Andrew Bragg (NSW, Liberal Party) Share this | Link to this | Hansard source

I rise to speak about the Timor Sea Maritime Boundaries Treaty Consequential Amendments Bill 2019 and related bills. The coalition has a fantastic record when it comes to trade and foreign policy. In fact, I would argue that the last six years of coalition government, which have seen us complete very significant trade and investment agreements, is a golden age in trade and foreign policy in Australia.

When we came to government in 2013, Labor had been unable to resolve trade agreements with Japan and with China. We were able to deliver those two agreements, as well as one with Korea, and subsequently with Indonesia, Hong Kong and the list goes on. At the same time, we've been able to work with our foreign counterparts and deliver the Trans-Pacific Partnership. This occurred after many people, including the Labor leader at the time, said that we ought to give up on trying to conclude the Trans-Pacific Partnership, because the President of the United States had walked away from it. We've been able to land a good strong grouping of bilateral agreements in our own region as well as multilateral or, as they say in trade talk, plurilateral agreements, like the Trans-Pacific Partnership.

One of the outstanding issues has been how we resolve petroleum arrangements with East Timor. This agreement effectively gives us a roadmap for dealing with Timor-Leste, I should say.

Our record here on Timor-Leste, as a nation and with a bipartisan political approach, has been very strong. People would recall that the Governor-General, when he was a general in the Army, led the INTERFET troops into Timor-Leste in 1999, when Indonesia and Timor-Leste had had some disagreements. We now see an independent Timor-Leste, and this milestone is a very important one. The former foreign minister, Julie Bishop, was able to agree with Timor-Leste in March 2018 on a way forward for these important resources for East Timor.

Effectively, what these bills do is establish permanent boundaries between Australia and Timor-Leste, and these are important for providing legal certainty. Anyone who has ever spent a day working in private enterprise knows that you need to have legal certainty if you want to have any private investment. Private investment is the only way you actually create jobs, because it's private businesses that invest in people's ideas, if you like, and then that results in jobs. Legal certainty is very important. That's why—as a nation like Australia, which has relied upon foreign investment since the First Fleet—we obviously regard that as a very important outworking.

What this provides is tax and regulatory certainty for Australia, for Timor-Leste and for the private sector companies. I understand that those companies have been consulted with very heavily by the minister and his department in the development of this treaty. My understanding is that everyone is broadly happy, which is quite remarkable in these fields of foreign relations, trade and taxation. That's certainly a very good sign. These bills have been considered by parliamentary committees, which have given the green light that they should proceed. I understand there is also bipartisan support for these measures, which is always good in the area of foreign affairs and trade. We always look to see bipartisanship, because we want to present a stable appearance of Australia to the outside world. We only hope that our opponents do better in the future in landing trade agreements.

Obviously, as a nation that is very exposed to the outside world, Australia relies upon a strong region for our prosperity and for our stability and security. It has often been said that a strong Timor-Leste is an integral part of a strong Australia and a strong Pacific. We would certainly regard landing this agreement as a very important ingredient in having some certainty within Timor-Leste, in terms of their economy and in terms of their social stability, that this has now been resolved after some years of consternation.

More broadly, we have sought to step up our efforts in the Pacific and in our region, because we know that it's critical to have strong states, strong partners and strong allies. We want to see all of our friends in the Pacific regarding Australia as a friend. In the case of Timor-Leste, we have certainly proven ourselves as a good friend both militarily over the long run but also now in terms of having resolved this very important issue for Timor-Leste, which has been a longstanding point of consternation in that nation. The government of Timor-Leste is the other important party here, alongside the Australian government and also the private sector. The representative of Timor-Leste has said that it's a good treaty and that it is 'equitable and forward-looking'. That's pretty good, I would have thought, as an endorsement from Timor-Leste.

As I said before, the government and the minister have been able to agree on a good framework here. This would be considered an important milestone for Timor-Leste and Australian relations. It does, as I said before assure the private sector that there is certainty. I think that bodes well, not only for existing investments but also for future investments. This bill should lay a framework that people feel they can invest in. In the long run it is really only the existence of private investment that will provide job creation and prosperity, not only here but in Timor-Leste.

Beyond just the bilateral groupings here—Australia and Timor-Leste—the United Nations has also indicated that this is a good framework. In fact, this historic treaty was signed at the United Nations, in the presence of the United Nations Secretary-General and the chair of their conciliation commission. You certainly couldn't ask for better than that as far as a treaty goes. Many have said that international law is not always effective. But certainly when both affected parties say that this is a good deal, and the private sector companies are also saying it is a good and a fair deal, and on top of that you get the trifecta of having the United Nations Secretary-General, no less, saying that this is a good thing, I think that's a pretty strong trifecta. So, if anyone was worried about the processes, hopefully they would be assured that all three groups were happy.

We have a growing economic relationship with Timor-Leste. In 2018, two-way merchandise trade between Australia and Timor-Leste was worth around $21 million, and our exports were around $20 million. Primarily we were exporting vehicles, and we have been importing mainly coffee from Timor-Leste. I assume that most of that goes down to Melbourne, where I'm told they have quite good coffee! As I said, this is certainly a good deal, and I think all the groups are very satisfied. So, I certainly commend this bill to the Senate.

Paul Scarr (Queensland, Liberal Party) Share this | Link to this | Hansard source

This is not my first speech, and I'm delighted to have the opportunity, on the first occasion that I'm speaking to the chamber, to endorse this piece of legislation coming before the Senate. I'd like to make three preliminary points prior to talking about the specifics of this bill. Firstly, Australia has a great and rich relationship with Timor-Leste and also the people of Timor-Leste, and that relationship goes back decades. Senators may have heard of Sparrow Force. Sparrow Force was a force of commandos who went into Timor-Leste after Pearl Harbour was attacked at the outbreak of World War II, and with support from the people of Timor-Leste they fought valiantly over many months, fighting against the Japanese invaders. Famously, the commander of the Japanese forces said, in an address to these commandos, 'You alone are the ones who have not surrendered.' And they didn't surrender, until the last moment, when they had no options available and they sought evacuation from the island. Then, of course, was the fight for independence of East Timor and the great support this Australian country gave to the people of East Timor during their most difficult time. And now we have cemented that relationship through the passage of this treaty, and we're now considering the legislation before the Senate here today.

The second preliminary point I'd like to make is that I come from the resources industry. For the past 12 years I've been a senior executive in the mining industry, and I've worked in some of the poorest countries in the world, including Laos. I understand from firsthand experience the difference that the resources industry can make to some of the poorest people on the face of the earth. Natural gas provides an opportunity for the people of East Timor to generate the revenue streams they need to provide the schools, the hospitals, the defence force and all the other public services which we in this country take for granted. It's a great opportunity for the people of East Timor to have the benefit of those revenue streams. It also provides an opportunity for their young people to participate in a great industry, the oil and gas industry.

I note that there's discussion at the moment as to whether or not the gas will be further processed in East Timor or in Australia. I think that's great. I think it would be a wonderful thing, a great thing, if the gas were processed further in East Timor and it provided job opportunities and economic activity for the people of East Timor. Ultimately, that is a question for the project proponents, which I note include a great Australian company, Woodside, and also the East Timorese oil and gas company. It's a question for those joint-venture participants as to whether or not they want to process that gas in East Timor or in Australia. But I dearly hope that there is an opportunity for young people in East Timor to develop skills, have the benefit of learning from some of the best in the industry in relation to the oil and gas industry and be able to take those skills forward for themselves and their families.

The last point I would like to make on a preliminary basis is to give my thanks, as a senator from Queensland, to all of the officials who were involved in the negotiation of the treaty and the legislation. I note, based on my experience, that there's probably nothing more complicated in the professional world of the resources industry than cross-border tax issues. This legislation deals with those issues. It removes any doubt with respect to the tax consequences flowing from the treaty and the legislation, and it provides certainty to the proponents moving forward with respect to the tax basis upon which they can proceed with the development of this gas field.

I think it's fair to say that this issue has been something which has come between, at various times, the people of Australia and East Timor. It's been an issue which has caused great controversy with respect to our relationship and it really is a wonderful occasion that we've been able to solve this and that East Timor is going to get the benefit of some of those gas fields. I hope that the project proponents bring forward and develop the oil and gas fields as quickly as possible for the benefit of their shareholders, for the benefit of the government of East Timor and the government of Australia, and also for the people who may enjoy direct benefits from those projects in terms of employment and also their families. I hope that that can progress as quickly as possible.

I would also like to pay tribute to Australia's then Minister for Foreign Affairs, the Hon. Julie Bishop, who was intimately involved in the resolution of this issue. She was our Minister for Foreign Affairs when the treaty was actually signed and I think, once again, this chamber and the people of Australia should note the great contribution that the Hon. Julie Bishop has made to this country and its relationships with some of our closest countries. That includes not just Timor-Leste but also Papua New Guinea where I lived and worked for 2½ years. I know the Hon. Julie Bishop also had a great relationship with the people of Papua New Guinea as part of her remit as foreign affairs minister.

What is the treaty? The treaty achieves three basic things. Firstly, it resolves what was a difficult issue around where the maritime borders and boundaries were between Australia and Timor-Leste. Secondly, it recognises both state sovereign rights in the creation of the Greater Sunrise special regime for the joint development, exploitation and management of the Greater Sunrise gas fields. Thirdly, it provides for transitional arrangements to provide regulatory certainty and continuity for affected oil and gas projects in the Timor Sea. The treaty makes clear that the outcome represents a mutual accommodation which was without prejudice to either side's legal position. Now we find that the treaty is going to be legislated for in this place, and both parties will be able to move forward.

The revenue implications of the treaty are significant, significant for the people of East Timor. Australia and Timor-Leste have agreed that, from the date the treaty enters into force, Timor-Leste will receive all future upstream revenue derived from the Bayu-Undan and Kitan in the existing Joint Petroleum Development Area. Previously, both Australia and Timor-Leste received benefits from revenue derived from petroleum activities in this area—90 per cent to Timor-Leste and 10 per cent to Australia—but from the time of passage of this legislation 100 per cent of the benefit of that upstream revenue will now go to Timor-Leste. That is a very positive outcome.

Australia and Timor-Leste have also agreed that the Buffalo oilfield, which previously fell within the continental shelf of Australia, will fall within the continental shelf of Timor-Leste. Accordingly, Timor-Leste will also get the benefit of all revenue generated from that oilfield. Again, that's an extremely positive thing for the people of Timor-Leste.

In terms of implementing the legislation, this bill deals with a number of further matters that need to be dealt with on a consequential basis. That includes issues dealing with, for example, the section of the Bayu-Undan pipeline international offshore area and creating a new pipeline licence to enable Australia to exercise jurisdiction in an area of foreign continental shelf.

The purpose of the government amendment is to give effect to an understanding reached, between the governments of Australia and Timor-Leste, on the decommissioning of the section of the Bayu-Undan pipeline that will sit on Timor-Leste's continental shelf. You can see that spirit of cooperation between the Australian government and the government of Timor-Leste in resolving this extremely complicated issue. That's a very positive thing, and I applaud it.

Timor-Leste, while recognising Australia's exclusive jurisdiction over the regulation of the entire Bayu-Undan pipeline, has expressed its preference for this section of the pipeline to be decommissioned by removal and, noting the removal of property from petroleum title areas is the base case in Australia, Australia has agreed to this approach. It was fit and proper that Australia do so. That amendment will ensure that this section of pipeline must be removed before the Australian licence for the pipeline, and therefore the responsibilities of the licensee, will end.

There are a number of other consequential matters that are dealt with in the bill, including in relation to a passenger movement charge. This will also assist with respect to persons departing from Australia for the purpose of travel to the Greater Sunrise Special Regime area in connection with petroleum activities. They shall be exempt from the passenger movement charge, as was previously the case with a person travelling to the Joint Petroleum Development Area.

Then there are some important issues dealt with in the Treasury Laws Amendment (Timor Sea Maritime Boundaries Treaty) Bill 2019. Schedule 1 of this bill amends the tax law to fulfil Australia's taxation related obligations under the treaty, to provide conditions equivalent to participants in 'transitioned petroleum activities' in the Timor Sea. That is extremely important. It is important that the project proponents are kept whole, with respect to their expectations regarding taxation treatments. It's an extremely complicated issue but a very important one for the project proponents, and they will be kept whole in the way they're treated by the respective revenue authorities in Australia and Timor-Leste. That is important for their commercial expectations being met. I applaud the government of Australia and the government of Timor-Leste for reaching that accommodation.

This is the sort of accommodation that promotes investments in countries. Coming from Queensland and having seen the experience of the Queensland government in dealing with the Adani mining project in Queensland, I wish it were accommodation provided to all mining and resource project proponents seeking to invest in this country and in this region. It's important to give investors the confidence that they can go ahead with investments. I applaud both the government of Timor-Leste and Australia in this regard.

Finally, I return to the opening comments I made about the special relationship—and it is a special relationship—between Australia and Timor-Leste. I have friends who actually served in the Australian Defence Force in East Timor during the troubles. They are extremely proud of the service they gave those people and extremely proud of the service they gave this country. I absolutely applaud the efforts of the Australian government and the efforts of the government of Timor-Leste in initially reaching the treaty and coming to an agreement on the treaty. Now, with this bill before the house, hopefully the projects which are encompassed by the treaty in this bill can be advanced for the good of the people of Australia and for the good of the people of Timor-Leste.

Matthew Canavan (Queensland, Liberal National Party, Minister for Resources and Northern Australia) Share this | Link to this | Hansard source

I'd like to thank all the senators who have contributed to this very important debate on these very important bills. It's a historic occasion to mark our burgeoning relationship with Timor-Leste to see these bills pass through this place. They passed through the other place last week. These bills give effect to the treaty between Australia and the Democratic Republic of Timor-Leste, establishing their maritime boundaries in the Timor Sea. The treaty is a historic achievement for Australia and Timor-Leste and its implementation is firmly in Australia's national interest.

The Timor Sea Maritime Boundaries Treaty Consequential Amendments Bill 2019 implements the new maritime boundaries agreed under the treaty and transfers the Joint Petroleum Development Area and some adjacent areas to Timor-Leste's exclusive jurisdiction. This bill also makes amendments to the petroleum title areas affected by the boundary and provides for two new international offshore areas for the purposes of the Bayu-Undan pipeline corridor and a potential Greater Sunrise pipeline corridor. Further, this bill gives effect to the Greater Sunrise special regime area and the legal infrastructure to facilitate the joint development, exploitation and management of petroleum activities in the Greater Sunrise gas fields, creating a pathway for the development of the resources. The economic benefits will be significant, particularly for Timor-Leste. The Treasury Laws Amendment (Timor Sea Maritime Boundaries Treaty) Bill 2019 fulfils Australia's taxation related obligations under the treaty by ensuring that taxation arrangements applying to transition petroleum activities will continue in accordance with Annex D to the treaty. Finally, passage of these bills and the Passenger Movement Charge Amendment (Timor Sea Maritime Boundaries Treaty) Bill 2019 fundamentally farms Australia's commitment to a robust, mutually beneficial and stronger bilateral relationship with Timor-Leste and to international law and the rules based order more generally.

I too would like to express my thanks to the officials involved in negotiating this treaty and also formulating the resulting amendments to Australian law here. I thank Senator Scarr for his recognition of those officials, because they have worked tirelessly over a number of years to see this to fruition. As Senator Scarr commented, they can be particularly complex negotiations. It's fantastic to have seen them brought to fruition in March last year with the signing of the treaty—and today with the passage of these bills. I'd also like to thank and recognise, as Senator Scarr did as well, the efforts of the former foreign minister Julie Bishop, who played an integral role in the negotiations and in finalising the treaty itself, which has led us here today to make changes to our own petroleum laws.

Throughout this process, the Australian government has recognised and sought to work with the government of Timor-Leste to give it the power to progress its economic development aims and objectives. We have worked very closely with the Timor-Leste government on a number of different proposals and opportunities for that to occur. We fully recognise the desire of the Timor-Leste government to want to take charge—be master of its own destiny—and to seek to see the development of its resources in the way it sees fit for its national interests. The passage of these bills and the treaty itself do provide Timor-Leste with clear sovereignty over what was formerly the Joint Petroleum Development Area so that it can pursue those objectives and aims. The Australian government stands ready and able to ensure that Timor-Leste can develop a strong economic base for its people and the job opportunities that will flow from that.

Gas developments have already played an important role in the development of Timor-Leste. The Bayu-Undan field is already developed and has provided significant benefits to the Timor-Leste government. It's a fulcrum of the cooperation between our two governments, given that that gas and those resources are sent to Darwin in Australia for processing but provide the Timor-Leste government with substantial royalties and funding. I'm confident that future developments, particularly of the Greater Sunrise regime, will continue to see similar cooperation between our two governments. As I have said, we would like to work very closely with the Timor-Leste government to ensure its development aims and objectives are fulfilled. The finalisation of this treaty will give us an opportunity to do that.

We do have a shared interest too in making sure that demand continues to grow for high-quality natural gas, which we're lucky to have abundantly in both of our jurisdictions. Australia is obviously a very large developer and producer of gas and is indeed the largest LNG gas exporter now. While we have a number of competitors in our region to supply gas, including Timor, we have a shared interest to make sure that those markets do develop and that demand increases. We're working closely with the United States, Japan and other countries to ensure that clean natural gas is used more fulsomely in our region because it can cut pollution, particularly air pollution, if it replaces fuels that have a lot more particulates in them than gas does. It can also of course lower carbon emissions because natural gas has a lower carbon content than other alternative fuels, such as coal. We'll continue to work with the Timorese government and the wider region to ensure that those development goals occur, not only for the people of Timor-Leste but also to help development right through our region.

I'd also like to thank the opposition for their support on these bills. They have been extremely supportive throughout the process. I thank my counterparts—Mr Clare before the election and Mr Fitzgibbon now—for their support of these related changes in our petroleum laws. It is a unifying moment not just for our two countries but our country as well to see this legislation through. I'm confident that with this legislation passing we'll have a new chapter in our relationship. There is some symmetry that this legislation is passing on the 20th anniversary of the INTERFET deployment to Timor-Leste. Indeed, it was only the other day that the 20-year anniversary date marked the referendum in Timor-Leste that ultimately led to its independence. Now, hopefully, through the changes in this treaty, that independence will only grow stronger for the Timor-Leste people, and our relationship will do so as well.

Question negatived.

Original question agreed to.

Bills read a second time.