reasons this week.

In any event, having made that initial observation, let me say a few words about the Excise Tariff Amendment (Condensate) Bill 2011 and the Excise Legislation Amendment (Condensate) Bill 2011. I begin by pointing out that it is not impossible that these two bills might be entirely academic because they have to do with petroleum. As we know the Australian Greens, yesterday, announced that their next plan to secure the greater prosperity of the Australian people was to ban fossil fuels. The government has resolutely assured the Australian people that they will not go along the path of the Australian Greens in seeking to ban fossil fuels.

It rather reminds me of the famous remark of the Prime Minister in 2010 when she said, six days before the election, 'There will be no carbon tax under the government I lead.' Now, as of the day before yesterday, we have a carbon tax. Yesterday the Prime Minister said, 'There will be no ban on fossil fuels under any government I lead.' So, I do not know how long it will be before the Australian Labor Party is ensnared by its lethal, treacherous, serpentine alliance partners into paying the 30 pieces of silver required to move on the Australian fossil fuel industry, drive up the cost of living of ordinary Australians even more than the carbon tax will drive it up and break another solemn commitment to the Australian people. Nevertheless on the hypothesis that that will not happen anytime soon, that the Australian Labor Party will not be ensnared by the Australian Greens with their fossil fuel prohibition proposal as they were ensnared by their carbon tax proposal, it may well be that this legislation will have an operative effect. So on that optimistic note, Senator Feeney, let me proceed to address it.

The Excise Tariff Amendment (Condensate) Bill 2011 amends the Excise Tariff Act to clarify and confirm the area encompassed by the 'rank and trend', as it is known, condensate production area located within the North West Shelf project area, one of the many great Australian industries and enterprises which, of course, would be rendered desuetude were the Greens ever to have their way. The Excise Legislation Amendment (Condensate) Bill 2011 amends the Petroleum Excise (Prices) Act 1987 to clarify that failure to provide petroleum producers with written notification setting out the terms of a volume weighted average of realised prices determination does not affect the making of that determination, the measure of firms or the current application of the crude oil excise regime as it applies to condensate production. I make it clear that the coalition will be supporting these bills.

However, in doing so the coalition does point out that this Labor government has engaged in an assault on the Australian energy and resources sector. It has comprehensively mismanaged the investment framework for oil and gas exploration and the resources sector in general. When it comes to identifying which areas of policy this government has so fundamentally mismanaged there is some very serious competition. Along with the well-publicised failures in border protection, the carbon tax backflip which has made its own assault on the resources industry, the bungling of the schools halls program, the pink batts program and the live cattle exports program, the Gillard government has inflicted some extraordinarily destructive policies on Australia. Those destructive policies extend to the resources sector, a sector which has contributed so significantly to our economy and should be given the opportunity to continue to do so.

The oil and gas industry over time has made a vast contribution to Australia's economy. But, just as importantly, it has provided the energy security that other countries would kill for. We are one of the few countries in the OECD that is an energy exporter in its own right. Part of that export is condensate from the North West Shelf, originally exempted as part of the incentives that were provided to this very important industry to get the project off the ground. And while we see those incentives ripped away by this government we also see a very significant change in attitude within the oil and gas sector, and potentially the investors in that industry in particular.

As a result of the deliberate actions of this government, Australia has suffered an erosion of our previously gilt-edged sovereign risk profile when it comes to investment in the energy and resources sector. Who would have thought that Australia, one of the world's mining and energy superpowers, is, as a result of the incompetence of this government, now regarded in some of the great commercial centres of the world as a sovereign risk. What an extraordinary turn of events. There can be no excuses for this government-led assault based on changing international circumstances or economic difficulties given that one of the very first acts of the Labor government after it was elected in November 2007 was to slug a massive tax increase on the oil and gas sector, in particular the North West Shelf, by removing the exemption that had applied to condensate. It is fair to say that without that exemption and without some very significant courage by the players at the time the exemption was introduced—in including of course the late, great, sainted Sir Charles Court—this condensate would be still lying thousands of metres beneath the seabed.

Coalition governments go out of their way to provide incentives to get these resources developed. The moment we have a Labor government in power it does everything it can to rip away the money that these companies have put at risk and have earned as a just reward. We on this side of the chamber, and of course the wider community, have also been aware of the Labor Party's complete inability to manage money. We have seen the evidence from successive Labor governments that apply the big-spending, big-taxing philosophy—and this legislation is just more proof of that.

But even though we are conditioned to this big-taxing, big-spending government, we were shocked when the former Rudd government so brazenly slapped a $2.5 billion excise on condensate. This signalled a very clear intention that this was to be a government that would view the resource sector not as a great Australian industry underwriting our nation's prosperity and providing jobs for tens of thousands of Australians but as nothing more than a cash cow. I am sorry to say that the government has realised the worst of our fears. While the oil and gas industry, in particular the offshore sector, has spent much of history well out of the public spotlight, it is nonetheless one of the most substantial sectors of our economy.

The former coalition government took great care to encourage investment and to facilitate an environment that would be conducive to exploration and production. And what happens? We find ourselves with a government now—having wasted tens of billions of dollars—desperate for money. The government's $2.5 billion tax slug has sent a shiver down the spines of major investors in the oil and gas sector because it has shown that this is a government that is prepared to be cavalier with investment, with issues of sovereign risk and with Australia's very dearly held reputation as a safe investment destination.

The bills before the chamber today are a consequence of that multibillion-dollar cash grab and are an attempt to clean up some of the confusion created from that tax grab in the zone covered by that taxation. The coalition wants to end that confusion and that is why we are supporting these amendments, while condemning the initial cash grab.

As I mentioned, we do not oppose these bills because we take the attitude that investors in the oil and gas sector deserve certainty in this very uncertain climate, even in a situation where the government seems to go out of its way to create uncertainty. As I said, it is our responsibility to bring what stability we can, as an opposition, to an uncertain playing field. No matter how the government might try to spin it, the subsequent projects in this field are in spite of what the government is doing, in spite of the hurdles it is putting in place, and certainly not because the government has put in place anything like the appropriate policy settings.

This huge tax burden was slapped on the industry with no warning and no consultation. Even the Minister for Resources and Energy found out after the event. What sort of government would do that to such an important sector—or, indeed, at all? It is a government that shows no restraint when it comes to imposing taxes and shattering the investment security that companies and investors from overseas look for.

It is little comfort that we recognise that this action is the standard operating procedure for this Labor government, particularly when it comes to decisions that affect the energy and resources sector. As we know from the resources superprofits tax debacle, which not only affected onshore exploration and mining but also offshore exploration and development, and from the ongoing mess that surrounds the new version of the minerals resource rent tax and the carbon tax, the Rudd government and now the Gillard government simply have not understood the dynamics in the resources sector.

Modelling done on the impact of the carbon price on industry estimates that a carbon price of just $25 per tonne would close 16 coal mines and cost 23,000 jobs in that industry alone. Access Economics estimated that a carbon price of $26 per tonne will, by 2020, have cost 126,000 Australian jobs. In imposing tax after tax after tax—like this condensate tax, the carbon tax, the minerals resource rent tax, any new tax they can think up at any time—all this government is doing is chasing investment away. I cannot believe that we have a government that, despite all of this and the economic insecurity in international markets, is still charging blindly ahead, putting in place more taxes—most infamously, earlier this week, in defiance of the Australian people, the carbon tax.

If the government proceeds with the flawed MRRT, not only is it going to put the budget's stability at risk but also it is rolling the dice on questions of energy security and future mining investment. Sudden changes such as the condensate tax, which we are debating now, continue to reinforce that sense of instability and that negative impact on investment security. With the government constantly changing the rules of the game for investments, it jeopardises Australia's sovereign risk profile and makes Australia a less attractive place to invest, particularly in the energy generation sector. The coalition believes that decisions about taxation paid by the mining industry should be done under the existing regime of state based royalties because the resources belong to the people of the state. They do not belong to the Commonwealth, and the decision to tax them should be a decision made by the state governments. It has worked well in the past and will continue to work well once a coalition government is elected and the minerals resource rent tax is rescinded.

The series of taxes including this condensate tax undermines Australia's energy security and puts international investment in the sector at risk. Coming at a time when the economy is also being slugged with a carbon tax, these policies show how poorly this government understands the contribution of the energy and resources sector and how ill equipped the government is to handle the economy. The only messages that come out are: 'Here's a new condensate tax; here's a new carbon tax; here's a new LPG tax; here's a new tax on mining.' The energy and resources sector is constantly being used as a cash cow for a big-taxing, big-spending government that cannot control its own finances. The energy and resources sector, including the oil and gas and the mining industries, is the great driving force of the Australian economy. At the moment, it is sustaining the economy at a time of global difficulty and when the manufacturing sector faces difficulties in competing with the very high dollar and the imports that are coming in. Yet we have a government that has no qualms about taxing this industry whenever it can.

As I said before, the coalition will not object to these bills, given that they are clarifying bills, but the Gillard government should stand condemned for its continued and comprehensive mismanagement of policies that apply to this sector, just as it is impacting on all sections of the economy.

Senator Macdonald, I know that you came into the chamber after I had commenced speaking, but I was making the point earlier on in my contribution—and I wonder if the chamber would be interested in hearing your observations about this when I resume my seat—that these bills, which deal with the taxation regime for condensate, may well be hypothetical, because if the government capitulate to the Australian Greens, just as they capitulated to them on the carbon tax, then we will not have any need for condensate legislation because we will not be allowed to use fossil fuels in this country at all. You will remember, Senator Macdonald—through you, Mr Acting Deputy President—that no sooner had the infamy of the carbon tax passed the chamber than Senator Bob Brown announced that the Greens' new plan was to prohibit the use of fossil fuels entirely. I know, Senator Macdonald, you have taken a close interest in this matter but I want to wind up my contribution to this second reading debate by making the observation that if the Greens continue to dictate the policies of this Labor government, to hold it hostage to their harebrained plans to deindustrialise Australia, then not only will we have no need for legislation dealing with condensate but we will not have an oil and gas sector at all. With those observations and, in closing, expressing the hope that the government could not be quite so silly, I indicate the coalition's support for these bills.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

Senator Brandis is correct: I have come into the chamber during the debate on the Excise Tariff Amendment (Condensate) Bill 2011 and a related bill to hear what the Greens political party will say about them. I assume Senator Wright is here to speak on these bills, because they are important bills and, as Senator Brandis rightly points out, if the Greens have their way there will be no fossil fuels used whatsoever and these bills will be completely irrelevant.

This condensate bill is simply one part of the whole mix of fuel and energy and how we tax it and how we encourage it in Australia. I am very conscious that the Labor Party and the Prime Minister, Ms Gillard, went to the last election promising there would be no carbon tax in this term of parliament—a very, very solemn promise. She came to government after the election after doing an unholy deal with the Greens political party that caused her and every member of her party to break their solemn promise to the Australian people that there would be no carbon tax under a government Ms Gillard led. If it was that easy for the Greens political party to get the Labor Party and Ms Gillard to change their minds on something as fundamental as a promise not to introduce a carbon tax—a tax which will have very widespread ramifications for the Australian people, our economy and our way of doing business—one wonders how easy it will be for the Greens to get Ms Gillard to go along with their harebrained, crazy scheme to ban all fossil fuels from Australia. You could not imagine that even the Labor Party would be involved with that, but, then, who could have imagined that a once great political party would give a serious commitment before the last election to introduce no carbon tax and then break it with impunity? I am very worried about that.

The Greens political party could get up tomorrow and say: 'Look, Ms Gillard, we know you like the Lodge. We know you like the planes. We know you like flitting around the world stage and telling everyone who is prepared to listen'—I understand there are not too many who do—'how Australia is leading the world with greenhouse gas reductions. We know you like that, Ms Gillard, but we, the Greens, are thinking of withdrawing our support for you unless you start the process of reducing Australia's reliance on fossil fuels.' Ms Gillard has shown that she will do anything to stay in the Lodge, so it may well be that the scenario that Senator Brandis suggested is not just fantasy but is in fact what will happen.

As I say, I do not want to delay this debate too much, but I am very keen to hear what the Greens political party have to say on this issue. Are they in favour of the bill? I would be interested in hearing that, of course, but I would be more interested in having the Greens political party assure us that it is worth our while debating this bill at length or that it will be irrelevant into the future. I am very worried that this call by the Greens political party to reduce or even ban fossil fuels from Australia will be heeded by the Labor government under Ms Gillard. As I say, 13 months ago you would not have believed that the Australian Labor Party could even contemplate that; but, then, 13 months ago you would not have believed that the Australian Labor Party would make a commitment not to introduce a carbon tax and then just break that solemn promise to the Australian people without any consideration.

I know the Lodge is nice. I know it is lovely flying around the world in your own plane—or I imagine it would be; it has never quite happened to me and is never likely to happen to me. I know Ms Gillard likes being Prime Minister. I know she likes telling all Australians, particularly Indigenous Australians: 'You don't know what's good for you. You don't understand what needs to happen for your wellbeing, so we'll do it for you. Big Brother will look after you.' It is that typical socialist outlook on life. Individual Australians are not competent to look after themselves. They are not competent to use their money to make donations—

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

Senator Macdonald, I wonder if I might draw your remarks to the bill before the chair.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

Yes, thank you, Mr Acting Deputy President. You will notice, if you happen to read the Hansard, that I have been referring to the bill. The bill is about a tax on condensate and is very relevant to the issue of fuel and energy across the board. I am just saying, if you hear me, Mr Acting Deputy President, that this bill is very relevant to whether Australia is going to be a user of fossil fuels in the future. I am just saying it would be unthinkable that anyone would think that Australia might ever get to that position. But, when you see the influence the Greens political party has on the Australian Labor Party, led by Ms Gillard, anything could happen. That is what I am very concerned about.

I do not want to delay the Greens political party. I am sure they will be making a contribution to this bill next so that we can get an assurance from them that there is some worth in proceeding with this debate.

David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

I thank senators for their contributions to the debate on these bills and I commend the bills to the Senate.

Question agreed to.

Bills read a second time.