Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Infrastructure and Water) Share this | Hansard source

I say at the outset that the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010, though minor in what it is proposing, affects two extraordinarily important areas—Australia’s economy and the future treatment of greenhouse gas emissions. The oil and gas industry in Australia, particularly the offshore oil and gas industry, has been one of the extraordinary success stories for this economy and an area which has seen enormous investment and development. It is no exaggeration to say in relation to offshore oil and gas, particularly off Western Australia but also off Victoria and parts of South Australia, that there will be literally tens of billions of dollars in investment in this industry over the next five to 10 years.

It is our goal as a nation not only to see this gas exploited for the economic wealth that it brings to this nation and the jobs that it creates for all Australians but also to see particularly the liquid natural gas industry in Australia developed as a clean energy alternative for the rest of the world. We all know that greenhouse gas emissions have to be cut and that Australia needs to play an important role in that. The coalition has a direct action plan which is able to do that without decimating jobs in industry in Australia and without causing enormous increases in the price of energy, particularly electricity, for the households of Australia. Part of that solution, as well as capturing carbon, lies in using gas as an energy source here in Australia. But, as we know, the issues in relation to greenhouse gas emissions do not just relate to one country. What is emitted by one country is shared by the rest of the world. So it is important that we as a nation are able to ensure that we have the opportunity to be the supplier of a clean energy source to the rest of the world.

Natural gas is a transitional energy to a zero-emission future. It emits half to one-third of the emissions of a coal fired power station when used to generate electricity through a combined cycle electricity plant. Also, for those countries who do not have abundant coal reserves, such as Japan, it is a very important part of their electricity generation industry. So Australia can play a major role in the global reduction of greenhouse gases through the development and export of liquefied natural gas.

The second area which is also covered by these amendments is the actual storage of greenhouse gas emissions. It is something both the government and the coalition support very strongly. In my time as the Minister for Industry, Tourism and Resources I worked with the industry to realise the potential of clean coal and also, more importantly, carbon capture and storage. Without carbon capture and storage there is no future for coal as a domestic energy source for our power stations in Australia as we move forward to a lower emission economy. The capture of that gas, the technology that goes with it and ultimately the storage of carbon dioxide in reservoirs both onshore and offshore will be a critical part of our low-emission future. This legislation touches on that as well and the way in which we are able to regulate that not only to ensure that the storage of that gas is possible but also to assure the community that the processes of the storage of that gas mean that that gas remains where it is supposed to be for decades and centuries to come.

I would like to address the two parts of the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010. Firstly, in relation to offshore petroleum measures, much of the reform of regulation surrounding offshore petroleum resources began under the previous coalition government. In fact, it was begun by me as the Minister for Industry, Tourism and Resources. The coalition also provided a number of incentives to encourage exploration and investment in that sector which we as a country need to ensure that not only the current known reserves of oil and particularly natural gas are exploited but also the exploration for new reserves of natural gas continues.

We all know that there are extensive traditional reserves of natural gas in Australia, particularly off Western Australia. Some 200 trillion cubic feet of known reserves exist off Australia. The exciting prospect is that onshore, particularly in southern Queensland and northern New South Wales, there may be an equivalent or even higher level of reserves of coal seam gas that will see Australia more than abundantly self-sufficient in these gases and, as I said, able to supply a growing world need for clean energy well into this century. Those incentives and the encouragement we gave for exploration are vital to the continuing expansion of the oil and gas industry in Australia. We are therefore pleased to support the measures that have the support of stakeholders and ensure the regulation of offshore petroleum activities is safe, effective and sustainable.

The coalition supports the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2010 and is happy for that to proceed unamended. We acknowledge that there is a minor technical amendment that stems from an amendment to the act late last year. The changes will provide transitional arrangements retrospectively from 1 January 2010 until 31 December 2012 to impose a safety case levy for designated coastal waters. The Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2009 commenced the phase-out of the pipeline safety management plan levy and its replacement by a safety case levy covering pipelines to facilitate pipelines being covered under safety regulations in future, rather than under pipeline regulations. This is part of the harmonisation of this array of levies and regulations that exists across the industry and across states. Australia needs to have a very harmonised and national approach not only to the way we administer and apply these levies but also to the regulations that go with them so that, regardless of whether you are operating in the jurisdiction of the Commonwealth, Western Australia or Victoria, there is a single set of rules. It was intended that the state and territory regulations would be amended to correspond with the Commonwealth legislation. Quite frankly, that just makes good sense. This has not occurred and, as a result, some safety levy payments due to NOPSA may not be collectable until corresponding amendments are in place. The current safety levies bill seeks to address these issues with transitional measures. As I say, the coalition does not oppose this bill.

However, the so-called miscellaneous measures bill that is being considered cognately with the safety levies bill is not as straightforward. My colleagues in Western Australia are particularly concerned with some aspects of this bill. It seems only reasonable that, with two-thirds of Australia’s offshore oil and gas resources and over 80 per cent of offshore titles being based in Western Australia, this parliament, this government and the industry as a whole should take a reasonable interest in, and pay reasonable respect to, those concerns. We, as a result, have significant concerns about the miscellaneous measures bill, including the fact that there has not been adequate consultation and that the negotiations have not been completed on it. We think there is room for further examination to ensure that all stakeholder concerns are addressed. There is no rush for this legislation. To address those concerns, from my experience as the Chairman of the Ministerial Council on Energy and of the Ministerial Council on Mineral and Petroleum Resources, it is important that we get these things right. If we do not get them right at the outset, inevitably the actual execution of them—the putting in place of their administration and the collection of the levies associated with them—grinds to a halt. As such, and because of our concerns about the failure to complete stakeholder consultation and our desire to ensure that this is right before it is implemented, we have sought to have the miscellaneous measures bill referred to a Senate committee for inquiry. That bill will be examined by the Senate Economics Legislation Committee, which is due to report back to the Senate by 23 April 2010.

Of preliminary concern, particularly to my Western Australian colleagues, is the first item of this bill, which seeks to remove the payments to the states and Northern Territory. Part 1 of schedule 1 of the miscellaneous bill allows for the Commonwealth to retain industry registration fees under the Offshore Petroleum and Greenhouse Gas (Registration Fees) Act 2006 rather than returning them to the states and Northern Territory for the purpose of funding the National Offshore Petroleum Regulator. The operation of that offshore regulator is crucial not only to ensure, as I say, the safe operation of this industry but also to ensure public confidence in the way this industry operates.

We have unfortunately seen a number of instances in recent years that have caught the public attention. We saw a fire on Veranus Island, which not only crippled the gas supply from that island but had a flow-on effect on energy users right down the Western Australian coast and certainly to the southern part of Fremantle and all points in between, as well as inland in the minerals province. We saw a fire in the gas plant there and we obviously need to ensure that is not repeated. The role of NOPSA and of this new regulator that is being established is to ensure that there is sufficient oversight and regulation of the operation of these oil and gas plants to ensure that these sorts of instances do not recur. It is impossible to prevent accidents completely, but there is the opportunity to prevent many of them, so the operation of this new regulatory body is crucially important. It is also important that the states are able to contribute to that; hence, our concerns about the failure of this money to be returned to the states and territories.

The explanatory memorandum to the bill states that the retention of registration fees is estimated to result in a decrease in expenses to the Commonwealth of around $15.3 million in 2010-11 and $7.7 million in 2011-12. The Western Australian government indicates, though, that this number is actually $15.3 million in an adverse hit on the Western Australian budget in 2010-11. The federal government has stated that it intends to retain the money collected under the registration fees act for the period 1 July 2010 to 31 December 2011 for the purposes of funding the establishment of the National Offshore Petroleum Regulator. That is crucially important, as I mentioned. There are roles that need to be played by these bodies, and NOPSA, and now the National Offshore Petroleum Regulator, have a crucial role not only in the gas industry but, as we have seen recently, in investigation of the oil leak that occurred off the north-west coast.

We do have concerns that the federal government would be moving through this bill to hold fees for the establishment of a National Offshore Petroleum Regulator given that at least one state government—that is, the Western Australian government—has concerns about the proposal. I am sure that Western Australia’s concerns in relation to the National Offshore Petroleum Regulator can be addressed but we need to see full and frank consultation on this. We need to see discussion, explanations and negotiations take place to ensure that this National Offshore Petroleum Regulator has the support not only of the biggest state in regard to the oil and gas industry but also of a state which obviously plays a part in our national system. We need to ensure, in fact, that all states agree with the establishment and operation of the NOPR.

The Western Australian government has been quite open in expressing its concerns about the Productivity Commission’s recommendations and the implementation of their recommendations and, given that Western Australia’s budget is going to be hit by this measure, identified in this bill as savings to the Commonwealth, it makes sense that its concerns are fully addressed before the passage of this piece of legislation. As the Western Australian Department of Mines and Petroleum pointed out to the Department of Resources, Energy and Tourism during the short window of time they had to comment on the bill, they said that they ‘do not believe that to unilaterally impose this amendment is in the spirit of the cooperative federalism publicly embraced by the current federal government’. I think that is probably optimistic in terms of the constructive cooperative federalism that is being embraced by this government but I will give them the benefit of the doubt. I will believe that they do actually care about what state governments say, and particularly state governments that are not of their persuasion, and on that basis it only makes sense to me that there be further time to comment and consult on this bill, to perhaps arrive at a negotiated agreement on this bill and to put something forward which, importantly, everyone agrees on.

The federal government has announced that it will proceed with the recommendation of the Productivity Commission and that it will establish the National Offshore Petroleum Regulator, to commence in 2012—still at least two years away. The minister indicated in his second reading speech that he does not expect to introduce the legislation to enable the establishment of the National Offshore Petroleum Regulator until 2011—again, a year away from now—and that would only be following further discussions with the Ministerial Council on Minerals and Petroleum Resources. The question must therefore be asked: why should the parliament, before that time, approve these changes in fee structures, particularly when they have a $15 million per annum negative impact on the Western Australian budget and when this parliament has not considered the legislation to actually establish the National Offshore Petroleum Regulator? That is a long-winded way, perhaps, of saying there is no rush for this legislation and that there is ample time to ensure that the spirit of the agreements is adhered to—that, in fact, we see full consultation and much better cooperation in relation to the establishment of the NOPR.

Given the concerns of the Western Australian government as a key stakeholder in the NOPR, we believe this bill should not be supported at this point in its current form. The coalition, as has always been the case in our term in opposition, is prepared to sit down with the minister and discuss the matter further, thus ensuring that this bill is optimal and that it has the support of all states as well as the Commonwealth. There was limited consultation on the specifics of this bill and limited opportunity for concerns to be addressed before the legislation was introduced.

While many of the other amendments in this bill are of a technical nature, I note that the Western Australian government has also made some comments to the Department of Resources, Energy and Tourism about other aspects of the bill. These include aspects relating to the functions of the safety authority, issues of natural justice in relation to property rights and the proposal of changes to the duties of titleholders. All these issues are important and all these issues must be fully explored. I trust that with further consultation these issues can be clarified and resolved to the satisfaction of all stakeholders and I urge the government to ensure that this occurs before the Senate considers this bill. Given this bill has the greatest impact in Western Australia, it makes sense for the Commonwealth government to work with the Western Australian government on a way forward on this bill and also in the establishment of the NOPR and associated funding arrangements. It is premature for the parliament to approve this component of the legislation in advance of further progress on the establishment of the NOPR through the Ministerial Council on Mineral and Petroleum Resources. Hopefully, these concerns can be resolved with further discussion in this forum and the parliament can consider a comprehensive plan, including the funding arrangements for any national offshore petroleum regulator.

As I say, the coalition supports the establishment of the regulator. We have a long and proud history of ensuring that there is a national approach to the way in which we administer and regulate one of the most important primary industries in Australia. The oil and gas industry is an industry which has, as I say, made an enormous contribution to our economy, will make an even bigger contribution to our economy, will provide jobs and wealth to many Australians and will provide clean energy to the rest of the world. It is crucially important, therefore, as we put this legislation in place, that we have the full support of the states. It is the coalition’s view that the second part of this bill should be delayed until that consultation has taken place.

See this speech in context