5 MINUTE: Fuel Security Bill

Deputy Speaker I rise today to speak on the Fuel Security Bill 2021.

This incredible commitment by the Morrison Government not only locks in Australia’s sovereign refining capability and our long-term fuel security, it backs local jobs for local families in my electorate of Bonner.

Deputy Speaker, the Morrison Government is taking strong action to support the Australian economy and ensuring our critical services can keep running.

The Bill includes two key measures of the Morrison Government’s fuel security package: the Fuel Security Services Payment and the Minimum Stockholding Obligation.

Fuel is crucial across the economy and through these two key measures this Bill will champion our fuel dependent industries.

Our truckies, our tradies, our farmers, our commuters, our miners—and of course, everyone who travels in Australia.

This Bill will help secure our sovereign fuel stocks and back local jobs.

And this Bill will protect families and businesses from higher fuel prices ensuring that Aussie families can keep more of what they earn!

Deputy Speaker, Australia continues to lead the world in our comeback from the Covid-19 pandemic.

And we aren’t slowing down.

Our Prime Minister has made a commitment.

A commitment to maintaining a self-sufficient refining capability in Australia.

A commitment that has been applauded by the fuel industry and by peak industry bodies.

Deputy Speaker, locking in Australia’s fuel security will deliver benefits for all Australian’s.

Deputy Speaker, traditional fuels will continue to be the dominant fuel source for transport beyond 2030 – we cannot be complacent about fuel security because of this.

The Fuel Security Bill supports the Ampol refinery in Lytton, in my electorate of Bonner, and Victoria’s Viva Energy refinery in Geelong.

This bill will lock in these refineries until 2027 and safeguard levels of key transport fuels through the Minimum Stockholding Obligation measure.

This is critical for our farmers, our emergency services, our truckies and our industries who all rely on diesel to keep Australia moving.

Deputy Speaker, without the passage of this Bill, it is likely Australia’s remaining refineries will close within the next five years.

Between these two refineries, this would mean losing 1,250 direct jobs. That’s 1250 families.

It would mean forfeiting 1,750 new construction jobs.

The fallout would then have a devastating impact on jobs in all fuel dependent industries.

The ramifications would be catastrophic for our local economy.

That’s why I was extremely pleased to welcome the Prime Minister and Minister for Energy and Emission Reduction Angus Taylor to Bonner for the announcement of this Bill recently.

Deputy Speaker, as part of the Fuel Security Services Payment measure, the refineries will be paid a variable production payment.

What this means is if there was a time either of these refineries were not making profits, they would be supported.

It means our taxpayers are only supporting the sector when it is needed.

On a local level this support equates to 550 direct jobs in Bonner.

550 highly skilled workers who can keep their jobs.

The flow on effect of this certainty in the local community can not be underestimated!

This is a Government that is backing jobs.

Deputy Speaker, when I joined the Prime Minister and Minister Taylor on a tour of the refinery, we walked past a worker holding up a hand-written sign which read: Thank you for supporting the refinery.

I was beyond humbled to read this because this is exactly why we do what we do.

These are real people; people with families, loved ones and passions for their work.

These are people with incredible skills that we absolutely must harness to ensure our sovereign capability.

Deputy Speaker, ensuring our sovereign capability is essential.

It means we can prepare for any crisis and protect our families and businesses from higher prices at the bowser.

This is where the Minimum Stockholding Obligation measure of the Bill comes in to play.

The Australian fuel market operates on a near just in time basis and is heavily reliant on global supply chains operating under normal conditions.

Yes, this helps to keep operational costs low.

But Deputy Speaker it means the market is less prepared for disruptions.

Implementation of the Minimum Stockholding Obligation will provide certainty to fuel consumers that there is a baseline level of liquid fuel available in Australia at any point in time.

Deputy Speaker, I say again-locking in Australia’s fuel security will deliver benefits for all Australian’s.

Fuel is what keeps us and the economy going.

That is why the Morrison Government is backing our refineries.

And that is why the passage of this Bill is essential.

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Boosting Australia’s fuel security

The Morrison Government is taking action to secure Australia’s long-term fuel supply, keep prices low for consumers and create over 1000 new jobs through a new domestic fuel security package.

As part of our 2020-21 Budget, the Government will deliver a $211 million investment in new domestic diesel storage facilities, reforms to create a minimum onshore stockholding, and measures to support local refineries.

This will be delivered through a combined market and regulatory framework, with three key elements:

  • Investing $200 million in a competitive grants program to build an additional 780ML of onshore diesel storage
  • Creating a minimum stockholding obligation for key transport fuels; and
  • Backing the refining sector by entering into a detailed market design process for a refinery production payment.

Prime Minister Scott Morrison said Australia’s fuel security was essential for our national security and that we had been fortunate to not have experienced a significant fuel supply shock in over 40 years.

“Our positive changes to the fuel market will ensure Australian families and businesses can access the fuel they need, when they need it, for the lowest possible price,” the Prime Minister said.

“Fuel security underpins our entire economy. Not only does it keep Australia moving, the industry supports thousands of people across the country and this plan is also about helping keep them in work.

“Like all sectors of the economy, the COVID-19 pandemic is having an impact on Australia’s fuel industry. The events of 2020 have reminded us that we cannot be complacent. We need a sovereign fuel supply to shield us from potential shocks in the future.”

Minister for Energy and Emissions Reduction Angus Taylor said the Government recognised that Australian refineries are under significant financial pressure and is committed to working with the sector to ensure it has a long-term future.

“Almost all Australians are reliant on fuel and it is the lifeblood of so many sectors in our economy. Our farmers and miners rely heavily on diesel to do their jobs and provide services, while the transport sector sources 98 per cent of its energy from liquid fuels,” Minister Taylor said.

“That’s why it is critical that Australia has control over its fuel security arrangements and the Government is making sure of that.”

Federal Member for Bonner Ross Vasta MP said the construction of additional diesel storage would not only secure our diesel supplies but support up to 950 jobs, along with 75 new ongoing jobs, many in regional areas.

“Supporting our refineries will ensure Australia has the sovereign capability it needs for any event, protect families and businesses from higher prices and support thousands of jobs across the economy as we recover from COVID-19,” Mr Vasta said.

A minimum stockholding obligation will act as a safety net for petrol and jet fuel stocks, and increasing diesel stockholdings by 40 per cent.

The Government will work with industry over the next six months on the legislative and regulatory design of the package.

Refineries play an important role in securing Australia’s fuel security and putting downward pressure on fuel prices for consumers. Modelling has shown that a domestic refinery capability is worth around $4.9 billion (over 10 years) in value to Australian consumers in the form of price suppression.

The Government is committed to a sovereign on-shore refinery capacity. We will design a market system for a production payment that recognises the fuel security benefits Australia’s refinery sector provides. It will protect Australian families and businesses from the around 1 cent per litre increase that modelling shows will hit fuel if all refineries close in Australia. For refineries to receive support, they will be required to commit to stay operating in Australia.

The Government recognises that the future refining sector in Australia will not look like the past. However, this framework will protect Australian families and businesses from higher prices and will secure jobs in the fuel sector and in fuel-dependent industries, such as our farmers, truckers, miners and tradies.

Additional measures will also be introduced to reduce the burden on industry and improve fuel market information.

This includes modernising the online fuel reporting system to make it easier for industry to report stock levels to Government and improve the timeliness of data. The Government will also remove the application fees for fuel standard variation requests.

This domestically-focused package builds on Government action to purchase up to $94 million of crude oil at record low global prices to be stored in the US Strategic Petroleum Reserve for access during a global emergency.

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