Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I move Greens amendment (1) to the Offshore Petroleum and Greenhouse Gas Storage Amendment (Miscellaneous Amendments) Bill 2019, on sheet 8741:

(1) Clause 2, page 3 (table item 11), omit the table item.

We also oppose schedule 17 of the Offshore Petroleum and Greenhouse Gas Storage Amendment (Miscellaneous Amendments) Bill 2019 in the following terms:

Schedule 17, page 156 (lines 1 to 20), to be opposed.

I did go into this in a bit of detail yesterday. Part of this legislation supposedly ensures the valid designation of certain areas as 'frontier areas' for the purposes of the Designated Frontier Area, DFA, tax incentive. A mistake was apparently discovered, in that a number of areas that should have been eligible were not. This bill provides for an uplift rate and an incentive. As I said yesterday, the Greens oppose this. We oppose schedule 17, page 156, lines 1 to 20, of the Offshore Petroleum and Greenhouse Gas Storage Amendment (Miscellaneous Amendments) Bill 2019. I made it very clear yesterday that we don't believe we should be giving more tax incentives to big oil and gas companies. Minister, can you talk us through the process of how these specific areas were discovered? Did the companies or the tenement holders themselves approach NOPSEMA or any other government department to ask that these areas be considered or was it discovered in some kind of audit process?

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

Thank you, Senator Whish-Wilson. In respect of your specific question, I don't have any information at hand, I'm sorry, about exactly how the issue was discovered or how it was brought to the government's attention. I'd have to take that on notice. Obviously I'm happy to go through the detail of the reasons for these proposed amendments.

I might just take this opportunity to indicate that the government will not be supporting the Greens amendment. Primarily we'll not be supporting this amendment because the provision that the Greens would like to oppose is all about providing consistency in our taxation law and honouring a commitment the Australian government made to oil and gas producers doing certain exploration activities around 10 to 15 years ago. Just to explain it to the chamber, the designated frontier area tax incentive is the issue at question here. It was a measure that was in place from 2004 to 2009. It was designed to attract and provide an incentive for investors to do exploration in remote offshore areas, or frontier areas—areas that might otherwise find it difficult to attract interest and investment given their high-risk nature.

As part of the tax incentive, the resources minister had the power, under subsection 36B(1) of the Petroleum Resource Rent Tax Assessment Act 1987, to designate, in writing, offshore petroleum acreage release areas, in the years 2005 to 2008, as designated frontier areas. The requirement to designate these areas in writing was not met for the 2005 acreage release. The then minister for resources had provided in-principle agreement to the designation of areas for the 2005 acreage release prior to commencement of the relevant provisions of the Petroleum Resource Rent Tax Assessment Act 1987. However, a subsequent process to formally designate the areas in writing was not undertaken once the provisions had commenced, although the areas were publicly, clearly and consistently promoted as such. Consequently, though four exploration permits were awarded over areas promoted in 2005 as designated frontier areas, they were not technically designated as frontier areas.

To remove any doubt regarding the validity of claims under the tax incentive scheme, the amendments made by this bill confirm the legal designation of those areas as designated frontier areas. There will be no detriment to or negative effect on any other parties as a result of the amendments and there are no new obligations that will be applied retrospectively. This program was fully costed and budgeted for during its original inception in 2004. These amendments relate directly to the Australian government's commitment to providing a robust and stable investment environment. The companies that bid on this acreage did so taking into account a range of relevant considerations in making their investment decisions, and the DFA—the designated frontier area tax incentive—was one of those considerations. If we failed to provide the taxation law certainty extended by these amendments, it would unfairly and unjustly undermine the original investment decisions. Genuine and consistent application of taxation law is a principle as equally applicable to offshore petroleum companies as it is to anyone else.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

You can't tell me whether the companies themselves had lobbied to have these areas changed, for tax purposes, to designated frontier areas as defined in 2005. Can you tell me what the four areas that were not formally designated as frontier areas are? What are those tenements, where are those areas, and what companies are we talking about here?

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

I do have that information and I'm happy to share it with the chamber. There were four areas: area S05-2, offshore of South Australia; W05-5, offshore of Western Australia; W05-23, offshore of WA; and W05-24, also offshore of WA. Those areas have a technical specification when they're released as tenements. Unless you really want that information I'll leave that off, just for time reasons, but I'm happy to provide it to you if you really need it. The companies involved across those four areas are Exxoil; Gascorp; Moby Oil and Gas; National Energy; Woodside; Mitsui; PTTEP, which is Thai; Toyota Tsusho Gas; Plectrum Petroleum; Arcadia Petroleum; Innovation Resources; Cathay Petroleum; and the last one actually is the same consortium, so those same companies—they are all involved. As I said, I've taken it on notice and we can come back to you if need be after this debate about the process and how the discovery occurred.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

You mentioned that this had been fully costed, presumably in the budget. Can you tell the Senate what the quantum of deferred tax or tax credits will be once this reassessment passes the Senate today.

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

To try and clarify for the purposes of the Senate, there is no additional cost associated with the bill that we are putting forward in regard to these issues with the frontier area tax incentive, because these tax deductions and credits, or incentives, have already been factored in. All we are doing through this bill is confirming the status quo. There are no additional deductions or incentives that are provided from the action we're taking today. Those extra deductions were already taken into account, or provided for, 10 to 15 years ago. I apologise, I don't have in front of me the budget amounts of 10 or 15 years ago for the extent of those costs in the budgets in those years, but, as I said and can confirm, there is no additional expense or cost to the budget from this bill.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I take it then that those companies that you read out—unfortunately, I wasn't fast enough to write them all down, but I'm sure I can go back and have a look in Hansardhave been claiming the uplifted petroleum resource rent tax deductions at the 150 per cent rate already. So to all intents and purposes they have been claiming these as designated frontier areas, but this is to avoid potential tax office findings against them. Is that why the Senate is doing this today? I don't quite understand. If it's already been factored in and they've already claimed these deductions, this is just a formality. Is that correct?

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

I must say I can't go into individual taxation issues here. I don't have that information. Obviously, it's a matter for the Australian Taxation Office, but my general understanding is that the ATO don't discuss individual taxation matters. We're talking about a framework. I think the government have clearly outlined in the contributions on this bill, in the EM and in the second reading speech that we take seriously the importance of having a consistent framework in place for these matters. As I said, I have taken on notice the question about the discovery process, but there is no information before me that says there is any issue currently with any of these deductions in the past being challenged directly, but we obviously have discovered that there was a mistake made in 2005. In most areas of life, when you find you have made a mistake you're best to correct it as soon as you can, and that's what we're doing today.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I appreciate that, Minister, but, obviously, how and why that mistake was discovered is pretty critical to the amendment we're dealing with today. In relation to the permit S05-2 that you mentioned was the first of the four permits—the other three were Western Australian permits—are you able to tell us today whether that tenement is still actively being looked at for exploration into the future? Is it offshore or onshore?

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

They're all offshore areas that I read out. I did mention that there are particular tenement titles that are issued associated with the area. There's an area designation. When a title is issued the title itself gets a specific code, if you like. For your records, that particular one, S05-2, in that area was awarded as EPP36 at the time. The early advice I have here is that we do not believe that any of these titles, as separate from the areas, are still active, but I'll take that on notice.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

They're all the questions I had for the minister. I just wanted to thank him for giving our climate emergency balloon a plug in this chamber yesterday. We managed to raise some funds from people who want to let parliament, and all the decision-makers in this place, know that we are in a climate emergency. This was a significant topic of debate in the other place yesterday. We're very pleased that Labor joined the Greens in our call to declare a climate emergency in this chamber and in the lower house of the federal parliament. Unfortunately, we weren't able to fly the balloon over parliament yesterday, as we had originally hoped to do, because of advice provided by the President. But we're quite happy to have it highlighted in this chamber. I hope Australians appreciate that we are in a climate emergency, and that at least some of us are trying to get decisions made in this place to act on the rising emissions that are causing global warming and putting our future generations in jeopardy.

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

Chair, I have some additional information for the question I took on notice about the discovery process. I'm informed that this error, this mistake, was discovered by the department in the course of its investigation of normal standard titles administration.

On some of the other questions that were asked during this debate: the entire designated frontier area program, for those five years I mentioned, was costed at $250 million. We do not have the individual amounts or deductions that were provided to individual companies. The Australian Taxation Office has confirmed for us that all of the affected companies that I mentioned have already claimed their deductions and, I'm informed, there are no additional deductions in the future that could be claimed by these title areas. I just confirm again that the reason we're doing this is to provide legal certainty and consistency, and to protect the integrity of our system.

I won't hold Senator Sterle up for too long but, just briefly, I want to thank the Australian Greens for highlighting the benefits and use of fossil fuels yesterday with their gas-fired hot air balloon. It's amazing what fossil fuels can and do achieve—flight being one of the things we wouldn't be able to do without the use of fossil fuels. The Australian Greens conducted their own scientific experiment on the lawns of Parliament House to demonstrate to us all, once again—I'm sure my good colleagues from Western Australia would agree with me—how good are the oil and gas sectors and how much they can do. You also might be interested to know, Senator Whish-Wilson, that the hot air balloon itself could not even have been made without fossil fuels. Almost all modern hot air balloons are made from either nylon or dacron, both of which are polymers that are made thanks to the wonderful products from our fossil fuel industries. So thank you very much Australian Greens. We work well together—you've also highlighted the position of the Labor Party for us all: that they support you in this climate emergency, support you in shutting down the oil, gas, coal and who knows how many other industries in this country. But we'll keep standing up for the jobs and supporting these great industries because we do like to fly, we do like the modern technologies we all have, thanks to these industries. And we particularly defend and fight for the jobs that these industries provide to so many Australians.

The CHAIR: I just remind people that, whilst we've had a slight digression, we do need to be relevant to the amendments before us, Senator Whish-Wilson.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Absolutely, Chair. I can't help not having the last say on this, although it may not be the last say on this—

The CHAIR: I think it might be the last say because I have directed people to be relevant to the amendment.

I promise it will be, Chair. We made those speeches yesterday and we've put up this amendment today because we don't believe we should have a tax system in this place that incentivises more oil and gas exploration. We've been very clear and very honest about that. This is the time in history to be transitioning away from dirty fossil fuels and supporting the profits of multinationals, who pay very little tax and give very little back to the Australian people. In this time of climate emergency we should be transitioning.

On that point, while I acknowledge, and I always have acknowledged, that I do use petrol and petroleum products—although I am getting a new hybrid car—just because it is so doesn't mean it needs to be so in the future. We now have the technology and the know-how to transition to new technologies. We could use hydrogen generated from clean energy, for example. We could create whole new products, whole new markets and whole new industries through this transition. What that's going to require is leadership. That's all I ask for. Acknowledge we're in a climate emergency. We must change. That won't happen unless governments play a really strong role in that transition. We need to accept that there are huge opportunities in this transition. It shouldn't be seen as a cost and a risk if it's properly managed. Whether it's hot air balloons and what they're made of and driven by, whether it's your car or whether it's the clothes you wear on your body, we have the technology and the smarts to engineer our way out of this crisis if we act soon—and we must act urgently.

Glenn Sterle (WA, Australian Labor Party, Shadow Assistant Minister for Road Safety) Share this | Link to this | Hansard source

Labor opposes the Greens amendments to the Offshore Petroleum and Greenhouse Gas Storage Amendment (Miscellaneous Amendments) Bill 2019. Firstly, the bill should commence when the bill has passed. We see absolutely no advantage in delaying it any further. Secondly, the 'frontier areas' inclusion in the bill fixes past omissions, as I said yesterday in my contribution on the second reading, and does not affect the revenue.

The CHAIR: The question is that schedule 17 stand as printed.

Question agreed to.

The CHAIR: That means that amendment (1) drops away.

Bills agreed to.

Bills reported without amendments or requests; report adopted.