Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Infrastructure and Water) Share this | Link to 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.

Darren Cheeseman (Corangamite, Australian Labor Party) Share this | Link to this | Hansard source

I would like to take the opportunity to speak to these amendments and also comment on the broader climate change issue. My electorate of Corangamite will be one of the areas most affected by climate change, and that is why I believe so strongly that we need to act now.

I congratulate the Minister for Resources and Energy for his amendments in the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010. The bill will amend the Offshore Petroleum and Greenhouse Gas Storage Act 2006. These amendments are minor policy and technical changes which will pave the way for the National Offshore Petroleum Regulator. This will improve the operations of the National Offshore Petroleum Safety Authority. There is no adverse effect on industry and there are no extra costs to industry.

This bill will also simplify the safety regime for titleholders. It will remove direct responsibility from a titleholder for facilities which it has no control over. It will ensure that offences that have occurred can be more successfully prosecuted by making them offences of strict liability. This bill will cause no adverse impact on any regional people, and this is great news for the people of my electorate and especially those who work in the offshore petroleum industry.

I have spoken in this place on several occasions on climate change related issues. I have done this because I believe we need to act decisively on climate change and we need to act now. There is the likelihood that some greenhouse storage activities will happen in my region. This could be an industry in my region that would provide people with well-paid employment and for those reasons I am hoping that it will be successful. This bill will help to make sure this industry is a success into the future.

This industry is very important to my region’s local economy. The Otway Basin is an important gas production area for the south-eastern gas markets of Australia. As at December 2009 the Otway Basin’s petroleum fields provided approximately 23.4 per cent of eastern Australia’s conventional gas production; proved and probable reserves of 1,197 petajoules, which is 17.8 per cent of Victoria’s conventional gas reserves and 14.8 per cent of eastern Australia’s reserves; 17.1 per cent of eastern Australia’s total gas production of both conventional natural gas and coal seam gas and 3.5 per cent of eastern Australia’s total gas reserves; and some 70,000 tonnes or 3.1 per cent of Australia’s liquefied petroleum gas production. The basin also produces a small amount of condensate—708,000 barrels, or 1.2 per cent of Australian production. This is a significant contribution from my region to a very important industry for Australia.

The Otway Basin has three major gas projects which all transfer offshore gas to onshore treatment plants. The largest development in the Otway Basin is the Otway gas project. It is a $1.1 billion development situated about 70 kilometres south of Port Campbell. We need to encourage these developments so we can act on climate change now. I would not be doing my job for the people of Corangamite if I were not talking about industries that are so important to my region. That is why I regularly speak on all climate related bills, particularly those that can help reduce our carbon footprint.

My electorate will be very severely affected by climate change if we do not take decisive action. I have mentioned before in the House but I think I need to emphasise again the problems in my electorate. The Great Ocean Road, the Surf Coast and parts of the Bellarine Peninsula will all be adversely threatened by rising sea levels. Large parts of my electorate do rely on the tourism economy. The Great Ocean Road is an icon of Australia and a key component of the local tourism industry. This would be devastated if we did not act on climate change and the real prospect of sea level rise came to fruition. Large parts of the Bellarine Peninsula, a key part of my seat, are very low-lying and will be inundated if there is sea level rise. There would be devastation over large inland areas of my electorate caused by drought activity and the like. The small borough of Queenscliff would be very adversely affected by sea level rise. Many jobs will be lost to the local economy if we do not take decisive action. Many parts of Ocean Grove and the Bellarine Peninsula would be affected.

We do need to take very decisive steps to reduce Australia’s carbon footprint. I think offshore production of gas and liquefied assets and, ultimately, storage of greenhouse gases in those fields can provide a very significant opportunity for us to reduce our carbon footprint. This is in many regards a new and emerging industry and we do need to take the necessary steps to support the growth and development of Australia’s very, very significant gas reserves.

Minister Martin Ferguson has been a passionate advocate for Australia to take advantage of all of the opportunities—whether in Western Australia, Queensland or Victoria—to exploit the landscape and gas reserves we have and to store greenhouse gases into the future. That is why I believe that these small but important amendments are very important, particularly in regional economies like mine and in Western Australia and Queensland where we have very significant opportunities to grow a very significant industry and to substantially reduce our greenhouse gas footprint. These small changes are significant and they will pave the way for future growth and development of this industry to ensure that the necessary regulations are in place so that we do undertake these activities in a very safe and sound way. I publicly acknowledge the contribution that Minister Ferguson is making in this area. He certainly is a very thoughtful minister and someone who is prepared to take the necessary steps to help grow this very, very important industry into Australia’s future. I commend these bills to the House.

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

We have two bills here that are in cognate, the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010 andOffshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2009. As the opposition spokesman on these matters has already said, the coalition sees merit in the legislation proposing some changes in the offshore safety arrangements but expresses concern in regard to the so-called miscellaneous measures—the process by which usually governments slip something under the guard of those who are looking at the principal legislation.

These, of course, are issues of grave concern to persons representing Western Australia and the areas such as mine in the electorate of O’Connor. It is all contained in the third paragraph of the second reading speech of the Minister for Resources and Energy on the introduction of the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010. It is quite interesting to read the second paragraph. It says:

It is nevertheless an important bill as it progresses the government’s intention to establish a new National Offshore Petroleum Regulator.

That is already covered by the acronym NOPR. That commences, according to the minister, on 1 January 2012. So what is the significance of these miscellaneous measures? They are to be found in the next paragraph of the minister’s second reading speech, in which it is said:

To this end, the bill introduces a measure by which the Commonwealth will retain the industry fees raised under the Offshore Petroleum and Greenhouse Gas Storage (Registration Fees) Act 2006 in order to use this money for the establishment of a National Offshore Petroleum Regulator.

This is another example we find of this government making promises to the community for delivery in a future parliament. It is now my strong view that by 2012 a coalition party will be the government here in Australia. But, irrespective of that, goodness knows what the make-up of the remaining members of the existing government might be in this House at that time.

What is the House deciding today—to take a significant amount of money? Thank you for the public servants who write the explanatory memorandum. They are not inclined towards spin; they try and tell us politicians the facts. They say under the heading, which they always use, ‘Financial Impact Statement’:

The Bill includes minor policy and administrative changes which will have a slight financial effect on the Australian Government Budget.

Considering the size of it, I guess that is an accurate statement. I will come to the Western Australian budget, which is miniscule in comparison. I continue my reading from the explanatory memorandum:

The retention of the registration fees is estimated to result in a decrease in expenses—

for the Commonwealth—

of $15.3 million in 2010-11 and $7.7 million in 2011-12.

In other words, we have a fiddle by which the Western Australian government, which have just also had the bad news of a very significant drop in their share of GST, are being asked by this government to contribute one-third of the remainder so that it can keep some sort of wobbly promise on reforming the health system, presumably for the better but which is yet to be proven.

So here we are in this House being asked to authorise a reduction in the revenues of the state of Western Australia to ease the Commonwealth’s efforts in creating a national offshore petroleum regulator. The Commonwealth government said that it is a good idea, and the coalition does not argue with that proposal. But now state governments are going to pay for the privilege at a point in time when we do not have a national offshore petroleum regulator—and $15 million is a significant amount of money to be removed from the coffers of the Western Australian government, struggling as it is to meet a significant amount of the infrastructure requirements that apply to the development of the arrangements involved in Gorgon gas and others. In my electorate—as it will be after the next election—people of the town of Kalgoorlie are very anxious that a rail-to-road transport hub should be developed within the town site areas of Kalgoorlie. Why? Because that would considerably shorten the journey that trucks must take—remembering there is no significant rail service north of Perth on the way to the Pilbara. There would be a considerable shortcut if certain infrastructure were improved to interconnect the roads that exist already with the north-west highway—this is the inland road—and if 100-odd kilometres of road were sealed it would be to the economic benefit of all Australians. Trucks could be offloaded in Kalgoorlie from the rail system and continue their journey up a sealed road to the Pilbara and, if necessary, onwards to Browse and other localities.

So here is the state government seeking to do that sort of infrastructure development—it is not cheap; 160 kilometres is quite an extensive length of road—but the outcome would be a huge profit in every regard for the Australian nation in reducing the cost of this form of infrastructure, such as for Gorgon and others, and opening up further opportunities to the eastern states to participate in the supply of equipment and other items that will be required, which, considering the location, can be shipped in from overseas countries. These are opportunities in which the Western Australian government can help out, and I can assure you that if the amounts of money mentioned here—$20-odd million—were applied to that road it would be an excellent start. But here we are being asked to take money off Western Australia for an organisation that does not exist, may never exist and, according to the speech by the Minister for Resources and Energy, is not expected to be in operation until 1 January 2012. I understand that the coalition—with the support of other senators, I am sure—will see this matter go to a Senate inquiry. But no case has been put by the government to grab this cash at this particular time, and I have some doubts in this regard as to whether the Western Australian government could disband the authority within its mines department that delivers this inspection capability at present.

The member for Corangamite made some reference to his own state and, by the way, spent a substantial portion of his speech on climate change. If you can reduce the travel distance as I have already described by way of a transport link and a transport hub out of Kalgoorlie, there must be a reduction in the emissions involved in transferring the goods over a longer distance. It is very significant. As things stand now, the east-west railway line delivers into the Perth metropolitan area and then the trucks take off from there into the north, when in fact the carriages could be dropped off at Kalgoorlie, the semitrailers unloaded at a proper hub and then the prime movers could move in and go straight up the inland road, provided that the connecting link is available and they are not smashing their trucks up on the original standard. Those things need money, and it is inappropriate therefore for us to be considering legislation that reduces the capacity of the Western Australian government to do that sort of good work.

But there are other interesting factors, and the member for Corangamite raised the issue of climate change. Apparently, the benefits to his electorate will arise from placing an emissions trading tax on the very industries we are choosing to speak about today because they are carbon based industries. But, more importantly, as I mentioned in a doorstop interview this morning, the issue of a great big tax has been widened with the coalition’s quite proper initiative to give adequate support to women who wish to have a family and who must lose their employment income during that period. Marital leave and maternity leave is a good process, but some people have tried to talk about the taxes as both being the same. They are not. The proposal from our leader, Mr Abbott, is one whereby the profit of certain big companies will be subject to an income tax, a tax you only pay when you are making a profit. The emissions trading tax is a tax you pay even if you are going broke—that is irrefutable—and it is why the coalition, under Peter Costello, got rid of sales tax. It was because that was a tax you had to pay when you were going broke. The GST gives business a rebate on such taxes as it flows through to the consumer. So this is pretty interesting.

There is another issue relevant to representing the interests of Western Australia. Two-thirds of Australia’s offshore oil and gas resources and over 80 per cent of Australia’s offshore titles are based off the coast of Western Australia. So this is legislation that almost exclusively covers Western Australia, notwithstanding the benefits that will arise with coal seam gas in Queensland and, as the member for Corangamite has said, in Bass Strait, but they are minuscule by comparison. Therefore Western Australian representatives have a big responsibility to put the argument on behalf of their constituencies.

I was in discussion the other day with the member for Canning, who is a member of the coalition and a man of great commitment to the issues I have just raised. He will be opposed in the forthcoming election by the state member for Armadale—not the retired state member for Armadale, but the incumbent state member for Armadale and one-time minister in the Gallop and Carpenter governments. In other words, she still has an office provided by the WA taxpayer, she still has her income and, on retirement—presumably just before the election—she will have a very substantial superannuation payout of an order I wish we federal members could get.

Bill Shorten (Maribyrnong, Australian Labor Party, Parliamentary Secretary for Disabilities and Children's Services) Share this | Link to this | Hansard source

When are you going to retire? It’s a bit rich for you to talk about super, but don’t let the legislation get in your way.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Order! I ask members to come to order and I ask the member for O’Connor to come back to the legislation before the House.

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

By the way, I will make a loss on it and I am not hanging around here to get it. When we have these sorts of contests it is very interesting to see how attitudes change. The present state government is a Liberal-Nationals—‘coalition’ is hardly the right word—group who I am pleased to say is getting on pretty well. It is over there making a fuss about this matter.

During the period when the member for Armadale was in government, she on occasion after occasion complained about the treatment that the Western Australian government got from the Howard government. On 29 August 2001, 20 May 2003, 29 June 2004, 8 May 2005 and 25 August 2005 she was on the record quite properly arguing the case for WA. But there is a significance about those dates: there is no such matter on the record after 2007. Apparently since there has been a change of government in this place that member no longer thinks she has a responsibility to argue the case for Western Australia, as the incumbent member for Canning certainly does. Of course we had a huge debate over the Bunbury highway and her original position, as a minister for transport, in refusing an offer from the Howard government of $170 million to start that project. All credit to the member for Canning.

These are most important issues when one looks at the particular issue under debate. That issue is one relative to whether an otherwise unexceptional piece of legislation can result in a clawback of money from the government of Western Australia, who has been doing a pretty good job in this regard. I want to talk a little about the relevance of its good work to the oil and gas industry. Western Australia, as other states, relies heavily on payroll tax as a source of revenue. I do not have to convince the House that, when a major project employing 10,000 people—of which we can be very grateful—is in progress, payroll tax is significantly enhanced, for instance in Western Australia.

Yet the previous state government was unable to secure for Western Australia the Inpex development from Browse, because they could not make up their mind where they might put a hub on the 6,000-kilometre coastline that exists between Broome and Darwin. They could not find a place. Colin Barnett, the incumbent Premier, fixed that up in no time. The interesting point is that the Japanese group obtaining gas from adjoining deposits was prepared to come ashore in the Kimberley in Western Australia and do its development. The payroll tax revenue from the wages it would have paid in such a circumstance would probably build a hospital in WA. It certainly would have funded the road that is essential to shortening the transport distances to that wonderful area of development in Australia and to making eastern states manufacturers more competitive with overseas manufacturers, as an example outside my state.

The previous state government could not do it, so Inpex has gone to Darwin. Good luck to Darwin. It is not a very good environmental outcome. There are huge lengths of pipeline undersea, high-pressure requirements, more emissions and more emissions in the actual manufacture of the pipeline—all bad things. More particularly, the traditional landowners missed out on a billion bucks. It will not go to Indigenous people in Darwin because the deal was already done. We have a government in WA who this government believes cannot do the job. This government would like to take the responsibility off the WA government, when after a very short period of time we now have the major projects coming to Western Australia.

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

I speak in support of the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010 and the accompanying Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2010. The government is establishing a national offshore petroleum regulator to operate from 1 January 2012, and it is important to have the legislation passed to get the necessary legwork done in time and to allow for the retention of the funds from 1 July this year. It will be these funds that will fund the national offshore petroleum regulator. The objective of the main bill is to establish the regulator, and the aims are as follows: to strengthen the role of the National Offshore Petroleum Safety Authority, to make clarifications on how titleholder provisions apply where titles are held jointly by two or more titleholders, to make clear a titleholder’s responsibility under the occupational health and safety provisions of the act and to make technical amendments to achieve a more enforceable regulatory regime and update the act in a few areas.

These amendments are minor policy and technical changes which, most importantly, pave the way for the establishment of the regulator. This will improve the ability of the authority to regulate the structural integrity of facilities, wells and well-related equipment, and it will clarify the way the provisions regarding titleholders relate to situations where title is held by two or more titleholders.

There are no adverse effects on industry from these bills and no additional costs as such. Currently, all the money the Commonwealth receives from industry fees under the act and related acts is paid to the states and the Northern Territory. In order to fund the establishment of the regulator, the government will retain the fees paid under the registration fees act. The minister will be reviewing the fees collected under the act and associated acts to ensure that the states and the Northern Territory will be able to continue carrying out regulatory functions on behalf of the Commonwealth until such time as the regulator is established.

The augmentation of the authority’s functions is to ensure that it can effectively and fully regulate the structural integrity of petroleum and greenhouse gas facilities, wells and well-related equipment, even where certain structures such as pipelines and wells may not have people at or near them for extended periods of time. These amendments do not extend the authority’s role beyond that of an occupational health and safety regulator.

The bills provide clarity in relation to administrative arrangements for and treatment of obligations of titleholders in situations where title is held by two or more of them. They also provide that a titleholder’s duties under the occupational health and safety provisions of the act relate only to wells. Under the safety regime, a range of people have duties to ensure worker health and safety, but critical information about the well and reservoir is held only by the titleholder. However, the amendments remove any possibility that a titleholder could be held directly responsible for facilities which it has no control over.

The changes to certain offence provisions in the act which relate to titleholders are to make sure that offences can be more successfully prosecuted by making these offences ones of strict liability. As they currently stand, the provisions require intent to be proved in order for a prosecution to be successful. This is very difficult to do given the nature and remoteness of offshore operations in addition to the proliferation of multiple titleholder arrangements. The amendments remove the need to prove intent. In line with government policy regarding strict liability, these changes are being made to offences with physical elements.

I want to make a general comment about the issue of strict liability. While I support these changes and understand the need in this situation—it is to do with occupational health and safety, which has to be a primary concern—I retain an apprehension, if you like, about strict liability in general. It is probably my lawyer’s background there. But I do understand that in this situation, when we are dealing with occupational health and safety, it is important—understanding how it works and how it operates in this particular situation.

Other amendments include a minor correction updating the act to reflect recent changes in regulations and providing further transitional arrangement in the safety levies act to allow further time for the amendment of state and Northern Territory legislation.

I will turn to schedule 1 of the miscellaneous measures bill; there are certain parts in it that I will make some comments on. Part 2 provides the authority with a clarified role and some strengthened functions, and this is important. These amendments make sure that the authority’s existing functions, relating to the structural integrity and the soundness, strength and stability of offshore petroleum facilities, also expressly cover wells and well-related equipment. They also expressly give the authority an ability to examine non-occupational health and safety aspects of structural integrity, and that is important. In ensuring such facilities and structures are safe when people engaged in petroleum activities are at or near these facilities and structures, the authority may need to take into account aspects of structural integrity which may not necessarily be directly related to occupational health and safety but which are nevertheless important to consider in assessing the integrity of the facility or structure. This is largely because certain structures, such as wells and pipelines, do not usually have people constantly near them. That is a good thing; however, when people are near them, they need to be safe. However, to be clear, these amendments do not extend the authority’s role beyond that of a health and safety regulator. They just give them the power and the authority to do what is necessary so that they can carry out their role as regulator.

I turn to the provisions covering multiple titleholders. Part 3 clarifies how the act applies when a petroleum or greenhouse gas title is owned by two or more titleholders, also known as multiple titleholders. This is common in the offshore resources sector. The amendments set out that, where multiple titleholders are making an application or request or giving a nomination or notice, they must nominate one of the titleholders to act on behalf of the others to make these applications. This part also makes clear that, where a title is owned by multiple titleholders while legal obligations under the act apply to each and every holder of a title, such obligations may be acquitted by any one of the holders. It is important to bring that clarification into the act.

Part 4 makes a number of offence provisions which apply to titleholders where the offences comprise physical elements only—the offences of strict liability that I talked about but for physical elements only. These provisions relate to the physical doing or not doing of an act—so by commission or omission—and relate to provisions that require information and record keeping or require compliance with expected work practices or with the regulator’s directions. Given the nature and remoteness of offshore petroleum activities, it is not always possible to have regulatory staff constantly and comprehensively monitor the activities of companies. Regulatory staff are thus dependent on the titleholder informing them of compliance with requirements and directions. Making these offences ones of strict liability removes the requirement to prove that the titleholder intended to do or not to do a certain act. In a situation that is about safety and where safety is paramount, it is absolutely essential that things be kept in pristine condition to minimise any damage or injury. It is very difficult to prove intention in these circumstances, as we know, particularly where there are more often than not multiple titleholders and, therefore, this serves to frustrate compliance efforts resulting in the need for these amendments.

These are very important amendments. Even though I said they are minor and technical, they are nonetheless very important changes to the act because they are about improving health and safety, improving compliance, ensuring that those are of paramount concern and having the regulator that can deal with those issues. I did not know a lot about this industry some years ago. I think as Australians and particularly as parliamentarians it behoves us to know about the industry. It is very important to Australia and the Australian economy. It was during my time working and living in Timor-Leste that I got to know a lot more about this industry, which I found very beneficial and useful in the role that I am playing today as an elected member. With those comments, I commend the bills.

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2010 and the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010. These two bills implement policy and technical amendments to the existing offshore petroleum and greenhouse gas storage legislation, much of which began under the coalition government. The safety levies bill provides transitional arrangements retrospectively from 1 January 2010 until 31 December 2012 to impose a safety case levy in relation to designated coastal waters. This transitional period will give the states and the Northern Territory time to implement corresponding amendments and for the safety case levy to be collected through the National Offshore Petroleum Safety Authority in the interim.

The coalition supports the transitional measures in the safety levies bill. However, the miscellaneous measures bill contains a number of amendments which are of major concern to Western Australia, to Western Australian members of parliament and, most significantly, to the Western Australian government and people of our great state. Part 1 of schedule 1 will see the Commonwealth retain industry registration fees from 1 July 2010 under the Offshore Petroleum and Greenhouse Gas Storage (Registration Fees) Act 2006. For practical purposes, the retention of the registration fees by the federal Labor government will see $15.3 million removed from the WA state budget in 2010-11 and $7.7 million removed in 2011-12. It appears to us that this is just the latest federal Labor government attack on the WA economy as a cash cow to help pay off the government’s debt and deficit and, by default, prop up the economies of the failed Labor state governments.

We are very well aware of the strength of the resources and agricultural sectors in our state of Western Australia. Madam Deputy Speaker Moylan, as you would know very well from your electorate, WA produces 40 per cent of the nation’s wheat and exports 60 per cent of the nation’s wheat, providing 35 per cent of Australia’s export wealth. Agricultural exports have been a key driver and a very major factor in keeping Australia from recession. The Labor government is expecting WA to keep delivering to the federal coffers via the resources and agricultural sectors in spite of providing a mere seven per cent of recent infrastructure spending in WA itself. This compromises the very growth the federal government is relying on to drive the national economy.

My electorate, the south-west area of Western Australia alone, needs at least $750 million for immediate infrastructure to deal with capacity and productivity constraints in roads, rail and port facilities. This comes on top of plans by the government to strip $443 million from WA’s share of the GST funding next year while—again—the failed Labor state of New South Wales will be rewarded with an additional $277 million, and Victoria with an additional $223 million.

Recent data quoted by the WA state Treasurer shows that WA contributes $8 billion more to Commonwealth revenues each year through company tax, personal income tax and petroleum revenues than it receives back from the Commonwealth in grants and other expenditure benefits. As we know, WA has 10.4 per cent of the population but also has the highest growth rate in Australia of over three per cent—well above other states. By majority, this is driven by the major resources sector—something that I believe is not clearly recognised or valued by the federal Labor government. This is why I am also sure that the WA state Treasurer, Troy Buswell, will make very strong representations to the Commonwealth Grants Commission, given the effects of strong population growth on the state’s capital works program.

The long-awaited Henry tax review that the Labor government is failing to release—at least prior to the election, it seems—proposes to scrap state based mining royalties and replace them with a federal resources tax. We in Western Australia are very aware that these royalties are really critical to ongoing development of local mining communities in our resource-driven state.

The next attack on the WA economy by the federal Labor government will come from the proposal to further strip the state of GST to fund the promise on the public hospital system. I note this has come under fire, as reported in the Age by two senior health leaders. John Deeble, the co-architect of Medicare, said the government’s $50 billion reform package ‘is largely spin’; and Professor David Pennington, who headed the National AIDS Taskforce, is quoted as saying, ‘The plan would leave many hospitals in dire straits’. I also note that Ken Baxter, the former head of the premiers’ departments in NSW and Victoria, has warned that GST would have to increase from 10 to 12½ per cent to pay for the Labor government’s health plan. The federal health minister has also agreed that tax increases may be necessary.

The resources sector is clearly a driving force in the Western Australian and Australian economies, and as this legislation will have a major impact on the Western Australian petroleum industry it will have a major impact on the WA economy. As the Deputy Director-General of the Western Australian Department of Mines and Petroleum, Stedman Ellis, stated in a presentation on 3 February 2010, ‘Petroleum projects cross boundaries from Commonwealth waters, state waters, islands and mainland areas, with industry most affected in WA.’

Approximately two-thirds—close to 70 per cent—of Australia’s offshore oil and gas resources and over 80 per cent of offshore titles are based off the coast of WA. Data from the Western Australian Department of Mines and Petroleum shows that the state’s petroleum sector grew in value by nine per cent to $21.3 billion in 2008-09. The total sales value of this sector, which includes crude oil, condensate, natural gas and LNG, represents around 30 per cent of the total value of WA’s resource industry. The estimated total value of WA’s minerals and petroleum resources sector for 2008-09 was $71.31 billion. Projected growth in global energy demands are at least 30 to 40 per cent by 2030, and that will increase this value.

We have all seen the $43 billion Gorgon project announcement off the coast of WA. It is Australia’s largest offshore LNG find, with an estimated economic life of at least 40 years and with construction due to start next year. And the historic North-West Shelf projects like Pluto, Wheatstone and Browse are significant contributors to the Western Australian economy.

The WA Department of Mines and Petroleum was recently asked to comment on the amendments included in this specific legislation. In their response they highlighted their very serious concerns relating to the establishment of a National Offshore Petroleum Regulator, and therefore cannot agree to the proposed legislative amendment for the Commonwealth to retain the registration fees. In addition, the loss of revenue for WA will come at a time when the state is being required to commit funding to infrastructure development for Gorgon and other major projects.

Western Australia also considers that the respective functions and powers of the joint authority and designated authority need to be very clearly defined and should remain in the OPGGSA. There is concern that this amendment could diminish WA’s functions and powers as regulation changes have less stringent requirements compared to act amendments. However, the Western Australia Department of Mines and Petroleum is supportive of, and has previously recommended, the inclusion of non-OHS structural integrity of facilities and pipelines as part of NOPSA’s responsibilities.

The WA government, like the coalition, believes that there needs to be further consultation on this legislation—and we believe the Senate inquiry will expose further flaws within the legislation itself. Under a National Offshore Petroleum Regulator industry will pay additional costs to set up the NOPR and will maintain regulatory expertise in the Commonwealth and state regulators. The national regulatory models also remove two very important issues: the states’ facilitation role and the local knowledge from regulatory decisions, and will result in a split regulatory regime. Companies will have to deal with a statutory authority and not directly with ministers.

Given the significant impacts these implications will have, particularly on the Western Australian petroleum industry, I believe that the WA government and other stakeholders should be given the opportunity to put publicly their concerns on the record about the measures contained in this legislation through the Senate inquiry process. As I said earlier, the inquiry will more fully examine the immediate and longer term implications of the measures contained in this bill—something very dear to both your heart and mine, Madam Deputy Speaker Moylan, particularly from a Western Australian perspective.

Bill Shorten (Maribyrnong, Australian Labor Party, Parliamentary Secretary for Disabilities and Children's Services) Share this | Link to this | Hansard source

I rise to support the legislation before the parliament, the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010 and the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2010. There is no issue at work more important, in my experience, than workplace safety, and for the words I am going to give in support of this legislation I am indebted for the lessons of my time with the Australian Workers Union, particularly for the work of Dr Yossi Berger, David Healy, John Clarence, Stephen Price, Paul Howes, Cesar Melhem, Helmut Gries, Rod Currie, Jim Ward, .and also Tony McDonald and George Parker, who both recently received well-deserved life memberships of the AWU. For me, the question of the simple things that we can do to ensure that workers on offshore platforms can go home safely to their families at the end of their shifts and rosters should always be at the heart of any debate that goes towards health and safety. We need to recognise that workplace fatalities that occur too often in Australian workplaces can be prevented—and I never use the word ‘accident’ when I refer to fatality or serious injury at work.

In my work I have, sadly, attended the funerals of men killed at work. They were not just miners killed by man-made tremors, factory workers killed by needless explosions and forestry workers hit by debris by explosions, but hydrocarbon workers burnt by negligent safety systems. Despite the best efforts of many—and I include the best efforts of this government and employers, unions and employees—there is still an endless list of sorrow and heartbreak. There is no consolation for the death of people at work, in particular perhaps for the death of young people in the full bloom of their health. We all know that there is no consolation. None of us believe there is any hope, inspiration or usefulness in it at all. All we can do is try and learn from these tragedies and hope to prevent them occurring again.

The bills in this House today result from the government’s intention to establish a national offshore petroleum regulator from 1 January 2012 to strengthen the role of the National Offshore Petroleum Safety Authority. NOPSA is something that I and those in the Labor Party from the Maritime Union of Australia, the AWU and other unions campaigned for. It took us 10 years of agitating to have the National Offshore Petroleum Safety Authority established in 2005. I regret to say that the previous government played games of hide-and-seek, of show-and-tell, of foot dragging and delay. As a direct result of these delays safety on offshore oil and gas rigs and construction projects over water was placed under pressure and we are now dealing with accidents and explosions.

Offshore facilities are inherently isolated and dangerous workplaces. There is a history of famous and not so famous tragedies on them, such as the Piper Alpha disaster in the United Kingdom and the BP Texas City disaster in 2005 which killed 15 people. The most recent event in Australia was at the Montara wellhead in the Timor Sea. It fortunately did not kill or injure anyone, but it did pollute the surrounding seas with oil. This incident is currently being investigated independently through the rigorous procedures established by this government and the relevant minister.

Under these bills, the government will retain fees raised under the Offshore Petroleum and Greenhouse Gas Storage (Registration Fees) Act 2006 to provide establishment funding for the national offshore petroleum regulator. These amendments make sure that NOPSA’s existing functions relating to the structural integrity or the soundness, strength and stability of offshore petroleum facilities also expressly cover wells and well related equipment. They also expressly give them the ability to examine non-occupational health and safety aspects of structural integrity. Certain structures, like wells and pipelines, do not usually have people near them, but when they do they must be safe. This bill clarifies NOPSA’s powers to ensure the safety of workers.

The election of the Rudd government has seen a return of the importance of debate about occupational health and safety in this country. The past Liberal government did not seem to be greatly interested in talking about health and safety. There was much done to soften regulation, to reduce the power of watchdogs and, most importantly, to take the voice of workers out of the safety debate. There was plenty of vague speech of OH&S culture and safety management, of management of acceptable risk and risk assessments of the sort of management humbug that has seen people hurt in the past at work. They did not talk of the practicalities of keeping people safe, of the burning need to keep that principle at the heart of every workplace. There was little discussion of the laws and standards and the punishments for workplaces that put their employees’ lives in danger.

One thing that was not discussed was the need to talk to workers about it. That was a no-go zone; that was a taboo. I recall very clearly their ideological opposition to unions, as typified by the mindless zealotry that was Work Choices. It meant that all too often they could not bring themselves to discuss safety with the people who dealt with hazards every day. As Dr Berger has written:

It is difficult to achieve good occupational health and safety standards in a workplace atmosphere bristling with denial and a sense of unfairness.

If you look at the record of the 12 years of the Howard government, why did they abandon the farmers? Why did they let dangerous chemicals, such as parathion-ethyl, a close relation of sarin nerve gas, continue to pollute our crops until the union banned it? They killed off Worksafe Australia and dispersed 100 fine researchers who would never again be gathered to do the work that they did so well as a critical mass before they were removed.

We are returning some of that capacity through Safe Work Australia, and after a decade of neglect we are trying to bring health and safety back—a decade after those opposite put the wrecking ball through the lot. We are working with the states to harmonise national health and safety laws which will place an unqualified obligation on employers to provide a safe workplace and to enshrine the power for workers to stop unsafe work, a power currently only available to 14½ per cent of the Australian workforce. We want to restore the requirement for employers to talk to employees about work related matters that affect their health and safety. This is common sense to me and it is common sense unless you still wear the Work Choices blinkers, as some opposite do. One thing this government is doing is listening to workers, because they are the ones who see the risks every day. The offshore workers, the ones I had the privilege of visiting and working with over 15 years, particularly those in Bass Strait, worked for 10 years to get NOPSA established. We are not blinded by ideology to the value of the years of learned experience in the workplaces and unions across Australia, to the people who heard the complaints and concerns of workers, who visited the sites and who tried to stop the injuries before they happened.

Whatever legislation we pass in this place and whatever good work is done by inspectors and regulators does not change the fact that safety in the workplace depends on us listening to workers. We need to ensure that every platform, every construction vessel and every pipe-laying barge has a strong OH&S committee and that each shift includes workers well versed in OH&S. They must be encouraged to report safety issues to management and to be included in discussions about safety. Risks taken for the sake of productivity should not be tolerated. We can and must do better. Zero harm is not a poster on a wall; it represents not just a desirable but a real and achievable outcome in the workplaces of this country.

The struggle for safer workplaces is one that will never end. We also need to act to ensure the gains made in the past and to improve safety in the future. I suggest that good health and safety offshore is often a struggle of memory against forgetting and of remembering the lessons learned and the lives lost. It should be a struggle against the slow spread of complacency and the temptation to take shortcuts. These bills are a small step towards improving the chances that workers in the offshore hydrocarbon and petroleum industries will end their careers alive, with their limbs intact and with the ability to enjoy their retirement.

But it would be remiss of me if I did not reiterate on the record that this bill, as with all safety legislation, has no relevance without effective, relevant and accurate inspections and very effective OH&S processes at the site. The former means that we need an experienced and well-supported inspectorate which must be encouraged to regularly inspect for OH&S standards as if their family were working there, not with an eye for not disrupting business. The latter observation about effective safety processes at site means that we must dispense with the blind faith in the regular nonsense that cultural change will suffice. We must dispense with the nonsense that can blind people to the fact that more and more risk is tolerated for the sake of productivity.

I have seen firsthand the aftermath of OH&S tragedy, where it is admitted with hindsight that plenty of shortcuts were taken by everybody but tolerated because of the various levels of denial. I have seen all too often the astonishment of the distressed manager. Again I am grateful for Dr Yossi Berger, from whom I will quote: ‘The astonished managers have the following or similar expressions of surprise after the tragedy: “I would never have thought”; “Not in my wildest dreams”; “That was totally unexpected”; “Who would’ve imagined?”; “I’d never have expected”; “I can’t imagine why anyone would do that”; “How could you possibly see this happening?”‘ These are all recorded instances after fatality or amputation.

Is it appropriate? Is it legitimate? Is it fair and natural to express astonishment at the death or maiming of workers. I suggest it is not. I think it is very important that the regulator, with its new areas in the new legislation, should recognise that we need to take careful note of the opinions and experiences of people working in the offshore industry. The presence of a board alone will not make workers safer. I suggest, for example, an examination of the age of the helicopter fleet currently bringing in and taking workers and material from platforms in the offshore industry. Is the helicopter fleet that serves the Australian offshore industry amongst the 22 or 25 offshore oil production fields around the world one of the oldest helicopter fleets in the world, and does this mean that we are heading for disasters that are not yet being acted upon and, indeed, may not likely be acted upon with these changes?

Finally, I also note for the new regulator the benefits of creating a small team of experienced workers or ex-workers—perhaps even the troublemakers—to promote the bad news, to act like OH&S ambassadors or bad-news officers all around all offshore facilities. Sharing information like that would be invaluable. In modern organisations it is always easier to get promoted when you pass on the good news. The question in health and safety, I have found, is what the bad news is that is not being passed up an organisation. In the petroleum and hydrocarbon industry, what is the bad news that is not being heard by the regulator or by the employers? I think the challenge is to promote bad news as opposed to just wanting to hear good news. With that, I commend the bill to the parliament.

Judi Moylan (Pearce, Liberal Party) Share this | Link to this | Hansard source

I have listened quite closely to the comments of the parliamentary secretary, the member for Maribyrnong, and I have to say I concur with the concerns that he has expressed about the importance of safe workplaces, especially in such dangerous and remote environments as exist in the oil and gas industry. Like the parliamentary secretary, I believe that there should be no compromise when it comes to the safety of individuals working in this environment, but neither the parliamentary secretary nor the minister in his second reading speech has made a case that would give rise to concern about a high accident rate off the coast of Western Australia. Indeed, the parliamentary secretary quoted major accidents abroad in Texas and in the North Sea. But that case has not been made and I would be very happy to find out more about the accident rate in Western Australia because of its offshore activities.

I digress somewhat. I think there are some more covert agendas going on here. Once, the ever-emotive constitutional lawyer, Greg Craven, observed:

Across the world, constitutions go down like South American currencies, producing mayhem and revolution …

Why am I talking about constitutions in a bill dealing with offshore petroleum regulations? Simple. These seemingly benign issues go to the core of Australia’s Federation.

Over the past few weeks we have observed what is becoming a trademark of the current government—the, ‘I’ll take that, thank you’ approach to federal-state relations. Mining royalties, health care and the school curriculum are all being pondered—or should I say ‘plundered’—for a federal takeover. Now this bill, the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2010 and the accompanying Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010, which is the one that I am perhaps speaking more to today, join the list.

What does the federal government want? From Western Australia alone it wants $15.3 million in 2010-11; $60 million over a four-year period. What will WA and the rest of the states get in return? Nothing. That is the situation, at least in the short term. That is because this money is going to be used for the federal government to fund a national offshore petroleum regulator, a regulator that has not yet been created, with no firm indication of when it will be created. The government says it will wait until mid-2012 to create the regulator—yet another layer of bureaucracy. Western Australia already has its own regulator. The West Australian government is understandably frustrated. As I indicated before, there are no firm plans to establish the regulator, but the federal government will take the money. In fact, it will be taken from July this year. The WA government submitted to the federal government a letter explaining that the loss of revenue will come at a time when Western Australia will be required to commit funding to infrastructure development for the Gorgon development, and Gorgon will be worth $64 billion over 30 years to this country and will employ 10,000 people at peak. Such a blatant tax grab by the federal government may impede important infrastructure projects in Western Australia. Quality infrastructure rationalises resource projects for the stakeholders, which in turn ensures maximum flow-on returns to both the people of WA and indeed all of the people of this great nation.

We should not forget the difficulty of providing infrastructure in a state as large as Western Australia. It is the world’s second largest subnational administrative division, covering a massive 2.6 million square kilometres. That is roughly the same size as Kazakhstan or five times the size of France, to get it into perspective. The West Australian government is undertaking massive infrastructure projects. Apart from Gorgon, another project is the Oakajee port and rail development. Oakajee is designed to open up WA’s midwest, supporting resource development in the area and ensuring long-term economic prosperity for Western Australia and the nation. The project will cost in excess of $4 billion. Twenty-five kilometres north of Geraldton—that is, 445 kilometres north of Perth—there will be a deepwater multiuse port eventually capable of servicing a number of vessels, including iron ore bulk carriers and dedicated berths for export and import of bulk materials and containers. Five hundred and fifty kilometres of heavy haulage railway will be built to fit into existing railways, and 2,300 hectares will be set aside for an industrial estate and processing facilities. Think then of the further infrastructure needs of the West Australian public, including roads to service these areas, airports, sewerage, electricity and accommodation for workers. With such massive commitments the West Australian government is understandably troubled by the Commonwealth holding money that would otherwise be distributed to the West Australian public, including to industry. But what will the federal government do with the money? Where is it going?

Clause 2 in the schedule of the miscellaneous measures bill simply repeals subparagraph 76 of the Offshore Petroleum and Greenhouse Gas Storage Act, removing registration fees from the list of fees that the federal government normally would collect and then pay out to the states the following month. So the federal government will collect the money but not give it back. No mention is made, however, that the money will go to infrastructure projects. Approximately two-thirds of Australia’s offshore oil and gas resources and 80 per cent of offshore titles are based off the coast of Western Australia. Yet no guarantee is given that any money will flow back to Western Australia. On the contrary, we have just seen the Prime Minister announce—and I will talk about that a little later should time permit—the carve-up of the GST, and Western Australia has been the loser in that carve-up.

The Australian Petroleum Production and Exploration Association have argued that the industry should not pay any registration fees as it is essentially stamp duty which should have been abolished with the introduction of the GST. While I understand their advocacy for their industry, the massive infrastructure investment required in Western Australia overshadows and outweighs the fees collected. Of course it could be argued that private industry may invest that money back into resource projects, but we have seen the problems of privately controlled infrastructure already in the north of Western Australia. What will the federal government do with this money? We do not know. The federal government does not seem to worry. It cherrypicks state revenue and responsibilities, removing local decision making to the faraway corridors of Canberra. Pru Goward, the New South Wales shadow minister for community services, wrote in the Australian this month:

The home-insulation tragedy demonstrates once more the dangers of federal governments believing their own rhetoric and thinking that they can run the country.

She continues, noting:

… the further government are from services, the worse they are at delivering. There is nothing like immediate and local accountability to keep public administration on its toes.

I say hear, hear to that. Pru is worried about how the federal government, just two hours drive down the road from her, can manage to do what is best. Madam Deputy Speaker, I am sure you can imagine how people in Perth, five days drive away, feel.

Some people wonder what all the fuss is about. But each time the federal government takes responsibilities away, it is chipping away at the foundations of Australia’s federal system of governance. As an example, Greg Craven points to ‘the usefully rich West Australians’, arguing:

With their small population, they would have little say over their own circumstances in a unitary Australia.

Western Australians already feel this is true. For instance, the recent changes to the GST returns I just alluded to mean that for every dollar paid in GST in WA, only 68c will be returned. But New South Wales will get a return of 95c, and Victoria will get 93c. People in WA feel that the state is being plundered.

Premier Colin Barnett—responding to the recent federal carve-up of the GST, where there were large increases to the revenue of other states, whilst the revenue for WA contracted—put it bluntly when he said:

This country depends on WA for the future growth of the whole nation ... It’s not good for this state but it’s not good for Australia. This is slowing down the growth part of our economy.

We all know that resources are, and will continue to be, the fuel for Australia’s economic growth. We also know that they are finite. Ensuring the economic potential is maximised will require much cooperation between the federal government and the states. I stress that cooperation, not compulsion, is the key. If there is disagreement, the Prime Minister needs to communicate more effectively with the state governments, as he promised to do before the 2007 election, and we see little commitment to that.

This legislation is a case in point. It is true that the federal government consulted the Western Australian government on this legislation. However, WA was given just one week to comment on the loss of $60 million over a four-year period. Where is the fairness in that? Where is the cooperative spirit so often spoken about by the Prime Minister?

Bill Tinapple, the Executive Director of the Petroleum and Environment Division of the Western Australian Department of Mines and Petroleum, even made that point in his letter to the government. Writing on the proposed tax grab, he stressed:

I do not believe that to unilaterally impose this amendment is in the spirit of cooperative federalism publicly embraced by the Federal Government.

Federalism is not perfect—I acknowledge that; it is like democracy in that sense—but it has served us well. Lord Acton, the 19th century British historian and politician reasoned:

The true natural check on absolute democracy is the federal system, which limits the central government by the powers reserved, and the state governments by the powers they have ceded.

Balance is the key. Increasingly, however, the balance of power is going to the federal government.

Michelle Grattan, in her piece ‘Federalism turns on financial carrots and Canberra’s big stick’ quotes AJ Brown, a professor of public law at Griffith University who runs a federalism project. Professor Brown remarks that ‘the debate we are not having is what should be devolved, how we are going to get more diversity.’ Professor Brown is correct. Where is the debate about diversity? Have we forgotten that our Federation was established to reflect the vast diversity of this enormous country? Why is it always thought that being the same is good? Where is the recognition that the states and their administrations are competent?

The wonderful thing about our democratic system of governance is that if the people do not like the way their specific jurisdiction is governed they will sack the incumbents. The state governments go to the polls every four years and the public, the voters, get to have the ultimate say. If the state governments are not administering the affairs of the states fairly and in a proper manner, they lose government. That is the ultimate sanction that the public has a right to impose. If the people are unhappy with the way their state is administered, they can express it at the polls. The question ‘Can Canberra do it better?’ does not always need to be asked, but increasingly it is.

There is nothing that we have done in this place in terms of administering programs out in the communities that demonstrates that we are any better at it. In fact, I hasten to say that the insulation program can demonstrate that we were much worse than we should have been, and that is costing this nation millions of dollars now to rectify. There is a perception that the federal government is the ‘better’ government. With more money, resources and national reach at its disposal, it can appear that the federal government is better equipped to handle significant issues facing Australians. The reality was proven, as I said, by the insulation scandal. The federal government cannot always manage programs effectively, and the cost to the nation can be very high.

The tragedy of the insulation program shows us that centralising more power in Canberra should not be the default position. If there are problems with federal-state cooperation, work at it—do not just ditch it; do not just seize power; do not just deny states the revenue for them to be able to govern effectively. We are seeing this in the health debate. It is like shifting the chairs on the deck of the Titanic while it is sinking. This is about inadequate revenue to the states to run the health system effectively. I do not believe that the federal government are going to be able to make any difference by just grabbing the money back off the states and then reallocating it to suit their priorities. That is not necessarily going to deliver better health care to Australians. But I digress. I just think that we should give the state governments more than one week to comment on proposals that have such an impact on them. It is not a good situation. There is continual talk of cooperative federalism, but I am afraid the rhetoric does not match the actions of the government in this respect.

The Western Australian government has raised concerns with this legislation and with the national offshore petroleum regulator that this fee grab is supposed to fund. These concerns are not insurmountable. More consultation is required. The views of the Western Australian government should be heard and should be taken notice of. Listen to the states. Respect the framework of the Constitution. Realise that the solutions do not always lie in Canberra. There is a reason that we do not have the mayhem and revolution described by Greg Craven, which I quoted at the beginning of this speech: our Constitution is well drafted and provides the balance that Lord Acton describes. That balance should not be so whimsically and carelessly upset.

There have been mining royalties, health care and the school curriculum, and now there is this blatant tax grab. What are the states getting in return? From this legislation, Western Australia are not getting anything for their money—certainly not at the moment. The federal government, in the minister’s second reading speech, indicated that there will be a delay in the appointment and establishment of a regulator. So why start plundering the funds that are currently going to the state government of Western Australia in July this year when there is no intention of doing anything about a regulator until some time in 2012? I think the public have a right to be cynical about these kinds of moves by this government. I urge the federal government to properly consult with the Western Australian government, to listen to their concerns and to find a solution that is agreeable to all.

I know that under the leadership of Colin Barnett, the Premier of Western Australia, a lot of progress was made early on in this. I know that there has been cooperation between the state of Western Australia and the Australian government on establishing the Oakajee port and a number of other infrastructure projects. But I think we have seen in the last year a major breakdown in proper communications with the states and this blatant grab for power and whatever money can be extracted. One has to question how this money might be distributed in the future, certainly given that Western Australia is the loser in the recent re-carve-up of the goods and services tax.

Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to lend my support to the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Miscellaneous Measures) Bill 2010 and the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2010. The fact is that, with 80 per cent of Australia’s electricity generated from coal, no serious response to climate change can ignore the need to clean up coal and our coal fired industries. As I, and most people on this side of the chamber, have said in this House before, we as legislators need to ensure that we have the regulatory environment that encourages the commercialisation of technologies that will play a part in our overall energy needs for the future.

Central to that is carbon capture and storage, geosequestration—the ability to strip carbon from coal fired power stations and inject that into the ground. That is going to be a central theme if we are going to be serious about cleaning up our industry and meeting our power production needs as they climb and also if we are going to be serious about encouraging renewable energy into this power mix. Carbon capture and storage is essential for the long-term sustainability of coal fired power electricity generation and to realise the potential of new industries. I know the Minister for Resources and Energy, who is at the table, has been very passionate about coal-to-liquid technology, which would improve Australia’s liquid transportation fuels security.

The coal industry is highly significant not only in relation to Australia’s economic prosperity but also in relation to the world’s current and forecasted energy needs. As I stated a little earlier, coal currently provides 80 per cent of Australia’s electricity generation capacity. But, in terms of the world’s needs, it provides something like 40 per cent. So coal is not something that is going to disappear. Therefore, we need to concentrate on those technologies that can ameliorate the effects of emissions. One that is central to that is carbon capture and storage. This legislation will do a number of things, but it will not cause people or industries to go out and start investing in carbon capture and storage. What it will do is start finessing some of the regulatory aspects that are going to be essential to improve this aspect of the industry.

Like the member for Maribyrnong, I too worked with the Australian Workers Union. Essentially, my responsibilities for a long period of time included the North West Shelf. I represented workers on various offshore facilities, ranging from the North West Shelf of Western Australia up to the Timor Sea. I know firsthand the challenges involved in the exploration industry and I have seen firsthand the dangers that are apparent in that style of industry. It is a highly competitive industry and it is quite remote from the mainland and certainly remote from the general reach of regulators. I support the call from the member for Maribyrnong regarding our need to work to ensure that safety on offshore facilities is paramount. One of the things that this legislation seeks to do is finesse the regime in terms of, for example, safety around wellheads for people such as derrickmen and tool pushers. This will be absolutely critical for their safety in the workplace.

I am talking about carbon capture and storage as a technique for assisting the amelioration of emissions. I have just come from a meeting of climate change scientists—Professor David Griggs from Monash University and Professor Ove Hoegh-Guldberg from the University of Queensland. They have also been talking to other members—and, as a matter of fact, they are lunching with other members at the moment. They wanted to talk to us about the science associated with climate change. Due to the regrettable issues associated with one chapter within the report of the Intergovernmental Panel on Climate Change and the hacked emails at the University of East Anglia—commonly referred to as ‘climategate’—these particular scientists are very keen to ensure that members of this House understand the reality of climate science and the fact that it is not being seriously contested amongst the scientists working in the field.

I know anyone can go and spend four years at a university and come away with a science degree—and I do not mean to demean people who have science degrees—but not everyone examines the changes that have occurred in the climate. One thing these scientists stressed at their recent meeting with me was that the global climate system has warmed significantly over the last century and continues to warm. They sought to bring the evidence forward that increased global temperatures mean that there is going to be lower atmosphere and surface temperatures, an increase in the heat and content of global oceans, and an increase in sea levels. They say these are now matters of fact in terms of the empirical evidence from the scientists in this field; that it is beyond contention.

Despite the issue of hacked emails—and, perhaps, scientists being overly bureaucratic—and despite the paragraph that appeared in the report of the Intergovernmental Panel on Climate Change, this should not deter people from thinking that the reality is that climate change is real. It should not be taken that there is some new-found science—and this applies to our colleagues on the other side of the House—that gives weight to the arguments of the climate change sceptics and deniers.

We are committed on this side of the House to getting on and doing the job that we were given at the last election—that is, moving to address climate change. I know we are experiencing very serious frustrations in the Senate at the moment. I know a policy change has occurred on the other side of the House that being a climate change denier now is no longer something that should be sneered at. It seems that they have a policy which has gone a long way to accommodate the views of the climate change deniers. But this is not a matter of politics. We must now rely on the best science we have available and use that science to project a methodology that will advance this country and allow us to play our role in terms of a world response to climate change.

This bill makes minor policy and technical changes which will, importantly, pave the way for the establishment of a National Offshore Petroleum Regulator, improve the ability of the National Offshore Petroleum Safety Authority to regulate the structural integrity of facilities, wells and well related equipment, and clarify the way a range of provisions regarding titleholders relate to situations where a title is held by two or more titleholders.

It is important to recognise that there will be no adverse effects on industry from this legislation. By way of background, all the money the Commonwealth receives from industry fees under the act and related acts is presently paid to the states and territories. In order to fund the establishment of the National Offshore Petroleum Regulator, the government intends to retain those fees paid under the registration fees act. However, as the minister stated in his second reading speech, he will review the fees collected under the act and associated acts to ensure that the states and territories will be able to continue carrying out their regulatory functions on behalf of the Commonwealth until such times as the regulator is established.

The adjustments in this legislation provide another step towards working out a greenhouse gas storage reality. This is something that needs to occur and must occur if we are serious about addressing the issues of climate change, having regard to the fact that we are reliant on carbon based energy sources. I commend this legislation to the House.

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

in reply—I welcome the opportunity to make some concluding remarks in this complex debate that is very much central to our future economic opportunities as a nation. In that context, I express my appreciation to the members for Groom, O’Connor, Forrest, Pearce, Maribyrnong, Page, Corangamite and Werriwa for their contributions. I want to respond to a few issues raised by the other side of the House.

I firstly go to the comments by the former resources minister, the member for Groom, opposing the removal of registration fees. I simply note that the Commonwealth first proposed the removal of such registration fees in 2002—when, I might say, the current shadow minister and Leader of the Opposition in the Senate was a key member of the government. Perhaps he should reread a little bit of recent history in terms of the previous government’s attitude to one of the key issues before the House today.

I also acknowledge the member for Groom’s comments regarding consultation. I simply say that the need for further consultation is understood by me, as the minister, because we are talking about the future regulation of one of Australia’s key future economic opportunities. For example, we currently export about $10 billion of LNG per year. By 2015-16 that could easily grow to $50 billion per year.

For those reasons, I will not be seeking to take further action on these bills until after the Senate Economics Legislation Committee has completed its inquiry into the legislation and until I have had an opportunity for further discussions with the Ministerial Council on Minerals and Petroleum Resources, which are scheduled for the end of May of this year. The reason I say that is because, in finalising the government’s view on the potential need for a national regulator, I also want to consider the context of the Montara commission report. I say that because in the last 18 months I think we have been very fortunate as a nation. We have actually had two major incidents in the petroleum industry—the Varanus incident and the recent Montara accident. I think we should properly inform ourselves of the potential ramifications and potential changes in regulatory regime required as a result of those accidents. For those reasons, I will proceed with caution, because I actually want to get it right. I also believe that is the desire of the former minister, the member for Groom, who is at the table, and of the current shadow minister, Senator Minchin, who is also a former minister.

Also during that period I will have further consultation with the relevant stakeholders not only at an industry peak council level through the Australian petroleum association but also with individual companies. I have indicated this to a meeting of members of the council of APPEA this morning. I also go to the comments by the members for O’Connor, Forrest and you, Madam Deputy Speaker Moylan. I simply observe for the information of the House that the fees we are talking about are fees generated by the transfer of property not in Western Australia but in Commonwealth waters and are therefore fees properly characterised as Commonwealth revenues. I think the Commonwealth is entitled to have regard for the proper use of its revenue for the purposes of the regulation of this industry. It is therefore important to note that the Commonwealth proposal with respect to the national offshore petroleum regulator contemplates all revenue raised under the offshore petroleum and greenhouse gas storage legislation being applied to the regulation of this industry with none going into general revenue—which I do not think is necessarily the current case with respect to the activities of state and territory governments. I simply advise the House that this is also what the industry expects: if revenue is collected it is actually used for the regulation of its industry, not for other purposes by state and territory governments.

I also refer to your comments, Madam Deputy Speaker Moylan, that the case for NOPSA has not been made out. I simply reiterate that if you have got any doubts about the proper consideration of these matters, you should pay close attention to the Varanus report—when it is finally released by the Western Australian minister for minerals and petroleum, as it is currently in his hands and we await its release in the Western Australia parliament—and the recent Montara incident. The public hearings by Commissioner Borthwick have now commenced and we will be paying close regard to those proceedings and the eventual report presented to the government by Commissioner Borthwick. In my opinion, the status quo is no longer an option.

These bills also appropriately amend the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act 2003. Importantly, they put in place a mechanism to fund the establishment of a new regime for regulating Australia’s offshore petroleum industry. For those reasons the government is acting on the independent recommendations of the Productivity Commission review of regulatory burden on the upstream petroleum—oil and gas—sector. Whilst there is to be a reference to the Senate economics committee, I think the committee should apprise itself of the existing body of work prepared by the Productivity Commission following a detailed process of public consultation and proper consideration of appropriate recommendations aimed at removing the regulatory burden on this key industry. Reducing the cost of regulatory activities and duplication is one of the desired objectives of not only the Productivity Commission but also the industry and the Commonwealth government and, I might say, most state and territory governments. Such a mechanism needs to be put in place, in my opinion, as soon as is practicable. There will therefore be, in establishing such a regulatory organisation, substantial start-up costs, but these new regulatory regimes must come into operation sooner rather than later.

As I indicated in my second reading speech, I do not expect to introduce legislation establishing a national offshore petroleum regulator until next year, as discussions regarding the exact arrangements are ongoing with the Ministerial Council on Mineral and Petroleum Resources. The ministerial council’s consideration of these matters cannot properly be finalised until ministers have had the opportunity to consider any relevant recommendations of the Montara Commission of Inquiry, which is due to report by the end of April. There is an opportunity now for discussions and consultations in the lead-up to that report, but in my opinion the report will very much finalise the government’s consideration of the need for this regulatory change.

For reasons consistent with this approach, the government will not press for the Senate to give consideration to this legislation until after the Ministerial Council on Mineral and Petroleum Resources has had the opportunity to further consider the Montara commission report at a meeting scheduled for the end of May. That is a commitment I have given to the ministerial council, which I detail publicly in accordance with the undertakings I have given them—volunteered by me as the Commonwealth minister.

I go to other small but important amendments, including: the strengthening of the National Offshore Petroleum Safety Authority’s functions and powers to more effectively enforce the safety regime; the streamlining and clarification of provisions in relation to multiple titleholders to benefit regulators and titleholders alike; improvements to enforcement and compliance aspects of the regulatory regime; and the clarification of titleholders’ occupational health and safety duties in relation to wells. While there is a difference between the government and opposition at the moment on some aspects of the bill, I understand that there is largely a strong sense of agreement between both sides of the House with respect to these matters.

In essence, these bills underscore the government’s commitment to the maintenance and continual improvement of a strong, effective framework for the regulation of offshore petroleum and greenhouse gas activities. I commend the bills to the House, but in doing so I reiterate the undertakings that I have given to the opposition, industry and state and territory ministers with respect to how I will proceed to finalise the government’s consideration of these complex matters.

Question put.