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senate vote 2021-06-22#13
Edited by
mackay staff
on
2021-07-30 11:06:24
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Title
Bills — Fuel Security Bill 2021, Fuel Security (Consequential and Transitional Provisions) Bill 2021; in Committee- Fuel Security Bill 2021 - in Committee - Productivity commission report
Description
<p class="speaker">Rex Patrick</p><p>I've got some relatively simple questions in relation to the $200 million grant program that is associated with the Fuel Security Bill 2021. I'm wondering what the status of that particular grant program is. When are we likely to see decisions made by the minister, and contributions or grants being made to companies?</p> <p class="speaker">Richard Colbeck</p>- The majority voted against [amendments](https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id:legislation/billhome/display.w3p;query=Id%3A%22legislation%2Famend%2Fr6716_amend_677f076c-a658-4879-9531-1c892ef859df%22;rec=0) introduced by Victorian Senator [Janet Rice](https://theyvoteforyou.org.au/people/senate/victoria/janet_rice), which means they failed.
- Senator Rice [explained the amendments](https://www.openaustralia.org.au/senate/?gid=2021-06-22.214.1):
- > *These amendments basically have two parts. One is essentially that this legislation shouldn't proceed until we've also got an electric vehicles strategy and we've also got something else going on other than ongoing dependence on fossil fuels. The second part of these amendments is that there should be a review of this act by the Productivity Commission to see whether the way the money being spent is the best way to spend the money. Specifically, it would amend the bill to ensure that it doesn't commence until the passage of the Electric Vehicles Accountability Bill 2021. That's the private senator's bill that I am putting forward.*
<p>The Boosting Australia's Diesel Storage Program received a range of high-quality applications, with the program guidelines focused on fuel security benefits, strategic regional locations and good job opportunities for Australia. Applications for the program were considered by a committee of officials at the department of industry, and the committee has provided advice on the different scenarios to the minister. The minister is considering a range of issues in the guidelines and will continue to engage with that committee in the department of industry as needed. The minister will make a decision in due course, as the government is keen for the construction projects to commence soon to meet the 2024 time line for the increased diesel stockholding obligation. Following the decision, the department will contact applicants directly to negotiate the grant agreements.</p> <p class="speaker">Rex Patrick</p><p>So within the month or two you're likely to see some applicants receive notification of success?</p> <p class="speaker">Richard Colbeck</p><p>The minister is considering a range of issues in the guidelines and will make decisions in due course.</p> <p class="speaker">Rex Patrick</p><p>It's not an unreasonable question, to at least get a rough time frame for that. Is it expected that these grants will come this year? Or will it be next year? Will it be within the next couple of months? I'm trying to get a feel for what the process is. We could wander through and ask questions about what the process is from here on in. I don't want to waste our time; I just want an indication of the rough time frame.</p> <p class="speaker">Richard Colbeck</p><p>As I indicated, there are some processes the minister is still going through. But I think the key point in the information I gave you is that the minister and the government are keen for the construction projects to commence soon, to meet the 2024 time line for the stockholding obligations.</p> <p class="speaker">Rex Patrick</p><p>Does that go to the geographical location or spread of the grants? There was some information in the guidelines about geographical spread. Obviously you wouldn't want all your storage in one location. I'm particularly interested in whether or not there's consideration of storage in South Australia.</p> <p class="speaker">Richard Colbeck</p><p>The information I have here doesn't provide state-specific information, but it does indicate that the program guidelines are focused on fuel security benefits, strategic regional locations and job opportunities.</p> <p class="speaker">Rex Patrick</p><p>I wonder if you might take that question on notice, just to see whether or not you can give more details. You would understand I'm particularly interested in South Australia. I just have a couple more questions.</p> <p class="speaker">Richard Colbeck</p><p>I will take that on notice.</p> <p class="speaker">Rex Patrick</p><p>Thank you. I have a couple more questions. I understand it involves approximately 780 megalitres of fuel storage generation. I'm trying to understand what that quantum is in the context of the entirety of our storage capabilities. Is it another quarter? Is it another half? Is it another 10 per cent? I would like a rough order of magnitude of what that quantum is in relation to existing fuel storage.</p> <p class="speaker">Richard Colbeck</p><p>My advice is it represents a 40 per cent increase in our diesel stockholdings as of now.</p> <p class="speaker">Rex Patrick</p><p>I have a final question in relation to the grants. I looked to see in the guidelines the requirements for an Australian company with its substantive operations here. The guidelines don't talk about parent companies. I am wondering: Is it the intention of the minister to examine whether or not grant applicants have parent companies domiciled in tax havens in places like the Cayman Islands or Guernsey? Is that one of the checks the minister will conduct in respect of the grant applications?</p> <p class="speaker">Richard Colbeck</p><p>Submitters will be assessed based on general reputation and capacity to deliver the grants.</p> <p class="speaker">Janet Rice</p><p>On the jobs created by this package, the Prime Minister's media release speaks of 1,750 jobs created during construction. I'm interested in some more details of what that estimate is based on—what types of jobs they are likely to be and how long those jobs are expected to last for.</p> <p class="speaker">Zed Seselja</p><p>Sorry. I just changed over with Senator Colbeck, so I might, with your indulgence, ask if you could ask that question again.</p> <p class="speaker">Janet Rice</p><p>The Prime Minister's media release speaks of 1,750 jobs being created during construction as part of this package. I want to know some more details about that estimate. What are those 1,750 jobs—in what sorts of areas—and how long are each of those jobs expected to last for?</p> <p class="speaker">Zed Seselja</p><p>I understand that those 1,750 jobs referred to are in construction and they would happen in, I think, the lead-up to 2024.</p> <p class="speaker">Janet Rice</p><p>Construction of what, specifically?</p> <p class="speaker">Zed Seselja</p><p>That would be for the major refinery upgrades that are needed to deliver the low-sulphur fuel.</p> <p class="speaker">Janet Rice</p><p>Can you tell me a bit more about what those major refinery upgrades are? What needs to be constructed that's going to create those 1,750 jobs?</p> <p class="speaker">Zed Seselja</p><p>Some of that detail will be determined on a refinery-by-refinery basis, but it will be for the technical upgrades that are needed.</p> <p class="speaker">Janet Rice</p><p>Are we talking about just the two refineries? Is there any assessment, then, as to those 1,750 jobs? There must be some background to that estimate. Are they split equally between both refineries? What is that estimate based on?</p> <p class="speaker">Zed Seselja</p><p>It's based on information provided by the refineries.</p> <p class="speaker">Janet Rice</p><p>Are you able to share that information with us?</p> <p class="speaker">Zed Seselja</p><p>I don't know that there's much more I can add to the answers that I've already given.</p> <p class="speaker">Janet Rice</p><p>Can you give us more detail on notice? If there's an estimate down to 1,750 jobs, there must be some background information to determine that level of jobs, which you clearly have information about. It would be valuable for the Senate to know about. It's the sort of information that would have been tabled in an inquiry, if we'd had one into this bill.</p> <p class="speaker">Zed Seselja</p><p>I can take that on notice and see what additional information can come back, obviously subject to things such as commercial-in-confidence.</p> <p class="speaker">Janet Rice</p><p>Also in the minister's speech we were told that this package of the fuel security services payment is going to support 1,250 jobs that exist in the refineries. Is there any expectation that employment is going to change in the two refineries over the period this package is in place?</p> <p class="speaker">Zed Seselja</p><p>We would broadly anticipate that the employment in the refineries themselves would remain relatively stable, with the additional jobs coming in the construction phase.</p> <p class="speaker">Janet Rice</p><p>The minister's second reading speech in the other place also refers to another 1,000 direct jobs. Can you tell me what those jobs are.</p> <p class="speaker">Zed Seselja</p><p>Those are construction jobs from the $200 million diesel storage program.</p> <p class="speaker">Janet Rice</p><p>So they're not part of the fuel security payment; they're part of the $200 million as per the conversation that Senator Patrick was just having with you. What is that estimate of 1,000 jobs sourced from?</p> <p class="speaker">Zed Seselja</p><p>I am advised it's based on Treasury estimates and applications that went into the program.</p> <p class="speaker">Janet Rice</p><p>But it's a grants program, and you just told Senator Patrick that the grants haven't been awarded yet. So it's applications that went into the program? Have you already got a short list of programs that are likely to receive money?</p> <p class="speaker">Zed Seselja</p><p>I am advised that what I was referring to was coming from a prior request for information.</p> <p class="speaker">Janet Rice</p><p>Can you tell me some more details about what information you got through that prior request for information? How many companies came forward with their proposals as to what they could do with some money to construct diesel storage?</p> <p class="speaker">Zed Seselja</p><p>I'll take that on notice.</p> <p class="speaker">Janet Rice</p><p>The explanatory memorandum says, on page 4, that the measures in the bill associated with the fuel security services payment are expected to have a financial impact of $2.047 billion over nine years from 2021-22. What's the amount of money expected to go out in this financial year?</p> <p class="speaker">Zed Seselja</p><p>I am advised that the $2.04 billion is a worst-case scenario based on historical amounts, so there isn't a figure for each individual year.</p> <p class="speaker">Janet Rice</p><p>We've got about 10 days left of the 2021-22 financial year, and we have had regulations in place for money to potentially go out up until now. Has any money been expended up until now? What's your expectation of how much money would be expended under the program in the last 10 days of this financial year?</p> <p class="speaker">Zed Seselja</p><p>It doesn't start until 1 July 2021.</p> <p class="speaker">Janet Rice</p><p>But there has been a regulation in place for money to be able to be expended before 1 July 2021. Has any money been expended under that regulation up until now?</p> <p class="speaker">Zed Seselja</p><p>I might just get you to clarify. I think you might be referring to a different program rather than this particular piece of legislation.</p> <p class="speaker">Janet Rice</p><p>My understanding was that there was a regulation that has already gone through that was allowing payments to be made.</p> <p class="speaker">Zed Seselja</p><p>That's a separate grants program from this legislation. I understood your question to refer to this particular legislation. But I am advised—if I understand the question correctly—that up to $83.5 million could be paid out under that grants program. It's based on actual production levels, and those haven't yet been reported to us.</p> <p class="speaker">Janet Rice</p><p>Do you have an expectation that you will be paying out that $83.5 million in this financial year?</p> <p class="speaker">Zed Seselja</p><p>That's the maximum that we would pay out, but we expect to receive the report soon and then we will obviously know how much of the $83.5 million would need to be paid out under the scheme.</p> <p class="speaker">Janet Rice</p><p>You said that's a maximum, and you've just said the $2.047 billion is a maximum. Do you have any expectation or any estimate you can give the Senate as to how much is expected to be paid out in the next financial year, in 2021-22?</p> <p class="speaker">Zed Seselja</p><p>It would depend on the level of production and the refining margins at the time.</p> <p class="speaker">Janet Rice</p><p>That's not very helpful. There must be somebody in the department who's got an estimate. Given we are about to start that financial year in eight days time, there must be some estimate given current oil costs. I know that the cost is dependent upon production. I know it's dependent upon the price of oil. But what is the expected amount in this coming financial year?</p> <p class="speaker">Zed Seselja</p><p>I don't really have anything that I can add to those previous answers.</p> <p class="speaker">Janet Rice</p><p>So we're just basically here with no clarity whatsoever. What about subsequent years? You said that $2.047 billion is the worst-case scenario. What is the expected cost over 10 years?</p> <p class="speaker">Zed Seselja</p><p>As I indicated earlier, the appropriation of up to $2.04 billion is based on the worst-case scenario if both refineries were paid the highest amount over the entire period, which is obviously highly unlikely. So it is a worst-case scenario. For example, this would assume COVID-19-like economic conditions on an ongoing basis to 2030. Actual payments are expected to be less, as refinery margins have already improved from 2020.</p> <p class="speaker">Janet Rice</p><p>Is there a lower cost that the government is budgeting for?</p> <p class="speaker">Zed Seselja</p><p>The lowest cost would be zero.</p> <p class="speaker">Janet Rice</p><p>What's it expected to be?</p> <p class="speaker">Zed Seselja</p><p>I don't know, with respect, that it's possible to answer in that kind of granularity. It's based on all of those factors that have been outlined. Obviously that's the range.</p> <p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>
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