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Wednesday, 16 March 2005
Page: 21

Senator ALLISON (Leader of the Australian Democrats) (10:32 AM) —I wish to speak about schedule 5 of the Tax Laws Amendment (2004 Measures No. 7) Bill 2005, the petroleum exploration incentive to allow a 150 per cent deduction for exploration expenditure in designated frontier areas. I have two concerns about this proposal. The first is the environmental implications and the second is that this constitutes yet another handout that shows that the government has not understood the need for shifting from the view that the future is with fossil fuels to a view of a future with more sustainable alternative fuels and renewable energy. On the first point, the frontier areas include areas just off the Great Barrier Reef. I note that the ALP still have not decided whether they will join the Democrats to renew our bill to prevent oil drilling and exploration in areas adjacent to the Great Barrier Reef. I hope that they do so and commit to their previous strong position on this matter and, in the meantime, oppose this incentive that may result in active explorative drilling off the reef.

While there is evidence to suggest that the incentive will benefit prospecting for gas as well as other fossil fuels—and we welcome that because gas is less damaging as an energy source—the Democrats still do not see the need for exponential expansion of prospecting in remote areas for oil. There would appear to be little need for further subsidy of what is an already highly lucrative oil industry, particularly as the price of a barrel of oil continues to rise and oil production, as was noted in the media this week, is likely to peak within the next 10 years. After that time, the price of oil will significantly increase, which means that providing subsidies for exploration probably will not be necessary.

Given the minimal support that is provided to renewable energy in this country, it is worth making some comments about what this great benefit to the oil companies might have meant had it been extended to renewable energy. The government introduced the mandated renewable energy target some years ago, but we now know that 70 per cent of that target has already been taken up by hydro—by far the biggest contributor to the MRET scheme; that is existing hydro, not even new hydro—deemed solar hot water services and landfill gas. So two-thirds of the measure has been taken up, I think, by renewable energy, which was not anticipated to be the way that the mix, the diversity, of energy sources would turn out. It is 36 per cent hydro up to the present time—it might be higher than that this year. Because of the baseline, we are seeing a very lucrative awarding of renewable energy certificates to hydro. Whilst hydro, particularly in Tasmania, has put some of that money into wind farms—and that is a fine thing to do—and improved the efficiency of their hydro schemes, I am sure it was not what was anticipated in this place when the legislation was passed. So wind makes up only 11 per cent of the total.

The review panel, in looking at MRET, recommended that by 2020 wind should make up 41 per cent, but that is highly unlikely when very little assistance is given to the renewable energy sector. Imagine if there were a 150 per cent deduction for wind exploration—not that wind exploration is as difficult as oil exploration; I recognise that—and you extended it to developing proposals, searching out sites and so forth. This would be very helpful. Searching for geothermal opportunities is a very expensive process, which is similar to exploring for oil in that you are looking underground for opportunities to tap into energy sources, but it is not addressed in this bill, which is a great pity.

Going back to the reef, we are firmly of the view that areas such as those adjacent to the reef are critically important for tourism income. They may be permanently and irreversibly damaged by large-scale petroleum exploration. The government, I think, just on that theme of not paying much attention to a sustainable energy future, has had a minimalist approach to encouraging renewable energy generally. Its energy white paper, which the Senate Environment, Communications, Information Technology and the Arts Committee will look at further on Friday, provides excise cuts worth an astonishing $1.5 billion to diesel users. The greenhouse cost of this kind of policy, or lack of it with regard to renewable energy, is going to be paid for by our children and our grandchildren.