Kelvin Thomson (Wills, Australian Labor Party) Share this | Link to this | Hansard source

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 Measures No 2) Bill 2011.

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

The Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill and cognate bills were the subject of an inquiry by the House of Representatives Standing Committee on Agriculture, Resour­ces, Fisheries and Forestry, which gave the House and the public an opportunity to scrutinise these important changes to the offshore regulations. I congratulate the Minister for Resources and Energy and the Selection Committee. I see that the Standing Committee on Procedure has put out a small report on the amount of legislation that is now going through that committee and being referred to our House committees. I think that is a good process and it certainly improves our legislation, and I congratulate the minister for doing that.

The main purpose of the bills is to amend the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and associated acts to implement reforms associated with the establishment of a national offshore regulator in Commonwealth waters. The bills address the regulatory framework for petroleum and greenhouse gas storage activities and do not impinge on the activities themselves. The four main objectives of the reforms in the bills are, firstly, to provide an integrated approach to the regulation of safety, structural integrity and environmental management. I think that point itself is an important one, bringing together the need for regulation of human safety and the safety of what we do offshore, the structural integrity of the wells themselves and of the work out there and environmental management. It is important that we deal with those issues. We can deal with these issues and have proper and good environmental management around the work we do. The processes we get into of constantly trying to stop or lock things up and not use some of our resources I think are very foolish and we need to think of things in a broader way. If we have environmental management done in a proper manner, independently, we can do this in a very modern way. We need to think much broader than we have in the past. I also think it gives us an opportunity of providing within this industry and within the regulating industry some very skilled people.

The second point is to ensure that this regulation is independent and appropriately skilled and resourced, as I said, to separate the resource development function from regulation and retain resource development within government; and to reduce the regulatory inconsistency and duplication that is inherent in the existing regulatory regime.

The Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011, the national regulator bill, will amend the Offshore Petroleum and Greenhouse Gas Storage Act 2006. It will establish two regulatory bodies to administer and regulate petroleum and greenhouse gas storage operations in Commonwealth waters in the Australian offshore area. The new bodies will replace the designated authorities—the state and Northern Territory ministers who, through their departments, have performed functions and exercised powers conferred directly on them by the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and its predecessor act, the Petroleum (Submerged Lands) Act 1967. The purpose of the Offshore Petroleum and Greenhouse Gas Storage (Registration Fees) Amendment Bill 2011 is to amend the Offshore Petroleum and Greenhouse Gas Storage (Registration Fees) Act 2006 to reference the new National Offshore Petroleum Titles Administrator, NOPTA, which will be established through the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Act 2011. The purpose of the Offshore Petroleum (Royalty) Amendment Bill 2011 is to amend the Offshore Petroleum (Royalty) Act 2006 to reference NOPTA, and the purpose of the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No.2) Bill 2011 is to amend the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003 to impose new cost-recovery levies on holders of offshore petroleum and greenhouse gas storage titles. The levies will recover the costs of NOPTA in undertaking its regulatory functions in relation to titles administration and the National Offshore Petroleum Safety and Environmental Management Authority, NOPSEMA, in undertaking its regulatory functions in relation to environmental management.

The purpose of the Offshore Resources Legislation Amendment (Personal Property Securities) Bill 2011 is to amend the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and the Offshore Minerals Act 1994 to exclude application of the Personal Property Securities Act 2009. The Productivity Commission delivered its 'Review of regulatory burden on the upstream petroleum (oil and gas) sector' in April 2009 and identified significant unnecessary regulatory burdens on the sector. Its principal recommendation to reduce those burdens was the establishment of a national offshore regulator.

The reason these bills came about can be traced back to April 2007, to the Australian Petroleum Production and Exploration Association's strategic leaders report, Platform for prosperity. This report identified more efficient national petroleum regulation as a policy priority. The APPEA called for the Productivity Commission to carry out a review of the onshore and offshore regulatory framework in order to assist implementation of a more efficient and nationally consistent petroleum regulatory regime.

In 2008 the Council of Australian Governments, COAG, identified the upstream petroleum sector as one area where overlapping and inconsistent regulation threatens to impede economic activity and agreed that the Productivity Commission should undertake a review, which occurred, and the report of the review of regulatory burden on the upstream petroleum (oil and gas) sector was released in April 2009. This identified significant unnecessary regulatory burdens on the sector. Its principal recommendation to reduce those burdens was the establishment of a national offshore regulator. The Productivity Commission also identified significant potential national income gains, in the order of billions of dollars each year, from the implementation of its recommended reforms.

The Commonwealth government sought to develop an all-of-government response to the Productivity Commission report through the Ministerial Council on Mineral and Petroleum Resources, the MCMPR, and established a working group of officials involving all jurisdictions to develop the responses. By the end of 2009, the MCMPR had agreed 25 responses to the Productivity Commission recommendations but deferred its consideration of the recommendations for a national offshore regulator pending the outcomes of the Montara Commission of Inquiry

The Montara incident in 2009 highlighted problems arising from regulatory gaps between regulation of safety separate from regulation of integrity, environment and day-to-day operations. The Commonwealth's draft response included the reform model that is now in the current amendment bills. Stakeholders were provided three months to comment on the draft response. On 18 February 2011, the MCMPR met to consider the Commonwealth's proposed establishment of a national offshore regulator and set up a working group from all jurisdictions, and the bills were developed from their findings.

The starting point for these bills is the essential reforms identified by the Productivity Commission report and the report of the Montara Commission of Inquiry. The House standing committee agrees with the government that failing to address the findings of these reports is not an option. We also believe that these bills do fulfil the objectives laid down by those reports. The bills are actually reforming regulatory processes, tidying up the present arrangement between regulatory bodies for the new era we are now in for the regulation of offshore petroleum. They are making the regulatory environment more efficient and effective and are moving towards world's best practice.

An essential part of this is cooperation between the Commonwealth, the states and the Northern Territory in the transition to the national regulator. The committee is heartened by the evidence of cooperation between Western Australia and the Com­monwealth in the formulation of a memorandum of understanding to guide government and industry along the new regulatory path. The success of that process is essential to the future of the industry. Both governments have a responsibility to make it work, to make it operate. There are great opportunities for our nation in having this regulator in place.

These bills endorse the formation of NOPTA and NOPSEMA to replace the current regulatory regime. We endorse the retention of the joint authorities but with NOPTA as the principal source of technical advice. We fully endorse the independence of NOPSEMA and do not believe that its activities should be compromised by mandatory consultation with outside bodies. The independence of the regulator of safety, structural integrity and environmental management should be ensured.

I thank the Minister for Resources and Energy, the member for Batman, Martin Ferguson, for his assistance in bringing these issues to the attention of the House of Representatives Standing Committee on Agriculture, Resources, Fisheries and Forest­ry. As I have said, it is heartening to see that more and more legislation is coming before House committees for consideration. I am sure that we end up with much better bills as a result of that consideration. I commend the bills to the House.

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

Obviously I will make some closing comments on each of the offshore petroleum bills before the House and then I will deal with each of them in terms of potential amendments.

The Offshore Petroleum and Greenhouse Gas Storage and Amendment (National Regulator) Bill 2011 amends the Offshore Petroleum and Greenhouse Gas Storage Act to ensure Australia's offshore regulatory regime is robust by reducing unnecessary burden on industry without compromising safety, the environment or resource manage­ment. The bill expands the functions of the Australian National Offshore Petroleum Safety Authority, which becomes the National Offshore Petroleum Safety and Environmental Management Authority. This bill also significantly streamlines the administration of offshore petroleum and greenhouse gas storage titles by establishing the National Offshore Petroleum Titles Administrator.

These amendments go beyond just delivering the Australian government's response to the Productivity Commission's recommendation for the establishment of a national offshore petroleum regulator for Commonwealth waters. Integrating the views gathered from extensive stakeholder consultation over the last 15 months and recognising the outcomes of the Montara Commission of Inquiry report, the Australian government is delivering on its commitment to restoring the Australian community's confidence in the regulation of the offshore petroleum industry. These amendments will help ensure that our regulatory regime and operating standards are the best and safest in the world. These reforms will replace the current inefficient system of seven desig­nated authorities with a national integrated regulatory system, ensuring consistency, efficiency and transparency in Common­wealth waters. Retaining the joint authorities for the Commonwealth minister and the relevant state and territory ministers guarantees that each jurisdiction continues to have a role in decision making on key petroleum titles in Commonwealth waters that could be adjacent to a state or the Northern Territory.

The offshore oil and gas industry is vital to sustaining our country's economic prosperity and security. These reforms streamline Australia's regulatory system, bolstering the nation's position as a world leader in offshore oil and gas regulation. The reforms in this bill, together with other complementary bills, will help deliver on the Australian government's commitment to ens­uring the Australian community's confidence in the regulation of offshore petroleum and reinforce our competitive advantage as a preferred location for investment.

I thank all members for their constructive contribution to what is a complex debate. I will deal with a range of issues raised by members and turn first to the contribution of the member for Groom, the former minister for resources, who had responsibility for this very complex industry. During the course of his contribution he expressed disappointment that the government was proceeding with the bill in the absence of a concluded agreement with the Western Australian government concerning collocation of federal and Western Australian offshore petroleum regulators. In reply, I can simply say the Commonwealth has negotiated in good faith with the state of Western Australia on this proposal.

On behalf of the Commonwealth I have signed a memorandum of understanding detailing the proposed arrangements, which I stand by, agreed by officials from within the Western Australian Department of Mines and Petroleum, my department and the National Offshore Petroleum Safety Auth­ority. I give my commitment to continue to discuss the matter with the Western Australian minister in the hope that he comes to recognise that the legislative regime for the offshore industry proposed by these bills not only is in the best interests of Australia as a whole but is very much in the interests of Western Australia.

It is the government's very firm belief that by locating the headquarters and most operations of NOPSEMA and NOPTA in Perth we are reinforcing the importance of Perth in the world's oil and gas industry. It is also the government's ambition that, because these two regulators will be well resourced and so be able to attract quality staff in what is a high-paying industry, they will be recognised as among the best regulators for this industry in the world, further reinforcing Western Australia's importance in this global industry. In many ways this industry represents a wonderful career opportunity for young Australians.

I must say that negotiation cannot be open ended, and it is critical, given the experience of Montara, that the Commonwealth ensures that it is able to properly regulate oil exploration and production for those waters over which it has exclusive jurisdiction as the Commonwealth. The changes we are proposing are not a question of states' rights being denied but rather of the Common­wealth finally accepting its proper responsibilities in relation to waters over which it has exclusive jurisdiction. Delegat­ing those responsibilities to third parties is no longer a tenable position for the Common­wealth of Australia.

The member for Swan made reference to the Western Australian government not collecting North West Shelf revenues. The House of Representatives Standing Comm­ittee on Agriculture, Resources, Fisheries and Forestry, chaired by the member for Lyons, recommended that this function be retained by the state of Western Australia. The Commonwealth accepts the committee's recommendation and I will be moving appropriate amendments to reflect that. The members for Forrest and Swan both incorrectly stated that under these bills the Commonwealth will not have to notify the state of the award of title in Commonwealth waters offshore of Western Australia. In fact the bill does not change current arrange­ments in this regard. As is presently the case, titles will be awarded by the joint authority of which the state minister is a member. The Western Australian minister will be aware of titles in Commonwealth waters offshore of Western Australia because he or she will participate in their granting. This point illustrates the extent to which I have gone to accommodate Western Australian concerns, and not just in relation to this issue, without compromising the essential aim of improving our national offshore regulatory regime.

The honourable member for Forrest was quite right in asserting that this legislation would have the greatest impact on Western Australia, but she was incorrect to imply that this would be a negative impact. I suggest it will be quite the opposite, and not just for the reasons I have already outlined. It is Western Australia that will benefit the most from the increased community confidence that will flow from the improved regulation of Australia's offshore oil and gas industry that this bill will bring about. It goes to our notion of the social licence to operate in a very important economic area: the further development of our petroleum industry.

Without these reforms it will be difficult to see how this industry will achieve its full potential with full public confidence. It is this legislation that secures the industry's long-term future by ensuring that the community's high expectation of environm­ental and other standards are properly met. It is about ensuring that we meet them in a way in which Australians, wherever they live, can have full confidence, and that is why industry supports these reforms. It sees them as essential to its commercial future and regards them as essential for its social licence to operate in Australian waters.

It is this essential point that Western Australians seem to keep missing: all Australians, not just those who live in the West, have the same interest in ensuring that there are no more Montaras and that this industry is regulated in accordance with the world's best practice. That objective is shared by all members of this House, and appropriately so, and I thank them for their support for that objective.

In conclusion, I take this opportunity to express my appreciation to the members of the Standing Committee on Agriculture, Resources, Fisheries and Forestry for their report on this legislation. I advise the House that it is the government's intention to accept the committee's recommendations. I also take this opportunity to thank members of the Senate Standing Committee for the Scrutiny of Bills, which recommended improvements to the bill that the government will also adopt. I repeat my thanks to honourable members for their contributions to this debate and I commend the bills the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.