Jill Hall (Shortland, Australian Labor Party) Share this | Hansard source

It gives me great pleasure to speak on this legislation, which I believe is very important because it not only changes the regulatory regime that we currently have in place but also, as the member for Makin points out, gets the right balance between environmental protection and the issuing of permits, ensuring that Australia's exploration and mining industry continues to succeed. In Australia we have a strong commitment to the mining, petroleum and other industries. We are very committed to ensuring that we have a strong industry base, but we are also extremely committed to ensuring that our pristine environment is protected. Any issuing of permits and licences needs to take into account the need to preserve the environment.

The purpose of the Offshore Petroleum and Greenhouse Gas Storage Amendment (Cash Bidding) Bill 2013 is to amend the Offshore Petroleum and Greenhouse Gas Storage Act 2006. It is providing a new model for the allocation of cash bidding exploration permits in the offshore petroleum regulatory regime. It is very important to mention at this stage that it was the previous government that undertook this. In November 2012 there was an announcement that we had moved to this system. The government then announced the decision to apply the cash bidding allocation method for the selection blocks released as from 2014.

The next statement I am making is a very important one: an independent and expert review was conducted of the act. It identified weaknesses in the current model that posed risks to the implementation of an effective cash bidding model. I am very supportive of any reviews that take place that really can improve the industry and ensure that the regime that is in place is the best possible regime, as I mentioned in the beginning, to deliver for the industry and protect the environment.

The proposed amendments will change the current cash bidding exploration permit allocation model in a number of ways. They will limit the discretion to refuse an offer of a permit made by the joint authority, and failure of the highest bidder to accept will result in the 10 per cent deposit paid by the bidder as part of the cash bid being forfeited to the Commonwealth. Full payment of cash bids must be made by the successful bidder within 14 days; previously it was 30 days. So this puts in place a requirement for those who are involved in the industry to actually commit to the permit in a much quicker and more transparent way.

The joint authority will set a reserve price for each of the areas that are released, and the price will reflect an estimate of the resource available. The reserve price will be determined in advance of inviting applications, at the discretion of the joint authority, and will be either undisclosed or disclosed to bidders via the gazette.

There are separate prequalifications and bidding processes. Prequalification assessment of the potential bidders' technical and financial capacity to hold an exploration permit will take place prior to the applicant placing their cash bid. I think this is a very important aspect. It allows for the bidders' credentials to be looked at. This should take place definitely well in advance.

The amendments also introduce a range of tools to achieve more efficient allocation of petroleum permits. It is important that we have an efficient industry that operates in a way that is going to deliver the greatest benefit not only to the industry but also to the Australian economy. These changes will lead to that.

As I mentioned previously, it was the Labor government that, in 2012, announced that it would reintroduce cash bidding for selected offshore petroleum permits. Cash bidding was previously used in Australia between 1985 and 1992. It was used successfully in the US Gulf of Mexico and has recently been introduced for onshore coal tenements in Queensland. Last year the Labor government decided that cash bidding would be used from 2014 on, and we made that decision based purely on the fact that it was the best way to operate the industry, and that the allocation of offshore petroleum acreages in mature areas and in areas containing known petroleum accumulations was best served by operating under this new regime. Under the competitive cash-bidding system applicants offer cash bids for the right to explore, with exploration permits being awarded to the highest cash bidder. The legislation before the House follows the 2010 Australia's Future Tax System Review, which recommended a move in this direction.

I feel that this is very important legislation. It is noncontroversial simply because of the fact that we on this side of the House could see the benefit of introducing this regime when we were in government. I am pleased to say that the now government has picked up the recommendations and the changes to the legislation that we were looking at introducing before the election. These are changes that will strengthen the industry, improve environmental protection and ensure that we look after our pristine environment in those very special areas.

At the same time—because this is a cognate bill—the bill allows for the collection of annual administration fees by the National Offshore Petroleum Titles Administrator, and that will cover the ongoing costs associated with the cash-bidding bill. And so I am quite confident that the changes that have been outlined in this bill, which resulted from a review that was undertaken by the previous government, will benefit the industry, will benefit our economy and will be great for the future.

See this speech in context