Mr BRERETON (10:00 AM) —I am pleased to support the Timor Gap Treaty (Transitional Arrangements) Bill, the purpose of which is to amend the Petroleum (Australia-Indonesia Zone of Cooperation) Act 1990 and related acts to reflect the fact that the United Nations Transitional Administration in East Timor—UNTAET—has replaced Indonesia as Australia's partner in the operation of the Timor Gap Treaty. The bill is consistent with Labor's approach to the future of the Timor Gap; specifically, that an independent East Timor could and should be encouraged to step into the shoes of Indonesia in respect of the operation of the Timor Gap Treaty. That policy position was first enunciated by Labor in September 1998 and elaborated in statements in January and later in 1999.

On 26 October 1999 Eastern Australian Time, UNTAET was established by resolution 1272 of the United Nations Security Council as the interim administrative and legal authority for East Timor. In Dili on 10 February, diplomatic notes were exchanged between the UN Transitional Administrator in East Timor, Sergio Vieira de Mello, and Australia's diplomatic representative in East Timor on interim arrangements for the Timor Gap Treaty, so that UNTAET, acting on behalf of East Timor, becomes Australia's partner in the treaty, and so that the terms of the treaty will continue to apply in the transitional period until East Timor's independence. It is a matter of public record that this agreement was negotiated in consultation with East Timorese representatives.

In a press release on 10 February announcing the agreement between Australia and UNTAET, Foreign Minister Downer and the Minister for Industry, Science and Resources, Senator Minchin, indicated—and I quote:

that is the first week of February—

Ministers Downer and Minchin also took the opportunity to place on record their appreciation of Indonesia's constructive approach to these talks. Since that press release, a number of Indonesian politicians, mainly from West Timor, have claimed that Indonesia should assert a continuing claim to at least parts of the Timor Gap and should retain a share of revenues from petroleum development in the region. The Governor of West Timor, Piet Tallo, was reported on 28 February to have said that Australia is in no position to unilaterally determine to whom the Timor Gap should belong, saying—and I quote:

More significantly, Indonesia's Minister for Mines and Energy, Susilo Yudhoyono, has been reported by the Jakarta Post and Agence France Presse as saying that Indonesia wants to hold talks on its sea boundaries with Australia in respect of the Timor Gap. The minister was quoted on 18 February as saying:

In the light of these statements, I ask the government whether, before the conclusion of this debate, they can provide further details on the talks in Jakarta in early February. Specifically, who were the representatives on the Australian side? Who were the representatives on the Indonesian side? Were any formal agreements reached; that is to say, was the Indonesian agreement referred to in the ministers' press release of 10 February contained in an exchange of notes or a memorandum of understanding, or, indeed, in any other formal agreement between Australia and Indonesia? What precise arrangements were agreed in respect of the Timor Gap joint authority, its personnel and its assets? A detailed response on these matters would be of some value and, indeed, some interest.

Turning, if I may, to the agreement between Australia and UNTAET, the exchange of notes of 10 February provides that UNTAET accepts all the rights and obligations previously exercised by Indonesia under the Timor Gap Treaty. Speaking on 10 February UNTAET Administrator de Mello rightly said that the agreement comes at `a very important moment for East Timor', as it will guarantee potentially valuable revenues for the territory as it recovers from last year's anti-independence violence. The agreement with UNTAET applies retrospectively from the establishment of UNTAET, thereby achieving a seamless transition between Indonesia's exit from the Timor Gap Treaty and UNTAET's entry into a treaty relationship with Australia.

This interim agreement is without prejudice to the position of the future government of an independent East Timor. Long-term arrangements for the Timor Gap will need to be concluded between Australia and an independent East Timor after the departure of UNTAET. There will, no doubt, be ongoing discussions between Australia and East Timor's political leadership on this issue. It is a matter of public record that East Timorese leaders have expressed a range of views on possible future arrangements for the Timor Gap and have raised the possibility of renegotiation. That said, I am confident that Australia and an independent East Timor should be able to conclude arrangements which ensure continuity, give security to the companies operating in the Timor Gap and ensure that East Timor will derive significant economic benefits from the Timor Gap.

Enactment of this bill should contribute to investor certainty in the Timor Gap. Over $US700 million has been spent on petroleum exploration and development of area A of the Timor Gap zone of cooperation since the treaty entered into force in 1991. The first commercial oil production commenced in July 1998 with the development of the small Elang-Kakatua field, which currently produces about 16,000 barrels a day and generates revenues to both Australia and East Timor at a rate of approximately $US3 million per annum.

Development of other potential projects in the zone of cooperation, notably the Bayu-Undan and the Sunrise-Troubadour gas condensate fields, could involve capital expenditures of about $US15 billion, including major onshore facilities in the vicinity of Darwin. The development of the Bayu-Undan liquids project, a world-class project by a Phillips Petroleum-led consortium, has the potential to provide several tens of millions of dollars per annum to both East Timor and Australia for a period of 10 to 20 years, commencing in the year 2004. The Bayu-Undan project has the potential to make a very significant contribution to the economic development and stability of an independent East Timor. Development of the second LNG production phase of the project has even greater potential both for East Timor and for the Northern Territory.

The changes contained in this bill should provide continuity in the arrangements under the terms of the Timor Gap Treaty to reflect the change in Australia's treaty partner from Indonesia to UNTAET and validate actions of the Timor Gap Ministerial Council and joint authority since 26 October 1999. They will also enable the continuation of a range of Australian taxation, customs, immigration, crime and quarantine laws relating to petroleum operations in the Timor Gap. They should not have any direct financial impact on companies and individuals or on the Australian government. The bill has Labor's strong bipartisan support.