Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Before debate is resumed on the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011, I remind the House that it has been agreed that a general debate be allowed covering this bill, the Offshore Petroleum and Greenhouse Gas Storage (Registration Fees) Amendment Bill 2011, the Offshore Petroleum (Royalty) Amendment Bill 2011, the Offshore Res­ources Legislation Amendment (Personal Property Securities) Bill 2011 and the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measure No.2) Bill 2011.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011 and cognate bills. Firstly, the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011 amends the Offshore Petroleum and Greenhouse Gas Storage Act 2006 to estab­lish a national offshore regulator of safety, integrity and environmental management of petroleum and greenhouse gas storage activities in Commonwealth waters. A nat­ional offshore titles administrator will also be established through amendments to this bill to administer titles in Commonwealth waters.

This is the principal bill in a package of complementary amendment bills. This bill will largely implement the government response to the 2009 Productivity Comm­ission Review of Regulatory Burden on the Upstream Petroleum (Oil and Gas) Sector. The principal recommendation of the Productivity Commission to reduce unne­cessary burden on the industry was the establishment of a national offshore petrol­eum regulator.

The report of the Montara Commission of Inquiry of June 2010 recommended, amongst other things, that the proposal to establish a national offshore petroleum regulator should be pursued at a minimum. The Montara commission specifically recommended the establishment of a single, independent regul­atory body looking after safety as a primary objective in addition to well-integrated and environmental management. The 2008 Varanus Island pipeline explosion and the 2009 Montara oil and gas blowout high­lighted the need for improvement in the regulatory regime to be robust and seamless. The existing regulatory arrangements are complex and disjointed and involve incon­sistent administration, including regulatory duplication across governments. These inadequacies largely stem from the risk of regulatory gaps arising from the regulation of safety and integrity being separate from the regulation of environment and the day-to-day operations. Maintaining the current arrangements is not a credible option in light of the Productivity Commission review and the report of the Montara Commission of Inquiry.

It is interesting that, while the shadow spokesman on this issue gave 20 minutes of praise for this legislation, the recalcitrant nature of the Western Australian government has committed the opposition to opposing this legislation. When you look at the merits of what the legislation is trying to do, it is a great shame that the opposition have taken this position. But it should not come as any surprise to anyone here that the opposition when in any doubt go for the negative, go for the no. It is in their DNA in this parliament that they are still going to oppose in the end even legislation that they spend 20 minutes praising. It is a real indictment of where the opposition is in this parliament at the moment.

In 2009, the Productivity Commission identified a significant unnecessary regul­atory burden on the industry. The system is burdensome, slow and lacks consistency across jurisdictions. Currently, the Common­wealth government has responsibility for petroleum operations in offshore areas beyond three nautical miles; however, the day-to-day regulation is undertaken by the designated authority in each state and the Northern Territory. The system requires seven separate designated authority regulat­ors for Commonwealth waters around Australia, resulting in inefficiency in regulation. With the reforms contained in this package of legislative amendments, the government is replacing the seven designated authorities with an integrated regulatory system, promoting consistency and efficiency across Commonwealth waters.

The administration of titles will be centralised in the new National Offshore Petroleum Titles Administrator, which will replace the designated authority system currently in place for Commonwealth waters. However, the joint authority, which compr­ises the Commonwealth minister and the relevant state or Northern Territory minister, will be retained as the decision maker for key petroleum title decisions. Retaining the joint authorities for petroleum titles ensures that each state and the Northern Territory continue to have a role in decision making on key petroleum projects in Commonwealth waters that could impact the individual state or territory. NOPTA will make recomm­endations to the joint authorities on key title decisions as well as administer titles and collect data relating to petroleum and greenhouse gas storage activities in Com­monwealth waters. As is currently the case, the view of the responsible Commonwealth minister will prevail in the event of a disagreement. The Commonwealth minister will also remain the decision maker for greenhouse gas storage titles. States and the Northern Territory will have an option to confer their administrative powers in their coastal waters on NOPTA.

The existing National Offshore Petroleum Safety Authority's functions are to be increased to complement their expanded responsibility for a well-integrated regulation which this parliament passed last year. A single national offshore petroleum regulator will ensure only one agency regulates the safety of Australia's offshore petroleum workers and the environment, from the exploration through to the decommissioning. Safety, environment protection and day-to-day operational consents are all concerned with integrity and it is essential that they be regulated in an integrated manner. The expanded authority will be known as the National Offshore Petroleum Safety and Environmental Management Authority. In developing these reforms the Australian government has undertaken significant stakeholder consultation over the last 15 months with the states and the Northern Territory as well as with NOPSA and the industry. As is currently the case with NOPSA, both NOPTA and NOPSEMA will be based in Perth, which is convenient for the oil and gas industry, and will operate on a full cost-recovery basis. This approach is consistent with the Australian government's policy on cost recovery and will help ensure minimal cost and regulatory burdens to the industry. These cost-recovery arrangements will be reviewed regularly in consultation with the industry. The establishment costs of NOPTA and NOPSEMA will also be cost recovered through the existing registration fees paid by the industry on transfers and dealings of offshore titles. Once the estab­lishment costs of NOPSEMA and NOPTA are fully recovered—currently expected in 2013—these fees will be scrapped, represen­ting a significant cost saving for the industry.

Additionally, these reforms also deliver on the government's commitment to the Council of Australian Governments reform priorities. COAG's National Partnership Agreement to Deliver a Seamless National Economy incl­udes milestones to implement the agreed Productivity Commission recommendations and remove unnecessary burdens on indust­ry.

The offshore oil and gas industry is vital to sustaining our country's economic prosperity and security. Passing this bill, together with the other complementary bills, will help deliver on the government's com­mitment to ensuring the Australian com­munity's confidence in the regulation of the offshore petroleum industry by ensuring operating standards are the best and safest in the world. The reforms put forward through these bills will help streamline Australia's regulatory system, ensuring Australia's cont­inuing competitive advantage in securing the necessary investment in Australia's offshore oil and gas industry to develop our resources for all Australians.

Let me go through the main points of the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011. This bill amends the Offshore Petroleum and Greenhouse Gas Storage Act 2006 to establish a single national regulator for offshore safety, well integrity and environmental approvals and a national titles administrator for offshore petroleum, mining and greenhouse gas storage activities. This model reflects the recommendations of the 2009 Productivity Commission review and the Montara Commission of Inquiry's recommendations, as well as 18 months of consultation with industry, states and the Northern Territory.

Safety, environmental protection and day-to-day operational consents are all concerned with integrity and it is essential that they be regulated in an integrated manner. The existing National Offshore Petroleum Safety Authority's functions are to be increased to complement its expanded responsibility for well integrity regulation, which this parl­iament passed last year. A single national offshore petroleum regulator will ensure only one agency regulates the safety of Australia's offshore petroleum workers and the environ­ment, from exploration through to decommissioning. To this end the existing independent National Offshore Petroleum Safety Authority will be expanded to become the National Offshore Petroleum Safety and Environmental Management Authority.

The bill will also establish a single national body for the administration of title in Commonwealth waters to be known as the National Offshore Petroleum Titles Adm­inistrator. Under the new system the administration of titles will be centralised in the new National Offshore Petroleum Titles Administrator, replacing the designated authority system currently in place and promoting consistency and efficiency across Commonwealth waters. Retaining the joint authorities for petroleum titles ensures that the states and the Northern Territory continue to have a role in decision making. As is currently the case, the responsible Commonwealth minister's view would prevail in the event of a disagreement.

Additionally, these reforms also deliver on the government's commitment to the Council of Australian Governments reform priorities. COAG's National Partnership Agreement to Deliver a Seamless National Economy incl­udes these milestones. The offshore oil and gas industry is vital and this legislation makes sure that we continue to provide support and improve the regulations that are there so that it can continue to be a powerhouse for the Australian economy.

These are very important pieces of legislation. It is a great shame that we have the opposition agreeing in principle to what is contained in the regulations and going to great lengths to point out their role in the consultation, but refusing to agree to the bill because of timing issues with regard to Western Australia. It is typical of those opposite that, wherever they can grasp a negative out of a positive, they will do so. It is very disappointing that, with what should have been a bipartisan position in relation to making sure this industry operates better, we again have the opposition going to their usual negative position. It is very disappointing in relation to this industry. I commend these bills to the House.

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

I rise today to speak on the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011, the Offshore Petroleum and Greenhouse Gas Storage (Registration Fees) Amendment Bill 2011, the Offshore Petroleum (Royalty) Amend­ment Bill 2011, the Offshore Resources Legislation Amendment (Personal Property Securities) Bill 2011 and the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No.2) Bill 2011. The national regulator bill is the principal bill and the remaining bills are consequential.

At the outset, can I say that as a coalition we do support the effective regulation of the gas and oil industry, but as a Western Australian I oppose key elements of this bill. One of the main reasons is that there is no agreement with the Western Australian government. We have just heard the member for Dobell take the shadow minister, the member for Groom, and also the Western Australia government to task for not agreeing with this bill. If he had listened closely to the shadow minister, he would have understood that we do support the bill in principle but the fact is that it was not supposed to be brought forward until there was an agreement with all the state governments. That agreement has not been achieved. I see the member for Dobell has left the chamber and has not bothered to hear what the actual facts are. The fact is that the government has not reached an agreement with the state governments. He should understand that and not try to take the opposition to task for agreeing with the principle of the bill but not actually agreeing with it because there is no agreement with the state governments.

We need to make sure that incidents like the Varanus Island gas explosion and the recent oil leak off the coast of Western Australia do not happen again. Never again do we want to see our environment and our supply of energy compromised in Western Australia. We in the coalition do recognise the thousands of people, many in my own electorate of Swan, who are employed in this sector of the economy. As such, we understand the scale and importance of Australia's oil and gas industry and are fully appreciative that it must be able to continue to operate in a safe and sustainable way. On reading the explanatory memorandum to these bills it seems that a major reason for the federal government's introducing this legislation is to respond to the Varanus Island gas pipeline explosion in 2008 and the Montara wellhead platform incident in 2009. The government's solution is a takeover of key regulatory institutions from the states. It is doing this by creating two new regulatory bodies. Currently, and consistent with the Offshore Constitutional Settlement, each of the states and the Northern Territory share the administration of the Commonwealth offshore petroleum legislation through two institutions.

The joint authorities comprise the relevant federal and state ministers and make decisions about granting, imposing condit­ions on and cancelling petroleum titles. In addition, they make decisions about resource management and resource security. The designated authorities are state and territory ministers who perform day-to-day regulatory and administrative duties. In addition, NOPSA regulates occupational health and safety.

Under the proposed changes in the legislation the new bodies replace the designated authorities, and the joint authorities are retained. These new bodies are the National Offshore Petroleum Safety and Environmental Management Authority and the National Offshore Petroleum Titles Administrator. These are designed to administer and regulate petroleum and greenhouse gas storage operations in Commonwealth waters in the Australian offshore area.

The coalition certainly understands the need for oversight. As the member for Groom said earlier, the oil leak off the coast of Western Australia has forever changed the way the oil and gas industry is perceived. This is an opportunity to make sure that oil and gas projects in Australian waters meet the highest international standards and can be carried out safely and successfully. However, it does not necessarily follow that the Commonwealth will be better at doing this than the states. I note that a key WA government witness to the Senate Economics Legislation Committee inquiry into this legislation said that one of the major reasons for the Varanus Island gas explosion was the subcontracting of the supervisory role to the Commonwealth agency NOPSA. In fact, many reports around the world suggest that the more regional the supervision and regulation the better. So we need to carefully scrutinise this Commonwealth takeover, and that is what I intend to do in my speech this evening.

As I have touched on briefly already, this legislation does have significant ramifi­cations for Western Australia. In making my response to this issue I want to raise some of the many concerns that have been raised by Western Australian senators and the Western Australian government. These concerns led to these bills being referred to a Senate inquiry. I know that the WA members of the Senate have been particularly vocal about these bills, and I intend to add my voice to their number today. In doing this I commend Senator Eggleston for his excellent work in his role on the Economics Legislation. Committee. Like senators in the other place, I am of the opinion that the government needs to concentrate on finalising its negotiations with the WA government before passing this legislation. Many people cannot understand why the government has brought on this debate without finalising these negotiations. However, I am sure that the government speakers will enlighten us in their contributions.

Western Australia is, of course, the most active petroleum jurisdiction within Australia. Roughly 60 per cent of offshore activity is conducted off the coast of Western Australia in Commonwealth waters. Any legislation that deals with these matters is of significance to the state of WA. Concerns have been expressed by the WA government that on the subject of licences there will be no requirement for the Commonwealth to advise WA regarding the location of licences. It is important that the state continues to have a say in these matters, for all sorts of reasons, including making sure that appropriate consideration is given to the environment. The federal government does not have a good history of ensuring that adequate protection is given to the environment. The recent Senate inquiry into changes to the Perth flight paths highlighted this, with the former Minister for Environment Protection, Heritage and the Arts, the member for Kingsford Smith, failing to implement any EPA report, as was his responsibility. This was just another abject failure by Minister Garrett.

Also included in the Senate inquiry report are concerns from the WA government regarding the potential removal from its administration of royalty amendments for the North West Shelf project. Through the supplanting of the designated authority and the allocation of these powers to NOPTA or NOPSEMA, the WA government may not have any estimates of royalty revenues until payments are actually received from the Commonwealth. Without this, it will be difficult for the WA government to plan for the infrastructure required for our mining areas.

There has been widespread commentary about the WA government's recent decision to increase mining royalties, and I have spoken in this parliament about this matter previously. It is easy to see why Western Australia is so concerned about royalties when it is asked to comment on legislation that will move the following responsibilities from the Department of Mines and Petroleum to NOPTA: involvement in setting royalty rates, negotiations of wellhead royalty schedules, determination of the wellhead point and the value of petroleum at the wellhead, assessment or determination of the quantity of petroleum recovered, assessment and audit of the monthly royalties payable and exemption from royalties.

I also raise the potential constitutional issues referred to in the Senate inquiry. Coalition senators are particularly concerned that the 1979 offshore constitutional settle­ment, which was an agreement between the Commonwealth and the states on taking a cooperative approach to administering the offshore area, is being overridden by removing the role of the designated authority. These are all significant issues. Importantly, these are all issues that are subject to negotiation between the Comm­onwealth and the Western Australian government. It therefore seems strange that the government is today reintroducing this legislation into the House without these negotiations having been completed. This legislation is important to Western Australia. The west has 60 per cent of titles in Commonwealth waters. The royalty paym­ents component applies solely to Western Australia. It is therefore incumbent on the government to get this legislation right.

In conclusion, the coalition supports, and has always supported, the effective regu­lation of offshore oil and gas. However, the government seems to be running away from negotiating with the WA government and running away from addressing these decisions. Thus the coalition looks forward to seeing the final, mutually-agreed-to result that will ensure that the industry can operate and grow with confidence. I look forward to the government members' contributions to ensure that there will be a mutually acceptable agreement between the federal government and the WA government.

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011 and cognate bills and their swift passage through this parliament. Essentially, these bills provide for the establishment of a national regulator for petroleum, gas and greenhouse gas storage activities in Commonwealth waters. This is a significant reform and one that implements recommendations made by both the Productivity Commission and the Commission of Inquiry into the Montara blowout in the Timor Sea in 2009.

The past few years have been a time of massive growth in offshore oil and gas investment and activity. We all know that what we have seen so far is just the start of a new era for the industry. Natural gas is set to take its place as one of Australia's key export commodities, underpinning national growth and economic prosperity. It is also expected to play a much greater role in domestic energy supply as a less carbon intensive alternative to traditional coal-fired power generation.

The past few years have also been a time of review and reform of the regulatory framework that applies to the offshore gas and petroleum industries. That process of review and reform was initiated with the Australian Petroleum Production and Exploration Association's strategic leaders report Platform for prosperity, which in 2007 called for a Productivity Commission review of the regulatory regime applying to the industry. The Productivity Commission car­ried out its review in 2008 and reported in 2009. The focus of that review was to investigate whether overlapping and incon­sistent Commonwealth and state regulation was impeding economic activity within the sector and how the regulatory regime could be made more efficient and effective.

The commission's principal recomm­endation to reduce the regulatory burdens on the sector was the establishment of a national offshore regulator. Since the Productivity Commission began its work in 2008, Australia and the world have seen what can happen if this industry is not regulated with the highest standards of rigour and oversight. First, the Varanus Island explosion off Western Australia in 2008, then, a year later, the Montara blow-out and, most catastr­ophically, BP's Deepwater Horizon spill in the Gulf of Mexico all carried grave lessons for our Australian offshore oil and gas producers and regulators. Even though the Productivity Commission report was handed to the government back in 2009, it was clear that these events raised new questions and that implementation of the Productivity Commission's recommendations should be deferred until the Montara inquiry reported as well. Those lessons have informed the government's response to the recomme­ndations coming out of both the Productivity Commission and the Montara inquiry. They are reflected in these bills, which go to the efficiency of the regulatory regime but also to its strength and effectiveness in the areas of safety and environmental protection.

At the heart of these bills is the creation of a national regulator of the offshore petroleum, gas and greenhouse gas activities in Commonwealth waters through the establishment of two new bodies, one with regulatory responsibilities and one with administrative responsibilities. The first, the National Offshore Petroleum Safety and Environmental Management Authority, NOPSEMA, will be a single independent national regulator with responsibility for regulating safety, well integrity, environm­ental management and day-to-day operat­ions. This will be done by expanding the functions currently performed by NOPSA, the National Offshore Petroleum Safety Authority.

In addition, it is proposed that the new National Offshore Petroleum Titles Admin­istrator, NOPTA, will replace the current system of designated authorities—essentially the state and Northern Territory ministers and their respective departments—with a single national titles administrator. NOPTA will be part of the Department of Resources, Energy and Tourism at the Commonwealth level.

The arguments in favour of these changes could not be stronger. There is no doubt that the current system of regulation is complex and disjointed. While the Commonwealth government has legislative responsibility for petroleum operations in offshore areas beyond three nautical miles from the territorial sea baseline, the Commonwealth and the relevant state or territory jointly administer the activities in Commonwealth waters adjacent to that state or territory. Some of those functions, such as the administration of titles, are carried out by the joint authority, which is the responsible Commonwealth minister making decisions together with the relevant state or territory minister. In practice, however, the actual day-to-day and environmental regulation is undertaken by the designated authority, which is essentially the minister and the minister's department in each state and the Northern Territory. In effect, this means that there are seven separate designated authority regulators for the Commonwealth waters around Australia, all applying their own standards of scrutiny, their own different interpretations on the regulations, and their different levels of resources and expertise. As well, since 2005, the National Offshore Petroleum Safety Authority has had responsibility for safety and, more recently, well integrity.

Not surprisingly, the Productivity Comm­ission review found evidence of duplication, overlap and inconsistent administration in the current regime that imposed significant unnecessary burdens on the oil and gas sector and threatened Australia's compet­itiveness. The Montara Commission of Inquiry was a stark reminder that there is a lot more than just efficiency at stake if there are any weak links in the regulatory regime. That inquiry was instituted by the minister following the uncontrolled release of oil and gas from the Montara platform in the Timor Sea, for 10 weeks from 21 August 2009, and found major deficiencies on the part of both the operator, PTTEP Australasia, and the primary regulator, the Northern Territory Department of Resources.

The Montara experience highlighted the problems arising from the regulatory gaps between regulation of safety and regulation of integrity, environment and day-to-day operations. In that case NOPSA had responsibility for the safety of the Montara operation but no powers or responsibility for well integrity and day-to-day management, which logically have a crucial bearing on the overall safety of the operation.

The unacceptably lax way in which the Northern Territory Department of Resources carried out its role on behalf of the Commonwealth as the designated authority meant that the Commonwealth agency, NOPSA, could not properly discharge its obligations to do with safety. Consequently, the commission of inquiry recommended a single independent regulatory body be created to look after safety as a primary objective, well integrity and environmental approvals. The Minister for Resources and Energy summed it up in his second reading speech when he said that maintaining the current arrangements is not a credible option in light of these two reviews. The House of Representatives Standing Committee on Agriculture, Resources, Fisheries and Forestry, in its report on the bills, identified the objectives of the reforms they contain as being consistent with the findings of those reviews. The objectives are:

Those objectives will be met by the establishment of the two new bodies I referred to earlier. NOPSA will become NOPSEMA, the National Offshore Petrol­eum Safety and Environmental Management Authority, reflecting its expanded role. NOPSA had already been given expanded responsibilities for well integrity in amendments passed by parliament last year. These changes go even further to include responsibility for environmental manage­ment and day-to-day operational consents. This achieves the aim of fully integrating, within one agency, the safety of Australia's offshore petroleum and gas workers and the environment from exploration to decomm­issioning. It recognises that occupational health and safety, structural integrity of facilities, day-to-day operational matters and environmental management are all related and require an integrated approach to minimise risk and maximise overall safety.

There is an overlap in the skills required by the regulator to properly supervise all these aspects of offshore activities, so it makes sense to have all functions located in the one agency and complementing each other so that a high standard of assessment and scrutiny can be assured. As is the case under the current system, NOPSEMA will only have authority over activities in Commonwealth waters. However, states and territories will have the option of conferring their equivalent regulatory powers and functions to NOPSEMA in respect of oil and gas operations in state and territory waters if they choose to do so.

The establishment of the national titles administrator, NOPTA, deals with the issues of efficiency and duplication identified by the Productivity Commission. As I outlined earlier, the current system relies on the designated authority, which is effectively the relevant state or territory department, to administer the petroleum titles within the Commonwealth waters off the shores of that state or territory. To replace the current system of seven designated authorities, the single administrator, NOPTA, will be situated within the Commonwealth Depart­ment of Resources, Energy and Tourism and will carry out the functions of data collection, analysis, titles approval and transfers, and the provision of information, advice and recommendations about all petroleum titles to members of the joint authorities and the responsible Common­wealth minister. This will centralise the administration of all titles and promote efficiency and consistency across operations in all Commonwealth waters.

The bills retain the joint authority as the decision maker on key title decisions. That means that the relevant state or territory minister, in concert with the federal minister, makes the major decisions on things like the granting of titles, the imposition of conditions and the cancelling of titles. This ensures that the states and the Northern Territory still have an important role in making decisions on gas and oil projects that will affect their state, although, as is curre­ntly the case under the offshore petroleum legislation, in the event that agreement cannot be reached the Commonwealth minister will prevail.

A representative from the Department of Resources, Energy and Tourism gave evid­ence to the House of Representatives Standing Committee on Agriculture, Resour­ces, Fisheries and Forestry illustrating how the creation of NOPTA will be an improvement over the current situation. She said:

The titles administrator will be able to source that advice from wherever they wish to, and obviously all relevant and available sources of advice will be used, including any information and advice that can be provided by the state department. But the advice will go to the joint authority as a single set of advice from the titles administrator. That will increase efficiency over the current situation, where it tends to be the case that the state minister gets his technical advice from his department and the Commonwealth minister gets his technical advice from Geoscience Australia, and sometimes there is toing and froing between the two departments about the quality of each other's advice and that kind of thing. That will all now be dealt with in an efficient manner by the titles administrator and there will be one set of technical advice that goes up.

This is consistent with the Victorian government's submission to the Productivity Commission, which estimated that a single national offshore regulator could reduce the time taken for approving a production licence by about 50 per cent, from 12 months down to six months. When you are talking about projects on the scale of these projects in the oil and gas industry, six months makes a big difference.

One other important element of these bills is the question of cost recovery for both the establishment of the new bodies and their ongoing operation. The government has approached this on the principle that it is the industry that benefits from the activities of NOPSEMA and NOPTA, so the costs of these bodies should fall to industry rather than to general taxpayers. To cover the set-up costs, these bills authorise the Commonwealth to retain registration fees from companies in the sector for a minimum of 24 months, or until the lesser amount of $30.6 million or the actual establishment costs have been collected. In addition, from 1 January 2012, NOPSEMA's and NOPTA's fees and charges will be reset to ensure they operate on a full cost recovery basis.

The government is committed to greater transparency for the industry when it comes to the fees they are required to pay and the expenditure of that money by the regulators. This has not always been the practice for the designated authorities, leading to the situation where revenue from fees often significantly exceeded the designated authority's administration costs. We want these reforms to lead to cost savings for the industry, and transparency in the fee structure will help to achieve that.

The offshore oil and gas industry is a valuable industry for Australia, employing thousands of people and contributing to our national wealth. But it is also a dangerous industry and one that operates in environ­mentally sensitive and unique areas off our coastline. Since the Montara blow-out, we cannot say that we were not warned. We know what can happen if offshore operators are not held to the very highest safety and environmental standards by regulators who have the expertise, the resources and the authority to supervise this industry on our behalf. These bills put the recommendations of the Montara Commission of Inquiry into place and, in doing so, make our regulatory framework more robust and in line with world's best practice for this industry. I commend the bills to the House.

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

I rise to speak on the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011 and related bills. I am really disappointed that the minister has brought this bill into the House before he reached agreement with the Western Australian government, when Western Australia is clearly the state that will be most affected by changes to petroleum and gas legislation. As Mr Tinapple, the Executive Director, Petroleum, of the Western Australian Department of Mines and Petroleum, stated during the Senate Economics Legislation Committee's hearing:

Western Australia has about two-thirds to three-quarters of the offshore activity in Australia. The exploration amounts and the production of gas and liquid petroleum in Western Australia make the state the largest jurisdiction by far

He went on to comment that the WA Department of Mines and Petroleum had been negotiating on how WA could work with the Commonwealth and was near to reaching an agreement on co-locating the regulators. But this has not happened yet. Mr Tinapple also expressed his disappointment that this legislation was introduced without any consultation with his department. This is unfortunately something that the Labor government seems to do on a regular basis. The coalition's dissenting report on this legislation also identified the significant impact this would have on WA. The report said:

Western Australia is the most active petroleum jurisdiction in Australia with an estimated 60 per cent of offshore activity being conducted off its coast. There are currently five LNG developments with onshore LNG processing plants at various stages of development, emphasising the fact that WA stands to be the most affected by the proposed legislation …

Yet the legislation is before us well before an agreement with the Western Australian state government. The dissenting report also mentions the concerns of the Western Aust­ralian government that under this legislation there will be no requirement for the Commonwealth to advise the WA govern­ment about the location of licences over the WA coast. The federal government's announcement of three new offshore explor­ation permits awarded in Commonwealth waters off Western Australia has further fuelled the state government's opposition to the proposal to introduce a national offshore regulator.

Western Australian Minister for Mines and Petroleum Norman Moore said the growing interest in exploration and develop­ment of the petroleum industry off the coast of Western Australia highlighted the need for the administration and regulation of petrol­eum titles to remain with the state government. The WA state government has formally requested the federal Minister for Resources and Energy, Martin Ferguson, to reconsider his national offshore petroleum regulator model to reform offshore petroleum regulation in Australia. In January this year Mr Moore said:

WA's proposal for the introduction of a National Compliance Auditor would achieve improved regulation and maintain all key parts of the current regulatory system.

Mr Moore went on:

This option would not only benefit WA, the largest jurisdiction for offshore petroleum activity, but strengthen the oversight role of the Federal Government.

Such a model would ensure that any delays, gaps or duplication in regulation processes were quickly identified and resolved with appropriate resources, while also maintaining the advantage of the current extensive local knowledge, workable and timely processes, and the existing skills base, without disruption.

This option recognises the need to boost safety standards in the offshore petroleum industry and the regulatory role of Government, and supports the significant reform of State and Commonwealth areas that is already taking place in Western Australia by the Department of Mines and Petroleum.

The minister criticised the recommendation by the Productivity Commission in its report on the regulation of upstream petroleum activities to create a national offshore regulator, saying it was flawed. He said:

The proposed national regulator is unlikely to provide any benefit to Australia, Western Australia or the offshore petroleum sector, even in the long term, as it will not solve the complex, cross jurisdictional boundary issues or the complexity relating to environmental and native title issues.

Mr Moore said the alternative model could be achieved without any disruption to or reduction of service level of regulation of offshore projects in WA. He said the current practice of mirroring Commonwealth and state petroleum legislation would continue to provide similar legislative frameworks across jurisdictions, and the current coop­erative approach could continue to deliver more timely outcomes. The minister said:

The Western Australian Government does not support the introduction of a national offshore petroleum regulator, and maintains that the administration and regulation of petroleum titles should remain with the State.

Western Australia's industry still has decades of lucrative years ahead of it, and we need to play a major role in realising these benefits for the people of this State.

This is a further example of the Federal Government grabbing WA's decision making powers and building costly, less efficient bureaucracies in Canberra.

We in this parliament should not undere­stimate the value of these industries. The resources sector is clearly a driving force in the Western Australian and Australian economies. The state accounts for 62 per cent of Australia's mineral production excluding coal, 73 per cent of our natural gas and 64 per cent of our crude oil and condensate. It has over 500 commercial mining and petroleum projects producing over 50 different products. The value of mining and petroleum production in Western Australia last year was more than $70 billion. For Australia as a whole, mining and energy exports make up nearly 70 per cent of all merchandise exports. There are around 30 international oil and gas companies and more than 40 oil and gas service companies with offices in Perth—companies such as Apache Corporation, BHP Petroleum, BP, Chevron, Conoco, Phillips, ExxonMobil, Hess Corporation, Inpex, Shell, Total and Woo­dside.

The Gorgon liquefied natural gas project, which has just gone into construction on Barrow Island off the Western Australian coast, is, at $43 billion, Australia's biggest project and the largest Chevron has ever undertaken either inside or outside America. This further translates into an investment surge in new mining and petroleum projects. While not every project will go ahead as its promoters may wish, there are around $170 billion worth of projects in the investment pipeline for Western Australia over the next five or so years.

I understand the intent of this legislation given that my electorate, because of its reliance on the gas that comes from the north-west, was one of those most affected by the Varanus gas explosion. Numerous businesses are no longer in existence as a result of the losses they sustained at that time. There were people out of work almost immediately, particularly in the forestry sector. It was an immediate effect and it was felt widely throughout my electorate. There is no doubt that the regulation of the offshore oil and gas industry is highly important to the country and that was demonstrated in this instance, particularly in Western Australia. The sheer scale and importance of Australia's oil and gas industry demonstrates the need to ensure that we get the legislation right. It is essential to not only Australia's future eco­nomic growth but also our energy supplies. We certainly need to have a very close relationship with the Western Australian government in developing the agreements and the legislation. The framework for legislation and response needs to be effective and comprehensive, but in my view it has to be agreed to by the most affected state, Western Australia.

Deborah O'Neill (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the government's reform in the area of offshore petroleum and greenhouse gas storage. I commend my colleague the member for Capricornia for her contribution to the debate. She gave a very lucid explanation of much of the detail of these bills. The reforms that are proposed here this evening are contained in five bills that previous speakers have alluded to. All of these bills make a significant reform to the manner in which our offshore petroleum industry is regulated.

The first bill I will speak to, and one of the most significant in my view, is the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011. This bill reflects an initiative in cooperative federalism because it enables a national system for the registration of national offshore petroleum titles. This bill establishes a new agency, the National Offshore Petroleum Titles Administrator—NOPTA—which will administer national titles in relation to offshore petroleum, mining and greenhouse gas storage activities.

It is an economic reality that, although there are national and international initiatives to move to an international clean energy economy, we do still currently rely on fossil fuels for our economic wellbeing and we will continue to for some time. Indeed, our dema­nd for energy will increase. In that context, there is the need to enable responsible and careful exploration of offshore sites for drilling. Many of us have witnessed events around the world and we are naturally apprehensive about offshore drilling, but responsible management of the industry is the task with which this government is charged and it is up to the task.

It is appropriate that this offshore petroleum industry should be well regulated under a comprehensive national system. These bills establish just such a system. In addition to the establishment of a national administration for titles, this government has also reformed the manner of safety, integrity and environmental approvals to ensure that they are administered well in offshore petroleum, mining and greenhouse gas storage activities.

The existing independent National Offshore Petroleum Safety Authority will be expanded to become the National Offshore Petroleum Safety and Environmental Man­agement Authority, which my colleagues earlier alluded to and which is likely to be known by the name of NOPSEMA. NOPSEMA as an authority will be there to ensure that there is a single agency that regulates the safety of Australia's offshore petroleum workers and the environment to ensure that both the environment and the workers are prevented from being exploited, including from when works are being decommissioned. A single accessible regul­atory agency will ensure that there are consistent standards applied throughout the Commonwealth, and that only seems fair and sensible in the light of what we have seen around the world.

We witnessed last year in the Gulf of Mexico the tragic consequences of the mismanagement of offshore petroleum extraction. It is a tragic reality that hundreds of thousands of people's lives and livelihoods were affected at that time, and will continue to be affected for decades, by a failure to provide adequate and proper protection of the environment and the workers. Apart from the long-term environmental impacts that this oil rig explosion had, we need to think about the impacts on the human presence in that area, including the workers who were so terribly affected by the disaster. We need only to think back further to the terrible images that Australians saw of the Exxon Valdez disaster to understand that the long-term ramifications of petroleum spills in our ecosystems profoundly impact on communities at all levels.

As I have stated in previous speeches, this type of legislation before the House, about which the entire House is so incredibly animated, is the kind of legislation that often does not make the front pages or even maybe some of the middle pages of the newspaper. It is certainly not the stuff of the daily broadsheet and I doubt that we will see a headline about it tomorrow. But this is part of the core work of responsible government and governance. It plays a fundamental part in the operation of this parliament because it is our obligation to act. It is our respons­ibility to protect one of the most treasured resources of our nation—our oceans.

For generations, Australians have relied on coastal areas for their livelihoods; in fact, most of us live near the coast. We are deeply connected to it. Our coastline wraps around our island nation and the image of that blue water meeting the landmass is imprinted on our national sense of identity. It is part of how we see ourselves and it is part of how the world sees us as well. That is another part of why this legislation is clearly so important. It will ensure that the operating standards of our offshore petroleum remain the best and safest in the world. It is also a key measure in ensuring that the seamless framework for a national economy is developed by this parliament to ensure that we benefit from our economic potential. This notion is also reflected in the Offshore Resources Legislation Amendment (Personal Property Securities) Bill.

This bill addresses the decisions by the state governments and the Northern Territory government to exclude operation of the Personal Property Securities Act 2009 from the operation of this legislation. One of the reasons why the PPS Act has been excluded is that retaining the register of dealings and interests can enable proposed dealings and interests to be rejected. This represents an important control mechanism in the management and security of our national resources. As stated, this is an area of policy where the regulation needs to be measured, appropriate, effective and consistent. In this regard, the existing system of having a register of dealings has been proven to be an effective means of regulating dealings and interests. Because of this exclusion from the PPS Act, it is important to ensure that there is consistency between onshore and offshore mining regimes.

It is also important to recognise that this bill reflects extensive consultation with the offshore petroleum industry and reflects the Montara Commission of Inquiry recomm­endations. Australians listening to this broadcast might recall the Montara oil spill, which happened in the Timor Sea just off Australia's coastline in 2009. The commission that followed was naturally called the Montara Commission of Inquiry. The commission of inquiry reflected a real and pressing need for appropriate regulation in this increasingly important component of our energy supply. This bill certainly addresses the advice from the commission of inquiry for the need for a comprehensive national system of regulation in response to the offshore oil extraction industry that is part of the economic fabric of our nation. This bill reflects the Gillard government's desire to secure and strengthen Australia's future. It is another step in achieving this goal. I commend the bills to the House.

Melissa Parke (Fremantle, Australian Labor Party) Share this | Link to this | Hansard source

I rise in support of this legislation and the provisions it makes in dealing with recommendations from the Montara inquiry relating to environmental and safety standards. These bills also introduce measures that respond to recommendations in the 2009 Productivity Commission report into regulatory burdens on the oil and gas sector. The Montara incident was one of the worst environmental and ecological disasters in Australian history. It had a profoundly damaging impact on the delicate environmental and ecological balance in the Timor Sea. What is more, it put at risk the health and safety of the many Australian men and women working on the West Atlas oil rig.

Between August and November 2009, over eight million gallons of lightweight crude oil spewed into the Timor Sea, affecting an area of over 6,000 square kilometres. Additionally, some 10,000 litres of chemical dispersant was subsequently sprayed over the contaminated water as part of the disaster response effort. All of this occurred in an area the Wilderness Society has rightly described as a 'marine superhighway', an ecosystem that is home to over 19 species of marine life that do not appear elsewhere. It is a high priority of this government to ensure that this type of incident is prevented from occurring in Australian waters. This legislation is part of the government's ongoing campaign to establish not only the highest level of compliance with environmental standards but also the highest level of compliance with safety standards to guarantee the safety of the men and women who work in the offshore oil and gas industry.

In 2009, the Productivity Commission's Review of regulatory burden on the upstream petroleum (oil and gas) sector stated that the current regulatory system was burdensome, slow and lacking in consistency across designated authorities, resulting in an inefficient approach to regulation. These bills take action to rectify these shortcomings by reducing the cost of compliance for the Australian oil and gas sector while streamlining and expanding the government's safety and environmental monitoring capab­ilities across the nation's maritime territories. It does this by introducing full cost-recovery funding models for the newly formed National Offshore Petroleum Titles Admin­istrator, NOPTA, and for the expanded National Offshore Petroleum Safety and Environmental Management Authority, NOPSEMA.

The National Offshore Petroleum Titles Administrator, NOPTA, will handle petro­leum titles and advise designated authorities on key title decisions. Currently, petroleum titles are administered by individual state and territory authorities, resulting in an ad hoc system of administration. The formation of NOPTA will streamline the administrative process and reduce the cost of compliance for the oil and gas sector. This is in line with the Productivity Commission's upstream petroleum review, particularly its recomm­endation that a national offshore petroleum regulatory body be established.

It is my understanding that the Western Australian government has raised concerns relating to the intergovernmental negotiation process for determining the NOPTA and NOPSEMA authorities over maritime jurisdictions. The detail of this legislation should allay any such concerns. NOPTA will advise and liaise with local designated authorities comprising Commonwealth, state and territory ministers, which will provide for appropriate state and territory govern­ment input to the system of administering petroleum titles. On this point, I would like to reiterate that this government is implementing an important recommendation of the Productivity Commission's upstream petroleum review and that this legislation will benefit the oil and gas sector, an important Western Australian industry.

This bill also provides for the expansion of the National Offshore Petroleum Safety Authority's jurisdiction to include environ­mental concerns, an important reform and a critical regulatory improvement if we are to guard against incidents such as the Montara oil spill occurring in the future. The new National Offshore Petroleum Safety and Environmental Management Authority will act as the federal regulator for safety and environmental matters on all offshore drilling activities in national maritime waters. This action by the government to form NOPSEMA and expand the purview of the regulator is a necessary and responsible measure.

Additionally, I congratulate the minister for forming NOPTA and NOPSEMA on a full cost recovery basis, which requires that the cost of regulation be shouldered by industry and not by the Australian taxpayer. However, I note that as of 2013, when the cost of forming NOPTA and NOPSEMA has been recovered, the existing registration fees paid to the government on transfers and trading of offshore titles and the fees that would be used to recover the start-up costs will be scrapped, representing a significant saving to the oil and gas sector from that point onward.

The provisions in these bills are sensible and measured. They represent a significant step forward in the regulation and administration of the offshore petroleum industry. These bills have been formulated after consultation with industry and environmental groups, and represent a well-calibrated response that takes into account many and varied considerations.

In their submission to the Montara inquiry, the Cape Conservation Group called on the government to introduce five measures to help safeguard against possible future environmental catastrophes. These measures include the formation of a series of marine sanctuaries, the closer regulation of the oil and gas sector in state and federal maritime jurisdictions and a stronger emphasis on the use of renewable and carbon neutral technologies. Since the submission of the Cape Conservation Group report, this government has taken action to protect Australia's rich and diverse marine environment through the release of the marine bioregional plan for the south-west, currently out for public comment. This long-awaited national reform will, in due course, extend to cover Northern Australia and other parts of Australia. As I noted in my recent motion relating to marine parks, debated in this place on 30 May:

Thanks to international agreements, Australia now has responsibility for oceans double our 7.7 million square kilometres of land. Only the oceans of Canada and France are larger. Australia's oceans are big but their size is not all that matters. They are special for many other reasons. The area of our marine environment brings together three of the world's most important oceans—the Southern, the Indian and the Pacific.

… … …

Australia has the world's largest area of coral reefs, the largest single reef—the Great Barrier Reef—and the largest seagrass meadow, in Shark Bay. We also have the third-largest area of mangroves and more than half of the world's mangrove and seagrass species. Our oceans provide life support for six of the seven known species of marine turtles, 45 of the world's 78 whale and dolphin species, and 4,000 fish species, which is 20 per cent of the global total. … Here in Australia we have the lot—tropical, subtropical, temperate, subantarctic and antarctic.

We are really very blessed and we need to look after what we have. The government has also announced a $3 billion clean energy fund to encourage the private sector to invest more in renewable and carbon neutral technologies, and now of course the government is taking action to streamline offshore petroleum industry regulation and establish a higher level of regulatory compliance. The Wilderness Society, in their submission to the Montara inquiry, called for 'strong independent compliance enforce­ment'. These bills provide that.

The formation of the National Offshore Petroleum Titles Administrator, NOPTA, will streamline administration and reduce the cost of compliance for industry. It will also remove much of the burden from state and territory governments, whilst allowing them input into matters that may affect their state interests.

The expansion of the National Offshore Petroleum Safety Environmental Manage­ment Authority, NOPSEMA, will implement a single compliance standard to apply across Australia, thereby decreasing the cost of compliance for industry and establishing a higher standard of safety for Australian men and women who work in the offshore oil and gas industry. Additionally, by including environmental management into the purview of the organisation, the government will provide a further safeguard for the ongoing protection of Australia's fragile environ­mental and ecological treasures. As I said on 30 May:

In the tropical north, coral reefs, extensive tidal flats, seagrass meadows and mangroves fill the seascape, shelter the shoreline and provide critical habitats for Australia's rich tropical ocean life. Moving south, the water temperatures gradually decline. Subtropical waters are wedged between the tropical and temperate zones, where they are shaken and stirred into a remarkable living cocktail.

The oceans are living poetry and must be protected. It is for all these reasons that I support these bills. I commend my colleague the Minister for Resources and Energy for bringing this legislative response forward in a comprehensive and timely manner.

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

The Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011, the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 2) Bill 2011, the Offshore Petroleum and Greenhouse Gas Storage (Registration Fees) Amendment Bill 2011, the Offshore Petroleum (Royalty) Amendment Bill 2011, and the Offshore Resources Legislation Amendment (Personal Property Securities) Bill 2011 do a number of things. They amend the Offshore Petroleum and Green­house Gas Storage Act 2006. They also establish a single national regulator for offshore safety, well integrity and environmental approvals and a national titles administrator for offshore petroleum mining and greenhouse gas storage activities—all important in maintaining environmental protection, the way we manage our natural resources, our oceans, our seabeds, our rare and unique corals and the fish in our oceans.

These models reflect the recommend­ations of the 2009 Productivity Commission review and also the Montara Commission of Inquiry's recommendations, as well as 18 months of consultation with industry, states and the Northern Territory. This compre­hensive process has enabled the government to provide certainty in these areas and the necessary frameworks and legislative models for environmental protection in the day-to-day integrated operation of all concerned. The functions of the existing National Offshore Petroleum Safety Authority are to be increased to complement their expanded responsibility for oil integrity regulation, legislation for which this parliament passed last year. In all, it is a comprehensive set of bills and I commend them to the House.