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Wednesday, 3 December 2008
Page: 12301

Mr MARTIN FERGUSON (Minister for Resources and Energy and Minister for Tourism) (9:59 AM) —I move:

That this bill be now read a second time.

Australia has over one-third of the world’s medium-cost reserves of uranium, which have the potential to make a major contribution to reducing global greenhouse gas emissions. As the world is moving to a low-carbon future, the uranium industry in Australia is forecast to grow rapidly and could add an additional $14 billion to $17 billion to Australia’s GDP over the period to 2030.

The Australian government’s policy is to allow the development of uranium mines, subject to world’s best practice environmental, health and safety practices. Exports of uranium are only allowed under very stringent conditions and only to countries which are members of the nuclear non-proliferation treaty.

The uranium industry framework is one way the Australian government is working closely with state and territory governments, Indigenous and other stakeholders and the uranium industry to ensure the sustainable development of the uranium industry in Australia. Indeed, the Australian government has committed $10.6 million over four years from 2008-09 to meeting this objective.

One of the impediments identified under the uranium industry framework was the uncertainty surrounding fiscal arrangements applying to uranium developments in the Northern Territory. The Commonwealth retained ownership of uranium and other prescribed substances such as thorium, as defined in the Atomic Energy Act 1953, when it granted self-government to the Northern Territory in 1978.

However, royalty arrangements for the current and previous uranium projects were made by the Australian government on a project-by-project basis. This has led to different royalty rates being applied to different projects and a lack of certainty for companies looking to develop new deposits when calculating their costs.

The Uranium Royalty (Northern Territory) Bill 2008 will, for the first time, apply a uniform royalty regime to all new projects in the Northern Territory containing uranium and other designated substances. I note that work is currently underway to develop several uranium deposits in the Northern Territory.

The bill will do this by essentially mirroring the existing profits-based mineral royalty regime under the Northern Territory’s Mineral Royalty Act 1982 and applying it as a Commonwealth law.

This means that for the first time there will be a consistent regime between uranium and other minerals in the Northern Territory. This is particularly important in the case of polymetallic mines which contain both uranium and other minerals and could potentially have come under two different regimes.

The royalty regime will apply equally to projects on Aboriginal land, as defined by the Aboriginal Land Rights (Northern Territory) Act 1976, and non-Aboriginal land in the Northern Territory. Importantly, it will protect the existing rights on Aboriginal land such that royalty payments made by the mine operator will be passed to the Northern Territory and an equivalent amount will be paid into the Aboriginals Benefit Account which assists Aboriginal people in the Northern Territory.

The mining industry is an important part of the Northern Territory economy and is one of the few opportunities for employment of Indigenous Territorians, particularly those living in remote areas. The performance of mining companies in the area of Aboriginal employment and training is improving and this is something the government is working hard to address.

There is one exception to the new royalty regime and that is the Ranger mine. This is because it is the only currently operating uranium mine in the Northern Territory and the royalty determination for that mine has been in place since it began operating in the 1980s.

A uniform royalty regime for designated substances will provide considerable certainty for industry at a time when expansion is expected to occur in response to the world’s demand for low-emission energy sources. In particular, this regime will provide administrative benefits to proposed polymetallic projects containing designated substances as the royalty regime for all products produced at such mines will be consistent. This means where a mine is producing both copper and uranium it will come under one regime instead of two.

Importantly, the Northern Territory is the only Australian state or territory which has a profit based regime for mineral royalties. The Commonwealth’s position is that profit based royalty regimes are superior in that they are the most economically efficient form of tax. Profit taxes ensure that all publicly owned minerals are recovered where economical and minimises the possibility of project shut-ins during periods of low prices. This is one of the reasons we are seeking to apply a profit based regime to the Commonwealth owned mineral.

To provide further consistency with the existing royalty regime for other minerals, the Northern Territory Treasury will administer the royalty regime on the Commonwealth’s behalf. The bill provides the authority for the Northern Territory Treasury to collect, retain and make payments of Commonwealth money for the purposes of administering the royalty regime.

In addition, the Northern Territory’s judicial system and procedures will be used if prosecution is required. As such, the bill also provides for other Northern Territory laws related to the administration of the royalty regime to be applied as Commonwealth laws.

Administrative arrangements will underpin the operation of the royalty regime and will outline a number of important processes including, but not limited to, how often the Northern Territory Treasury will report to the Commonwealth on the amount of royalties collected on the Commonwealth’s behalf, dispute resolution processes for disputes between the Commonwealth and Northern Territory on administrative matters and apportionment principles for polymetallic mines. I will be negotiating these arrangements with the Northern Territory Treasurer prior to this bill coming into effect. To ensure transparency of the regime, the administrative arrangements will be published in the Gazette.

As the bill will automatically remain consistent with the Mineral Royalty Act 1982 (NT), the bill provides for the Governor-General to make regulations as necessary. This is included to maintain and protect the operation of the Commonwealth law from any unintended consequences arising from any amendment or repeal of the Mineral Royalty Act 1982 (NT).

The proposal was developed in consultation with representatives from relevant Commonwealth and Northern Territory government agencies; the two largest Aboriginal land councils in the Northern Territory, the Northern Land Council and the Central Land Council; and the uranium industry under the auspices of the Uranium Industry Framework. The passage of the bill will be a major milestone arising from the large amount of work undertaken over the last two years.

In conclusion, I commend the bill to the House and express my appreciation to all those involved in the consultation leading up to the presentation of this important bill to the House.

Debate (on motion by Mrs May) adjourned.