A report from the Government controlled intelligence committee has recommended that Australia’s record low emergency fuel reserves be listed as a critical national security issue with the newly-created Home Affairs department handed oversight to radically increase stocks.

In a damning assessment of the country’s internationally mandated fuel stocks, reserved for times of war or global supply disruption, the Parliamentary Joint Committee on Intelligence and Security has raised serious concerns about Australia’s “vulnerability to regional geo-political instability” such as the South China Sea dispute.

It follows a similar assessment from the International Energy Agency which last month raised the same concern in a five-yearly report into Australia’s energy sector.

“There are identified supply chain vulnerabilities in the fuel sector in Australia and the Committee is concerned that these risks are actively managed in the most appropriate manner,” the report, which had bipartisan support, said.

“In particular, the Committee considers there is a serious requirement to assess these vulnerabilities, and test the effectiveness of any existing or potential risk mitigations, particularly in scenarios of heightened geo political tensions.

“The Committee notes the need to examine Australia’s security of fuel supply and dependence upon fuel from a national perspective, involving collaborative efforts between governments and industry.”

Australia now has the lowest reserves of the member countries of the IEA which mandates that all countries should hold 90 days in reserve as a minimum. Australia has just 43 days of supply.

The PJCIS report into the government’s proposed Critical Infrastructure Bill, which is designed to quarantine identified critical assets from foreign ownership and sabotage, listed fuel infrastructure be included in the bill as a priority.

“The Committee recommends that the Department of Home Affairs, in consultation with the Department of Defence and the Department of the Environment and Energy, review and develop measures to ensure that Australia has a continuous supply of fuel to meet its national security priorities,” the major recommendation said.

“As part of developed measures, the Department should consider whether critical fuel assets should be subject to the Security of Critical Infrastructure Bill 2017.”

The committee chair, Liberal MP Andrew Hastie, said the Government needed to take the issue seriously as a national security issue rather than an economic concern.

“The free-market assumptions that have shaped Australia’s approach to our liquid fuel security are coming under increasing pressure from the rapidly changing strategic environment in the Asia-Pacific region,” Mr Hastie told The Australian.

“We must consider all the risks and not presume upon the access of open, unfettered trade — especially as the power dynamics shift around us.

“Our fuel stocks are well below the mandated 90 days. We are out of step with every other Western democracy — even New Zealand has greater fuel stocks than Australia.

“Fifty per cent of our imported diesel and sixty per cent of our jet fuel comes through the South China Sea. That leaves Australia very vulnerable to coercion through a disruption of our liquid fuel supply.”

Labor members of the committee have endorsed the recommendation. Deputy Chair, Labor MP Anthony Byrne, said: “The bipartisan report indicates fuel security is as important as national security and has to be brought under a national security umbrella.”

The five-yearly IEA report into Australia’s energy sector, released in February found that Australia was vulnerable to “significant external supply shock”.

“The country does not have public stockholdings and does not place a minimum stockholding obligation on its domestic oil industry,” it said.

“Australia meets neither obligation,” the report said. “In 11 out of the 12 months of 2012, and for all of 2013 to 2017, end-month stock levels were below the 90-day level. Stock levels as of 1 October, 2017, were equivalent to only 48 days of net imports.

“This was Australia’s lowest reported monthly stock level in terms of days’ cover since 2000.”

The report went on: “In addition to not meeting its international obligations, this situation leaves Australia more vulnerable in the event of a significant external supply shock.

“Although the long supply chain provides Australia with additional time to implement domestic measures in response to a supply shock, low stock levels limit the country’s options for addressing such a disruption.”

Extracted from The Australian.