Published May 10 2004 by The Age
Archived May 10 2004

Australia: Budget cash to shore up oil reserves

by Jason Koutsoukis, Michelle Grattan

The Federal Government will launch a major push to find another Bass
Strait-type oil reserve to combat concerns over Australia's looming
oil supply crisis as part of a wide range of giveaways in today's
federal budget.

Oil exploration companies will receive $1.50 for every dollar spent
on "new frontier" exploration in Australia's offshore seabeds.

The funds are among a plethora of sweeteners in a family-oriented
election budget that will include substantial tax cuts, enhanced
benefits, strong growth projections and a surplus.

The budget is expected to be accompanied by a media campaign costing
up to $20 million.

But Treasurer Peter Costello has taken some gloss of the budget by
failing to stop leadership speculation. Yesterday he again refused to
say that he would be treasurer next year, accusing reporters of
asking a "tricky question".

Mr Costello's prevarication surprised colleagues and triggered
Government fears that selling the budget will be complicated by
repeated questions to Prime Minister John Howard and Mr Costello
about their futures.

Opposition Leader Mark Latham said there was now the "extraordinary
situation" where the Treasurer could not commit to being there for
next year's budget, and the PM could not commit to serving the next
full parliamentary term.

Adding to the day's confusion, Mr Costello was also at odds with
Deputy Prime Minister John Anderson over what to do with the proceeds
of the sale of Telstra.

Mr Anderson said some of the money should be used on infrastructure
spending in rural areas, while Mr Costello said the money should be
used only to reduce Commonwealth debt.

In one of a suite of family measures, which also includes a new
maternity payment worth thousands of dollars, hundreds of thousands
of parents will be eligible for a $600 tax rebate for each child.

The payment follows anger over unexpected debts incurred by up to
500,000 recipients of the family tax benefit who had over-estimated
their incomes.

Mr Costello said the budget "will have families front, centre and
square". It would help relieve some of the pressures on families and
help them balance work and child rearing, he said.

St Paul's Cathedral in Melbourne will receive $2.5 million to help
repair and preserve the 113-year-old Anglican church.

The funding is in addition to the $2.5 million the Federal Government
granted the church in 2001 under its Federation Fund to help restore
two decaying spires.

The hopes of a large number of Government backbenchers for the
establishment of a Families Tribunal to take the place of lawyers in
child disputes will be dampened by a lack of any firm funding in the

The Government's funding for oil exploration is in response to
concerns raised by resources exploration agency Geoscience Australia
that at current production levels Australia's reserves will dry up in
five years.

The agency believes there are up to 40 potential sites in Australian
waters that contain significant oil reserves.

Geoscience Australia expects that by 2015 Australia will be producing
325,000 barrels a day, compared with a demand for 1,027,000 barrels,
resulting in Australia having to import 70 per cent of its oil needs.

The Australian Petroleum Production and Exploration Association has
forecast Australia's annual import bill for crude oil to rise to
anywhere between $3 billion and $12 billion by 2010.

Original article available here