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Thursday, 5 March 2015
Page: 1329

Fuel Security

Senator MADIGAN (Victoria) (14:31): My question is to Minister Ronaldson, representing the Minister for Industry. Liquid fuel security ensures food and pharmaceuticals can be transported across this country. Liquid fuel security ensures people can visit their family and friends. Liquid fuel security underpins all forms of security in this nation. On 2 February the Department of Industry and Science appeared before a Senate inquiry into Australia's liquid fuel security. We were informed that the government does not have a policy to maintain any onshore refining capability for Australia's oil production. Minister, can you confirm that the Australian government does not believe onshore refining capability is a part of our national interest?

Senator RONALDSON (VictoriaMinister for Veterans' Affairs, Minister Assisting the Prime Minister for the Centenary of ANZAC and Special Minister of State) (14:32): I thank Senator Madigan for his question. I would make the observation that we had two questions before—one from the left wing of the Australian Labor Party and one from the Australian Labor Party—which were complete and utter twaddle. I thank Senator Madigan for using Senate question time in the way it should be used.

Australia is part of a global petroleum supply chain that has access to diverse sources of oil and refined products, both onshore and offshore, through the global market. This has proven to be highly reliable in maintaining the supply of liquid fuel, even during the significant global and local disruptions. As the senator would know, Australia's fuel comes from reliable sources of crude and refined product from a range of countries. At any given time, Australia has a lot of crude oil and refined product on its way to Australia via diverse shipping routes. Oil and oil products are traded globally through deep and liquid markets, and the market has a very high capacity to respond to price signals to continue supply.

In response to the senator's direct question, I can say to him of course that this government does value our onshore refining capacity as part of this deep and diverse supply chain. The government, however, believes that refinery closures are a commercial decision to be determined by the owners and operators of those refineries. The government does, however, ensure that any refinery closures that do occur and the subsequent conversions to import terminals are done in an orderly manner with a smooth transition to minimise the potential impacts on motorists and industries.

The Department of Industry and Science commissioned a report in 2012 to assess any risks associated with refinery closures. The report, the National Energy Security Assessment, identified competitive pressures on domestic refining and assessed and tested Australian refinery closure scenarios. The main finding was that Australia was well placed to maintain domestic energy security. (Time expired)

Senator MADIGAN (Victoria) (14:34): Mr President, I ask a supplementary question. Minister, at the inquiry, the Department of Industry and Science officials struggled to inform the committee how many days of fuel reserves we have in our country. Minister, how many days of fuel to we have in stock, based on usual consumption? I would appreciate an answer in light of the fact that this question has been tabled for four days.

Senator RONALDSON (VictoriaMinister for Veterans' Affairs, Minister Assisting the Prime Minister for the Centenary of ANZAC and Special Minister of State) (14:35): I thank Senator Madigan for his question. Just to finish off my last answer: I do note that we will be releasing a National Energy Security Assessment later this year. I understand that data is collected in many forms as part of the government's ongoing monitoring and assessment of Australia's fuel position. I also understand that the Department of Industry and Science collects petroleum industry information on production, refining, sales and the stock of all petroleum from market participants. Aggregated trade data—imports and exports—is currently sourced from Customs via the Australian Bureau of Statistics. The Department of Industry and Science publishes an aggregated subset of this data as the ABS publication on the industry website. The two most common measurements used in Australia are: net input days, which is the total oil stocks in this country divided by the average net imports of the previous calendar year, which is currently 52 days; and consumption data, which is the total oil stocks in the country divided by the former daily demand, which is currently 34 days. (Time expired)

Senator MADIGAN (Victoria) (14:36): Mr President, I ask a further supplementary question. Minister, what evidence can you provide to the Australian people to prove that the government is not putting commercial and political reasons before our national security on this matter?

Senator RONALDSON (VictoriaMinister for Veterans' Affairs, Minister Assisting the Prime Minister for the Centenary of ANZAC and Special Minister of State) (14:36): I do not accept the premise of Senator Madigan's question. This government has a very clear record on national fuel security. On top of that, all monitoring of the fuel market and all of our modelling of possible disruption scenarios shows that Australia is in a good fuel security position. I can assure Senator Madigan that the government continually assesses and tests our fuel security position, and these assessments have consistently shown that global markets would continue to supply Australia's requirements during supply disruptions. These assessments include regular energy security assessments to provide a high-level overview of Australia's energy security position and, in particular, identify issues which need further monitoring and assessment and an examination of historical oil market responses to global oil market prices to determine how Australian and international oil markets have responded to different oil shocks in the past and oil supply shock scenarios to determine the impact on physical oil supply to Australia.