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Wednesday, 1 September 1993
Page: 751

Senator SCHACHT (Minister for Science and Small Business and Minister Assisting the Prime Minister for Science) (12.16 p.m.) —I move:

  That this Bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

  Leave granted.

  The speech read as follows

The purpose of this Bill and the associated Bill is to impose a charge on commercial uranium producers in Australia to recover some of the costs of the Australian Safeguards Office (ASO) in undertaking nuclear safeguards and physical protection activities.

The Government's decision to consider cost recovery for these activities was included in the 1992-93 Budget papers.

Mr President, this cost recovery proposal rests on two fundamental principles. First, those who derive benefit from an activity should pay for it, so long as the amount recovered is reasonable having regard to the nature and costs of the activity.

Second, those who pay should have a genuine opportunity to examine and be consulted on the necessity, quality and cost of the activities they are paying for. This is required not only on equity grounds, but also because it imposes a discipline (in addition to that of normal parliamentary scrutiny) on the provider of the activities—in this case the ASO—to deliver them as effectively and efficiently as possible.

The ASO cost recovery arrangements to which the Bills would give effect, will be fully consistent with these principles. In particular, the Government accepts that a substantial proportion of the activities of the ASO provides benefits to Government and to the Australian community generally. The costs of ASO activities not specifically directed at or relevant to industry will continue to be met by the Government, which will remain the largest contributor to ASO resources.

Other countries charge their industries for nuclear safeguards and related activities, including the United States, Canada and Sweden.

Moreover, cost recovery for undertaking regulatory and other activities, based on the same general principles I have outlined, applies quite widely across Australian industry. In the Primary Industries and Energy portfolio, Mr President, it currently applies to activities undertaken by the Australian Quarantine and Inspection Service and the Australian Fisheries Management Authority, as well as to many of the projects of the Australian Bureau of Agricultural and Resource Economics, the Australian Geological Survey Organisation and the Bureau of Resource Sciences. Activities of the National Residue Survey and the registration of agricultural and veterinary chemicals are also subject to cost recovery arrangements.

Before commenting on this particular Bill I will say a little about the ASO and its activities. Established by the Nuclear Non-Proliferation (Safeguards) Act 1987, the Director of Safeguards and the ASO manage domestic and international nuclear safeguards and physical protection programs in accordance with our stringent nuclear safeguards policies and requirements.

ASO has a key role in ensuring that uranium produced in and exported from Australia is used only for peaceful purposes and is not diverted into non-peaceful programs.

In short, a significant proportion of ASO's program exists, and the associated costs are incurred, because of the need to safeguard our uranium industry. These are the costs the Government has decided to recover. I shall return to this point when commenting on the associated Bill.

This first Bill provides in its substantive clause (Clause 3) for a charge to be imposed on the companies which produce and export uranium in commercial quantities. Both Bills commence on 1 November 1993.

In recognition that it is reasonable for a producer to have generated a cash flow before being liable for the charge, we have provided that no charge is payable until some uranium has been exported from the relevant processing facility.

Mr President, the uranium industry has been going through a difficult period in recent years. Prices have been low and, at the Ranger plant in the Northern Territory, production has fallen and some workers have been retrenched. Happily, prices have increased quite significantly in the last few months. Although the industry is by no means fully recovered at this stage, I am pleased to note recent comments by senior officials of Ranger's parent company, Energy Resources of Australia, that the market has strengthened recently, utilities are showing an interest in talking about future demand, and ERA has a number of new contracts under negotiation.

I also note that Western Mining Corporation intends to increase uranium production from its Olympic Dam mine at Roxby Downs in South Australia as part of a mine production expansion program in the near future.

Our decision to charge the companies for nuclear safeguards has not been made without regard to industry conditions. We estimate that the two current uranium producers, both of which have remained profitable despite the industry problems, will each pay only about $340,000 annually at the present level of ASO activity, representing about 20 cents per kilogram of uranium produced. This is less than one half of one percent of the present value of uranium production.

All in all, the Government believes these cost recovery measures—fully justifiable in terms of the principles I have outlined—are not unreasonable as regards the impact on the uranium industry. Furthermore, the arrangements for determining the annual charge payable by the companies, which I shall describe shortly in discussing the associated Bill, will give them a genuine opportunity to influence through consultation the actual amount they would pay each year.

I commend the Bill to honourable senators and present the explanatory memorandum for it and the associated Bill.

  Debate (on motion by Senator Reid) adjourned.