Senator LEWIS —I ask the Minister for Resources to confirm that oil exploration companies pay a top marginal rate of 67 per cent taxes, being company tax plus resource rental tax, compared with other mineral resource companies which pay only 45 per cent taxes, being company tax plus a royalty. Having confirmed that fact, I then ask the Minister: Is it a fact that in the past four years 22 Australian-based companies have invested $3.1 billion overseas; of that, $1 billion on exploration and $2 billion in acquiring resources, and that one-tenth of that overseas investment, if it had been invested in Australia, would have drilled about 50 wildcat offshore wells in Australian waters? When will the Government apply its mind to the positive taxation discrimination against oil exploration in Australia?

Senator COOK —I cannot believe my luck that Senator Lewis should have bothered to ask this question. As I understand it, the first part of his question sought my confirmation that oil companies pay a tax rate of 67 per cent, being company tax and resource rental tax. To the best of my knowledge, no Australian oil exploration or production company has paid resource rental tax up to the present time. The first company that is likely to pay resource rental tax is Broken Hill Proprietary Co. Ltd, on its Jabiru production. That will be some time next year. The resource rental tax was adopted in the Parliament as a taxing measure about two years ago and consists of the long-term bond rate plus 15 per cent. That component of the resource rental is exactly what it says. The oil deposits in the continental margins or on land in Australia are the property of the Australian community and companies that want the right to exploit those resources and produce from them are entitled and required, quite properly, to pay a rent to the Australian community for the privilege of doing so. This Government-indeed Senator Lewis's Party as well, as I understand it-has not derogated from that point. There might be a difference between us on to what extent secondary taxation should apply, but there is no disagreement that there ought to be secondary taxation.

As to the first point of the honourable senator's question, that oil exploration companies pay a top marginal rate, to the best of my recollection no-one has actually paid yet and production companies-this excludes Bass Strait oil, which is in a special category which I will come to in a moment-pay a company tax rate. An excise regime is in place in Bass Strait. Because of overtures to the Government last year based on the fact that the price of oil was nudging under $10 a barrel, we undertook a review of the Bass Strait excise arrangements and made an offer to the operators-Esso and the Broken Hill Proprietary Co. Ltd (BHP)-to adopt a sliding scale so that when the price of oil fell below a certain point it would trigger a reduction in the excise. Esso and BHP rejected our offer and, as a consequence, we have withdrawn it. But I announced just last month at the Australian Petroleum Exploration Association national conference in Hobart that we would be bringing forward the excise review which was scheduled for the middle of next year to commence in September this year, and hopefully it will be completed in March this year. This would be a review of the excise regime and of deductability against excise. I also indicated that if it wanted to bring forward views on a revision of the resource rental tax, we think it would take a terrible lot to shift us on that but we would look to what it had to say about it.

With respect to the amount of $3.1 billion that the honourable senator has referred to as being spent offshore on exploration and production companies-I think the honourable senator is confused as to the difference between exploration and production-it is true that exploration companies in Australia have developed a capability and a maturity which enables some of them to explore overseas as well as in Australia. They do so because prospectivity is high in the countries that they choose. A large slab of that $3.1 billion involved the purchase by BHP of a refinery and distribution network based in Honolulu so that it can approach the American market. I do not think we can rightfully include the purchase price in those figures and give a genuine picture of what is happening.

Senator LEWIS —Mr President, I ask a supplementary question. Does the Minister deny that part of the question that I put to him suggesting that there is a positive taxation disincentive for oil exploration companies in comparison with mineral resource exploration companies in Australia?

Senator COOK —I do deny that there is an in-built positive disincentive. What the honourable senator has omitted to take into calculations is that our resource rental tax applies for offshore oil development and that mining companies, by their very nature, mine onshore and pay a whole range of State government taxes, charges and royalties based on mining onshore. I do not believe that there is that positive disincentive that the honourable senator has referred to; indeed, the incentive for oil exploration in Australia is still quite strong. As I have said in this chamber, it is related to three things: the price of a barrel of oil, the possibility of finding oil-that is, our prospectivity-and the taxing regime and the costs of operating in Australia. I assert here that our costs are competitive with similar countries in the rest of the world.