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Thursday, 14 November 1985
Page: 2196


Senator GIETZELT (Minister for Veterans' Affairs)(5.50) —I move:

That the Bill be now read a second time.

I seek leave to incorporate the second reading speech in Hansard.

Leave granted.

The speech read as follows-

The purpose of this Bill is to implement that part of the Government's indigenous crude oil marketing policy which provides for the imposition of a 3 cents per litre special customs duty on imports of light crude oils and petroleum products. The Government's policy on indigenous crude oil marketing was announced by the former Minister for Resources and Energy, Senator Walsh, on 9 October 1984.

In the 1984 autumn sittings the Government introduced a Bill to impose, under certain circumstances, a special stand-by duty on imports of certain light oils. The Government subsequently decided to conduct a major review of crude oil marketing policy. The review took into account representations made by the oil industry on the various provisions of this earlier Bill. Accordingly, the 1984 Bill was allowed to lapse with the prorogation of the last Parliament.

The Bill I have just introduced is part of the package of measures which the government decided to implement following consideration of the crude oil marketing review.

The Customs Tariff (Stand-by Duty) Bill 1985 reflects the Government's determination that crude oil produced in Australia will, where possible, be refined in Australia. The Bill is closely tied to the partial allocation scheme that currently allocates most of Australia's crude oil production to particular oil refiners. Under the scheme, the Government announces how much crude oil it expects each refiner to lift during each quarter from each producing area. Monthly records of each refiner's performance are kept for each producing area and are compared with their lifting obligations. If a particular refiner has failed to meet its obligations to lift indigenous crude oil over an extended period, then the provisions contained in this Bill are to come into effect.

The commencement date of the Bill is the day on which it receives the royal assent. It should be noted, however, that the crude oil marketing partial allocation scheme announced by Senator Walsh came into effect on 1 January 1985, except for the arrangements for the imposition of a special penalty duty which are contained in this Bill. The provisions of the Bill require that duty can only be imposed on importations of certain oil on and from the date of publication of a Gazette notice which declares that the duty is imposed. It is not possible for that Gazette notice to be published within a time period of two months after the date on which the Bill receives the royal assent.

The Bill does provide, however, that shortfalls of Bass Strait oil during each of three consecutive annual months that occurred after June 1985 can be taken into account. The purpose of enabling shortfalls that occurred after June 1985 being able to be taken into account is to implement the previously announced and clearly defined Government intention that this Bill would take effect, as far as practicable, from the introduction of the crude oil marketing partial allocation scheme. Similarly, for minor oil from a particular oil source, underliftings during a period of six consecutive annual months that occurred after March 1985 can be taken into account. The significance of the dates of June and March 1985 is that the ends of these months are approximately three and six months before the prospective date of the Bill receiving the royal assent.

In the policy statement of 9 October 1984, the Government announced that the Customs Tariff (Stand-by Duties) Bill 1984 then before the Parliament would be redrafted to enable the penalty import duty to be applied to both crude oil and refined products and to be imposed on an individual company rather than across the board. As with the previous Bill, the Government has limited the application of the duty to goods of a density below 0.9. This means that no duty will be payable on imports that are used to meet the demand for heavy oil products such as bitumen. Imports of heavy oils do not compete with indigenous crudes and it would not be appropriate to apply the penalty duty to them.

The Bill also recognises the different scales of oil production in Bass Strait and the smaller or minor oil producing areas. For Bass Strait oil, action to impose the penalty duty can only commence when a refiner has had a shortfall in liftings for each of three consecutive annual months occurring after June 1985. In relation to the smaller oil producing areas, action can only commence against a refiner who has failed to lift the allocated percentage of minor oil in each of six consecutive annual months occurring after March 1985.

The provisions contained in clause 10 of the Bill would come into effect once a refiner had failed to meet its allocation obligations in regard to Bass Strait oil. The Minister for Resources and Energy is, firstly, required to give the refiner a written notice setting out particulars of the shortfall. That notice will also state the need for information that will satisfy the Minister that the shortfall was not caused by factors principally under the control of the refiner. The refiner is given one calendar month to respond to this notice. If, within that calendar month, the refiner has not responded to the minister, or the information supplied does not satisfy the Minister, then further steps may be taken to impose the penalty duty.

After making the decision that the shortfall was within the control of the refiner, the Minister for Resources and Energy is required to notify the refiner in writing of the particulars of the decision. This notification will also state that, unless otherwise precluded by a later provision of the Bill, a stand-by certificate may be issued to the Minister for Industry, Technology and Commerce. That certificate, if issued, will specify the refiner and the three annual months in which the shortfall had occurred and will certify that it is appropriate for the duty to be payable.

Sub-clause 10 (4) is important in the operation of the Bill as it provides the refiner with the opportunity to make up the shortfall and thus prevent the imposition of the duty. The period allowed for the shortfall to be made up commences at the beginning of the earliest of the three annual months of shortfall and ends one calendar month after the day that the refiner was given the second written notice.

Before the penalty duty can be imposed, the Minister for resources and energy also is required to publish a gazette notice inviting persons to be included on a list of eligible persons. Inclusion on the list will ensure that those refiners who purchased the allocated quantities of oil will not be required to pay the penalty duty.

It is only when all the requirements I have outlined have been satisfied that the Minister for Resources and Energy is able to issue a stand-by certificate to the Minister for Industry, Technology and Commerce. Clause 12 of the Bill requires the Minister for Industry, Technology and Commerce, once he or she has received a stand-by certificate, to publish a Gazette notice declaring that duty is payable under the legislation. The duty cannot be imposed from a day earlier than the day of publication of the notice in the Gazette.

Similar procedures to those I have just outlined in relation to Bass Strait oil are also applied to minor oil from other fields. In the case of these smaller fields, however, a refiner has to have underlifted minor oil from a particular source for a period of six consecutive annual months occurring after March 1985 before the provisions of clause 11 of the Bill can come into effect.

The Bill also includes provisions for the revocation of a penalty duty that has been imposed. Once the Minister for Resources and Energy becomes satisfied after an annual month that a refiner has ceased to have a shortfall or underlift, that Minister shall, by notice in writing to the Minister for Industry, Technology and Commerce, revoke the relevant stand-by certificate.

Where all stand-by certificates are revoked, the Minister for Industry, Technology and Commerce is thereafter obliged, by clause 14, to publish a Gazette notice revoking the declaration which imposed the penalty duty. This revocation will have effect on the first day of the annual month after the date that this Gazette notice is published.

Clause 15 of the Bill recognises that one refiner may agree with another to purchase oil which forms part of the allocation obligations of the other refiner. Provision is made in clause 15 that the relevant Bass Strait and minor oil allocation notices applicable to both the transferor and transferee are deemed to be adjusted by the transferred quantity or percentage of oil.

In addition to the measures contained in the Bill which provide refiners with the opportunity to avoid the imposition of the penalty duty, honourable senators may recall that the Customs and Excise Legislation Amendment Act 1985 which was passed in the last autumn sittings included measures which relate to this Bill. Those measures put into place provisions for appeals to be made to the Administrative Appeals Tribunal in regard to certain aspects of this legislation.

The following matters in the Bill are within the jurisdiction of that Tribunal-

1. A decision of the Minister for Resources and Energy that he or she is, or is not, satisfied of a matter for the purposes of the definition of `List of Eligible Importers' in sub-clause 4 (1);

2. A decision of that Minister under paragraph 10 (1) (b) that he or she is, or is not, satisfied as to whether a shortfall of Bass Strait oil during each of three consecutive annual months was principally within the control of the refiner; and

3. A decision of that Minister under paragraph 11 (1) (b) that he or she is, or not, satisfied as to whether an underlifting of minor oil during a period of six consecutive annual months was principally within the control of the refiner.

Financial Impact

As long as refiners are meeting their obligations, no stand-by duty will be imposed. The refining industry has traditionally met these obligations. Accordingly the Government would not expect to have to frequently invoke the provisions of this Bill. Consequently, the Bill will normally have no financial impact.

If at any stage a refiner fails to meet the allocated requirements and the penalty duty is brought into effect, there will be an increase in Government receipts. It is very difficult to estimate the extent of such an increase but, as an example, if a middle-sized refiner had to pay the duty, then Government receipts would increase by approximately $4 million a month. Thus the legislation would only have a marginal effect on Government revenues but could have a major impact on the refiner concerned.

I commend the Bill.

Debate (on motion by Senator Archer) adjourned.