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Thursday, 17 October 1996
Page: 4419


Senator PARER (Minister for Resources and Energy) —During question time on Thursday 10 October, Senator Lees asked me a question concerning the eligibility for diesel fuel rebate of the diesel which leaked from storage tanks at the manganese mine on Groote Eylandt, operated by the BHP subsidiary GEMCO. I seek leave to incorporate my answer in Hansard .

Leave granted.

The answer read as follows—

Senator the Hon Warwick Parer

Minister for Resources and Energy

During Question Time on Thursday 10 October Senator Lees asked me a question concerning the eligibility for diesel fuel rebate of the diesel which leaked from storage tanks at the manganese mine on Groote Eylandt, operated by the BHP Subsidiary GEMCO.

I am advised this leak was first confirmed in February 1995. It is not known when it commenced, but apparently well before that date. A drilling program carried out by the company to both identify the extent of the leakage and to enable recovery of the spilled fuel has indicated that of the order of 3 million litres escaped.

I have to say that I find it difficult to understand how a company can lose 3 million litres of diesel without noticing. GEMCO was fined $45,000 by the North Territory Government in March 1996 after pleading guilty to a charge of unlawfully permitting diesel fuel to enter the groundwater. Around 600,000 litres has so far been recovered by the use of skimmer pumps. That diesel is being cleaned and re-used for activities which would be eligible for the diesel fuel rebate. The company has advised me, however, that it does not intend to claim the rebate, for reasons which I will go into in a moment.

One of the many administrative issues we have had to deal with since coming to Government is the administration of the diesel fuel rebate scheme by the previous Government.

Significant deficiencies were identified by the Australian National Audit Office as long ago as May 1991. Over the following three years, the Labor administration established three separate interdepartmental committees and an Industry Commission Inquiry. The only response by the then Government was to legislate to reduce eligibility and to attempt to charge industry an administration fee, or perhaps in this case a mal-administration fee.

In 1993-94 a major fraud of approximately $1.4 million was discovered, which resulted in Customs commissioning consultants to review the rebate database system and its claims processing practices.

It is instructive to consider the comments of the Australian National Audit Office on this process, and I quote:

"The contract did not stipulate that a written report be provided and Customs did not modify its procedures for DFRS claims processing following completion of the $60,000 consultancy"

The administration of this scheme by the previous Government was a saga of inaction and incompetence.

I am advised that it is not possible to determine whether all or part of the diesel lost was, or was not, subject to a rebate claim without an extensive search of both Customs and GEMCO's records, even then, a conclusive outcome may not result.

I am further advised by the Australian Customs Service that under the existing legislation, payment of rebate is based on intended use for eligible activities. Recovery is possible where fuel is used for other than eligible purposes.

Any prospect that the rebate is not recoverable is not tolerable and will not be tolerated by this Government. It is yet another testimony to the incompetence of the previous Government.

Minister Prosser initiated a review of the administration of the Diesel Fuel Rebate Scheme shortly after taking responsibility for the portfolio. That review was assisted by the efficiency audit of the scheme which we tabled on 2 May of this year. Senators will also be aware that the Government announced in the Budget that it will introduce legislation, with effect from 1 January 1997, to tighten eligibility for mining industry rebated under the scheme and to ensure that only legitimate claimants receive the rebate.

As part of the review the Minister will ensure that clarity is in the Act to make it clear that rebate is only paid when there is an eligibility.

In the meantime, the company is acting responsibility in relation to the recovery and use of the spilt fuel and I have requested regular progress reports to ensure that his situation continues.

I thank Senator Lees for her question and look forward to her support when the legislation comes before the Senate.

Senator Warwick Parer

17 October 1996