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Wednesday, 28 March 2007
Page: 1

Mr BALDWIN (9:02 AM) —I move:

That this bill be now read a second time.

In 2004 the Australian government commissioned a review of the Liquid Fuel Emergency Act 1984.

The review was conducted by ACIL Tasman and proposed a number of changes to improve the economic and administrative efficiency of preparations for and management of a national liquid fuel emergency.

Many of the recommendations were accepted by the Ministerial Council on Energy and by the government in its response in December 2005. This Liquid Fuel Emergency Amendment Bill 2007 will give effect to those recommendations.

Australian suppliers of petroleum products are adept at managing supply chains to efficiently and reliably provide liquid fuels to the Australian market. Disruptions at any point in the supply chain can affect the capacity of suppliers to provide fuel to the end user, but anything more than a minor inconvenience has been rare. In most cases, the end fuel user has been oblivious to any problem. In situations where there has been pressure on supply, the normal operation of the market has effectively managed the shortfall.

In the rare circumstance where intervention could be necessary, each state and territory government has its own liquid fuel emergency legislation and response plan. Where the crisis is beyond the capacity of either the fuel industry or the relevant state or territory government to manage on their own, a national liquid fuel emergency may be declared. However, no such emergency has been declared since the Liquid Fuel Emergency Act came into force nearly 23 years ago.

Nevertheless, the existence of the act recognises that such an emergency is possible and this amendment bill improves its arrangements. There are many potential triggers and it is not possible to predict which could require the use of the act’s powers. While I do not wish to limit the ability of present and future governments to deal with a national liquid fuel emergency caused by an unforeseen event, such emergency could conceivably be brought about by a terrorist attack against one or more oil refineries, an accident caused by human error, long-term industrial action at our ports or even a major disruption in places like Singapore or the Middle East.

While the government accepts its responsibility to prepare contingency plans for a potential national liquid fuel emergency, the act does not, and was never intended to, manage or reduce fuel supply risks for fuel users. If such an emergency does occur, the government cannot guarantee that all fuel users will have access to the fuel that they desire. Although the act provides the government with extensive powers to control the distribution and sale of fuel, a finite amount of fuel available means it is the government’s responsibility to ensure that it goes to those fuel users that need it the most, without causing any further disruption to the community than is necessary.

All businesses with operations that rely on an uninterrupted supply of liquid fuel should understand that there is a remote possibility that their fuel supply could potentially be disrupted and consider how they would cope if such disruption occurred.

I now turn to some of the major elements of this bill.

The bill changes the definition of ‘essential’ user to relate more specifically to the health, safety and welfare of the community and removes the concept of ‘high priority’ user from the act. These changes narrow the types of fuel users with preferential access to fuels in the event of a national liquid fuel emergency and therefore encourage appropriate investment in risk management. The government retains the power to identify additional ‘essential’ users under the act and to tailor the list of essential users to the specific circumstances of a disruption.

The bill amends the compensation provisions of the act to establish a more equitable regime. Compensation will be payable under:

  • section 45, where compensation for an acquisition of property must be on just terms; and
  • section 46, where a fuel industry corporation or person can be compensated if forced to comply with a government direction prior to the emergency. A claimant must demonstrate that they have suffered a loss as a result of the direction and that they have been unable to recover that loss from the market.

No compensation will be payable for any losses suffered as a result of compliance with a direction during a national liquid fuel emergency.

Other changes to these provisions extend the exemption from a lawsuit for a breach of contract and for officials exercising a power or performing a function under the act reasonably and in good faith.

The bill will enable certain legislative instruments under the act to take effect prior to their registration, or to prevent the parliament from disallowing or sunsetting certain legislative instruments. These changes will enable the government to respond as quickly as possible to changing circumstances in a national liquid fuel emergency. In most cases, these exemptions will not be necessary. However, fuel supply disruptions are inherently unpredictable, and there must be a high degree of flexibility in the government’s ability to respond.

The bill introduces an exemption from prosecution for conduct during a national liquid fuel emergency that would breach part IV of the Trade Practices Act 1974, which deals with anticompetitive conduct, if that conduct is required by a direction under the act. The government is relying on the cooperation of fuel corporations to help it respond to a national liquid fuel emergency, and the inclusion of this clause will provide greater certainty of a corporation’s potential liability.

This change is not intended to signal open season on anticompetitive practices. It is the intention that a direction will specify acceptable conduct or arrangements if there is a risk of anticompetitive effect. In any event, the minister will retain the power to revoke a direction if it is not achieving its intended purpose.

The bill extends the capacity of the minister to delegate his or her powers and functions under the act, enabling a more devolved emergency response that can better adapt to changing circumstances.

It also amends the enforcement provisions of the act to require a search warrant to be issued by a magistrate rather than a justice of the peace, as well as outlining the requirements for consent and clarifying some of the powers of authorised persons appointed under the act.

The Australian Capital Territory will now be a legal entity within the terms of the act, and the penalty provisions updated to reflect current drafting practices and criminal law policy.

The Liquid Fuel Emergency Amendment Bill is intended to facilitate two outcomes:

  • to encourage the more effective management of fuel supply risks by those persons or organisations that have the capacity to do so; and
  • to ensure that administrative arrangements remain efficient, effective and sufficiently flexible, reflecting the many different circumstances that could trigger the exercise of the government’s powers under the act.

The changes to the Liquid Fuel Emergency Act that will be given effect by this bill will strike an appropriate balance between these two objectives.

I commend the bill to the House.

Debate (on motion by Dr Emerson) adjourned.