Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Link to this | Hansard source

I shall not keep the House long on the Offshore Petroleum and Greenhouse Gas Storage Amendment (Compliance Measures No. 2) Bill 2013, bearing in mind that we do, of course, agree with the government in terms of the changes it is making. Offshore petroleum safety is paramount. The changes that are being introduced under this amendment are changes which not only do we support but come from the 2010 Montara commission of inquiry report together with other policy and technical amendments. This is part of the process of ensuring that the Australian and global communities are confident in the operation of offshore petroleum assets, particularly in the oil and gas industry.

Offshore petroleum is a very important part of Australia's economy, though you would not know it from the budget last night, and I will come back to that later. The reality is that our gas exports at the moment come virtually entirely from offshore petroleum in Western Australia, with some also from offshore petroleum in the waters north of Darwin. As a Queenslander, I have to say the industry is expanding onshore in Queensland, but it is also expanding offshore in Western Australia. We see the introduction of the latest technology in the world, the technology of floating LNG, where the plant is actually placed on what could be called a ship, though it is bigger than an aircraft carrier. In fact, one of the executives of the gas industry says it is a pretty handy par 5—it is about 490 metres long. That is a hell of a big ship. On top of that, you put the LNG plant and that plant then produces LNG and exports it to the world.

It is imperative that as Australia moves into the next phase of offshore petroleum production—liquids, condensate and oil, and also gas for the LNG plants to supply the Asian markets in particular—we have the sort of legislation that ensures that those operations are done safely and in an environmentally sustainable way. We all know that there have been some unfortunate, and in fact disastrous incidents in recent times. Montara was the incident in Australia that caught the public's attention. Far bigger tragedies have occurred: the Deepwater Horizon spill in the Gulf of Mexico on 20 April 2010 and the death of two drill workers in the Otway Basin off the Victorian coast in 2012. They are salient reminders to the oil industry that it needs make sure that its operations are not near-perfect but actually perfect.

The bill will amend the act to implement a number of findings in the legislative review conducted into Montara and will aim to strengthen the implementation of polluter pays principles in the offshore petroleum regularity regime. I hope we do not get to that. I hope the industry operates in a way that is safe but also prevents the escape of any molecules into the environment. The amendments in this bill will: introduce alternative enforcement mechanisms enabling inspectors appointed by NOPSEMA to issue environmental improvement notices; introduce a statutory duty on petroleum titleholders in the event of the escape of petroleum; provide an ability for the regulator to take up the necessary actions to recover costs from the titleholder; and, finally, improve the effectiveness of insurance requirements in the act to ensure that titleholders are in a financial position to comply with the new statutory polluter pays duty and other extraordinary regulatory costs that they may incur.

As I said, the coalition supports these amendments and is of the view that the offshore oil and gas industry can operate in a manner which allows it to grow without exposing either the workers or the environment to unnecessary risks. I know from my discussions with industry that this is an issue they are very engaged in and they are very keen to make sure that it works. We need to learn from the lessons of the past. We need to make sure that we have the right set of amendments and legislation to ensure correct and safe operation. But I think the onus is on the industry to go above and beyond the requirements of the legislation, to do everything they can to make sure the safety of their workers and the protection of the environment are paramount.

The thing that disturbs me and which continues to be exposed by this government is not the sorts of amendments they are making today, which we do support; it is what we saw in the budget last night, which continues to be a full frontal assault on the oil and gas industry and on the resources industry in general. The changes we saw in the budget last night may leave these amendments unrequired—that is, if this government were to be allowed to continue in its assault on the oil and gas industry, exploration and development of oil and gas offshore and onshore would basically grind to a halt. We saw last night some of the most short-sighted policy I have seen handed down by a government in my mere 14½ years in this place, perhaps even in my political lifetime going back probably three decades—that is, to make it more difficult, more expensive for multinational companies, which in the end are responsible for most of the oil and gas development in Australia, to invest here. When the oil and gas industry in Australia today is responsible for 30c of every private-sector dollar invested in Australia, it is beyond me why a government would be turning on this industry simply to desperately try to get dollars in to balance its wasteful spending.

The industry is currently investing around $200 billion over five years, which is around $1,200 per second. On top of the $200 billion it is investing, it will pay billions of dollars a year in royalties and taxes to the government and create more than 100,000 new jobs. On top of all that—if that was not enough—the industry is considering investing many tens if not hundreds of billions of dollars in future projects. So when we see a change in the thin capital rules that means it is now more expensive for companies to invest in those projects, we realise that this government really does not get it. On top of that, the government changed the exploration rules. The increases in costs associated with trading or buying exploration permits will be a further deterrent to investment in Australia. Everyone, surely, wants to see investment in Australia. Everyone, surely, wants to see the amendments we are discussing today being there for an industry that is thriving, prospering and investing in Australia, as well as growing jobs, growing exports, putting extra revenue into the coffers. The changes that were introduced last night by the government to both thin capital and exploration allowances was, as I said, the most short-sighted thing I have seen for a long time.

The coalition will continue to work with this government to ensure that offshore safety and protection of the environment is maintained. I had a very fruitful and useful working relationship with the previous minister, Minister Ferguson. I thank him and congratulate him for what he did for the resources industry in Australia. His replacement, the Minister for Resources and Energy and Minister for Tourism, Minister Gray, is someone I have known for a long time through the corporate sector prior to him coming into politics. I have the absolute confidence in him that I had in his predecessor. I wish the minister well. I look forward to working with him over the months ahead. The outcome of our cooperation will be to the betterment not only of the industry but also of the community of Australia and better for jobs in Australia.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Offshore Petroleum and Greenhouse Gas Storage Amendment (Compliance Measures No. 2) Bill 2013. I commend the member for Groom for the first two-fifths of his speech and the last one-fifth of his speech. There were two-fifths there during which I drifted off, but I commend him for his contribution and for the bipartisan support that the opposition has given this legislation.

Obviously, as an island nation we have always taken a particular interest in our immediate surrounds. We have a troubled and a proud history as a federal government in being a little bit adventurous. I will particularly mention my predecessor as the member for Moreton, the Hon. James Killen, who did so much back in his time in the 1970s in terms of looking at federal responsibilities. He had a barney or two with the states working out those federal responsibilities. We can also look at the PRRT and some of the debates that went on in this place about that. Obviously, it is now well established that the PRRT is a good tax. We have a sustainable industry there that is also giving a responsible return to Australia. If you look at the Hansard debates at the time that that legislation was introduced by the Hawke government, you could swear that it was going to be the end of that industry. But we have obviously seen a significant offshore petroleum industry since, and it continues to have a healthy outlook—despite what the member for Groom said about the tax avoidance manoeuvres undertaken by some large multinational companies that work in this area.

I particularly commend the Labor government in both the 42nd and 43rd parliaments for the work we have done in declaring parts of our surrounding waters marine parks. As a Queenslander, I am very proud of the Great Barrier Reef, as all Australians are. We have declared some of the other marine park areas in recognition of the important contribution that our oceans make, as a source of food but also in terms of their impact on global climate change and maintaining temperatures. If you go north-west of Australia, you are getting into an area called the Amazon of the oceans. We are only just exploring some of the scientific and health benefits associated with the marine flora and fauna. I would like to commend the work of the famous Australian writer Tim Winton, who has done much to focus Australia's view on the south-western part of Australia. And on cue a Western Australian walks in! I commend Minister Gray for the work that he has done in recognising that important interplay between industry and the environment.

Sadly, over recent years we have seen a number of tragic accidents due to serious risk within the offshore petroleum industry. I first encountered this industry when I was on the House of Representatives Standing Committee on Primary Industry and Resources under the member for Lyons, Dick Adams. We did a review of the draft Offshore Petroleum and Greenhouse Gas Storage Bill. We were looking at productive fields changing to be more useful in a carbon constrained world. This is offshore and sadly it is dangerous. There have been incidents. We have all read about the Montara incident in the papers. I also recall the two deaths in the Otway Basin. These can be dangerous environments and it is important to get the health and safety legislation and support well established and controlled. Those two incidents indicate that there is a need to develop strong, effective regulations of our offshore petroleum regime to ensure the health and safety of our workers as well as protecting the Australian marine environment.

The compliance measures contained in the amended bill will include a range of alternative enforcement mechanisms, such as infringement notices and adverse publicity orders, and continuing penalties. It is a stepped-up scheme of common sense and it allows for a bigger stick to be hauled out slowly. The agreed recommendations from the whole-of-government polluter-pays report include: an express polluter-pays obligation and an associated third-party cost-recovery mechanism; clarifying the insurance requirements to ensure that maintenance of sufficient financial insurance is compulsory without a direction being given and to clarify the compliance role of the regulator; enabling NOPSEMA inspectors to issue environmental prohibition and improvement notices to require petroleum titleholders to take action on removing significant threats to the environment; and requiring the National Offshore Petroleum Safety and Environmental Management Authority to publish occupational health and safety and environment improvement notices and prohibition notices on its website—the naming and shaming side of things.

The upstream oil and gas sector is a significant industry for Australia, generating around $35.6 billion in the 2008-09 financial year. It employs over 10,000 people. Australia is in danger of marine damage and risk to worker safety within the oil and gas industry, but unless new oil discoveries are made in Australia there is legitimate concern about the long-term fall in production as ageing oilfields decline. As a Queenslander, I know that there are significant developments onshore, but offshore we look forward to new exploration and development leading to new production. The petroleum industry has been acutely aware of the environmental issues for many decades. Geologists, geophysicists and production engineers have been taught to protect and conserve the natural phenomena which surround them every time they venture into the field to initiate and build a project. As a consequence, through their work the petroleum industry has been taking steps to minimise its disturbance to flora and fauna both onshore and offshore for a number of years prior to the media hysteria about the Montara incident.

With this in mind, the government has maintained a regulatory body to ensure this protection is upheld and in some cases improved. That is why we introduced the National Offshore Petroleum Safety and Environmental Management Authority to police the petroleum industry's safety and environmental standards. The regulatory body was set up as a direct response to the 2009 oil and gas spill into the Timor Sea. As a result of the inquiry it was recommended that a single independent regulator look after safety, well integrity and environmental management of the Australian offshore petroleum industry. It effectively consolidates the current state, territory and national regulation for health and safety, structural integrity, environmental plans and day-to-day operations associated with petroleum activity in Commonwealth waters. As I mentioned, it will be supported by the opposition.

The bill under debate today has been introduced as a necessary action to further maintain the safety of offshore petroleum workers and to enforce those further environmental standards on the industry, so that all Australians can be assured about the sustainability of our environment which is a big asset for our tourism industry as well as the enjoyment of the nearly 90 per cent of Australians who live within 100 kilometres of the ocean. Our marine environment is worth protecting by strengthening the application of polluters-pay standards. By forcing industry to stop, contain, control and clean up spills that occur we are giving our fragile environment a chance to survive and grow for future generations.

Environmental protection and the conservation of biodiversity are exceptionally important for Australians, and the international community is watching us to make sure we get it right. Every Australian wants to see our economy grow and prosper. As the Labor Party we are all about jobs, but we need to get the balance right and ensure we do not do so at the expense of our environment. Stringent environmental controls must be in place across the petroleum industry. Greenhouse gas storage is significant in reducing environmental impacts, but there are also a number of measures that must be monitored to ensure maximum protection is upheld, including drilling fluids. Drilling muds must be ecologically tested to ensure there are no toxic effects on the surrounding environment. Disposal of the chemical and heavy metal content of waste material should strictly adhere to government regulations, particularly in offshore locations. Land clearing, including clearance of vegetation for tracks and drilling sites, should be further controlled to ensure any disturbance is kept to a minimum. Oil spill control is hopefully not something that the minister will ever have to worry about, but obviously this would be detrimental to our environment. The Offshore Petroleum and Greenhouse Gas Storage Amendment (Compliance Measures No. 2) Bill is focused on implementing improved industry standards for clean-up and reduced environmental impact.

The bill is also a reflection of our commitment to our Clean Energy Future. Obviously the Australian Labor Party is moving Australia to a low-emissions economy while upholding our commitment to protecting jobs and growth. Despite the doom and gloom and the relentless jeremiad coming for those opposite, the reality is that since 1 July and the introduction of the carbon price, the emissions in the national electricity market have fallen by about 10 million tonnes and renewable energy generated in the NEM has increased by almost 30 per cent over the same period. This is while the economy has continued to grow close to trend and we have created around 160,000 new jobs. I particularly commend the government for the Carbon Farming Initiative by allowing additional land-based abatement projects to generate credits. Despite those opposite, we have got a multi-pronged attack, which is what a price does. Obviously their mechanism will be a complete disaster. Heaven forbid if they do get a chance to implement it. I commend the legislation to the House.

Greg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Action, Environment and Heritage) Share this | Link to this | Hansard source

It gives me great pleasure to support the Offshore Petroleum and Greenhouse Gas Storage Amendment (Compliance Measures No. 2) Bill 2013. Let me proceed in three brief steps. The principles which we uphold in relation to offshore oil and gas are very clear. The first is about the economy and energy security. We unashamedly seek to support energy security for Australia and the capacity to be an oil and gas producer and, potentially—certainly in the case of gas—exporter. These are good things for Australia and for the world. It is about human development. It is about the access to heating and cooling and all of the benefits which come with modern society. Encouraging and supporting a viable flourishing offshore oil and gas industry, with a particular focus on gas, is good for Australia, is good for human development and is one of the drivers of bringing not just tens but hundreds of millions of people out of poverty in India, Indonesia and China. That is a profound historic contribution.

The second of the principles is in relation to environmental safety, security and sustainability. Whilst we want to see genuine energy security and all the human benefits that flow from it, we do not want to make the trade-off where our environment is lost. That means we need strong, clear standards. This bill fairly and squarely addresses those standards as a consequence of the Montara incident and the Montara commission. We, for example, are categorically, clearly and implacably opposed to mining and offshore petroleum and gas exploration in the Barrier Reef. In my judgement it will not change in my lifetime or, beyond that, in generations. I think that that is something which will be an Australian standard for the entire foreseeable future across the full political spectrum. So our duties are clear on that side.

The third of the principles is to make sure that we try to minimise our emissions footprint. To the extent that gas replaces other forms of energy generation around the world, that is a way of doing this, but we also need to make sure that we have adequate measures. Where this broad bill addresses greenhouse gas storage—the act itself—is one way of reducing our overall national footprint.

Let me then move from the principles to the bill. The bill is a response to the Montara incident. I disagree with the member for Moreton, who made the point that it was a wild public overreaction. It was a very serious incident with very serious environmental consequences. I think it was well responded to by the authorities in general, but let us not understate the environmental incident nor overstate it. It was a serious incident. Having said that, we support the amendments which are proposed as a consequence of the commission—in particular, the alternative enforcement mechanisms, infringement notices, daily penalties for continuing offences; it is a tough regime. But our Australian companies have been, for the most part, outstanding. This was a case of negligence, and it is appropriate that there are consequences when there is significant damage to the environment. Let me restate that principle. We support the inspection regime. We support the statutory duties on petroleum titleholders. We support the regulator having the ability to take the necessary action and recover costs from the titleholder, and we support improving the effectiveness of insurance requirements.

Against that background, we also think that, in the future, there should be a one-stop shop for federal and state environmental approvals and assessments. In particular, I think we also ought to look—and here I move from policy to a personal view—at a single, horizontal, one-stop shop within the federal environment so that there is only one point of negotiation between a firm and the federal government rather than multiple agencies. I think a single coordinating agency for approvals, assessments and other activities would be far preferable to a multiple agency regime. That is a personal view as to how we can take the one-stop-shop concept in terms of federal-state relations to a true, national, one-stop-shop assessment. That would make the difference on projects, I think, such as Olympic Dam and Browse, where they had to run the clock for five or six years to get approvals and, in the meantime, the economic circumstances changed, the cost profile went up and the projects were lost.

That brings me, lastly, to the contrast between this bill and what we saw last night in the budget. The contrast is this. This bill is an example of good cooperation, and I thank the minister and his predecessor; they have both been very good partners in working across the chamber. By contrast, the entire carbon tax process has been a debacle. We saw a write-down of $5 billion of revenues because they had phantom revenue projections last night. However, there are still phantom revenue projections. The 2015-16 price of $12.10 in the budget and the 2016-17 forward carbon price of $18 in the budget are more than double and triple what the market is saying the price will be. In other words, there is still phantom revenue built into the budget, and that means a $2 billion black hole in 2015-16. The surplus is gone—evaporated; toes up; it no longer exists. And, in 2016-17—using, again, the forward price of the market, as opposed to the government's inflated phantom revenue projections—there is a $4 billion black hole. What we have there is the same thing as last year: phantom revenue, predicted, spent, but ultimately unlikely to eventuate. It is exactly what we said last year. Nothing has changed. Compare these two examples of phantom revenue with the way this bill was done on a cooperative basis with industry and across the chamber. There should be more examples such as the offshore petroleum and greenhouse gas storage amendment bill and fewer examples of phantom revenue for political purposes which is spent in advance and which ultimately evaporates.

Gary Gray (Brand, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

I rise to sum up this debate on the Offshore Petroleum and Greenhouse Gas Storage Amendment (Compliance Measures No. 2) Bill 2013. In so doing, I want to pay tribute to my predecessor, the member for Batman, for the work that he did in dealing with the immediacy of Montara and then the outstanding public administration work that has given rise to this piece of legislation. It is impossible to make that statement without giving due credit and acknowledgement to the opposition and, in particular, the shadow minister, the member for Groom, for his tremendous insight and support of good industry practice, leading to good environmental regulation and a safer and better offshore working environment for Australian workers and for this extremely important growing industry.

This bill amends the Offshore Petroleum and Greenhouse Gas Storage Act 2006 to strengthen the offshore petroleum regulatory regime, continuing the Australian government's work to implement the lessons learned following the uncontrolled release of hydrocarbons from the Montara wellhead platform in August 2009. Recent incidents such as the tragic accident on the Stena Clyde rig in the Otway basin located in the Bass Strait which resulted in the deaths of two employees, one a 32-year-old man from the Northern Territory and the second a 60-year-old, during drilling operations in August of last year further emphasise the need for a strong, effective regulatory framework to promote and encourage the safe best practice that we have in our industry and the continuous improvements in the operations of the offshore petroleum industry.

The amendments in this bill help to achieve this goal by introducing a range of alternative compliance and enforcement tools to strengthen the ability of the regulator and the courts to enforce critical safety and environmental management requirements, including adverse publicity orders, injunctions, infringement notices and continuing offences to help protect the Australian offshore workforce and the marine environment. The bill also inserts a new polluter pays provision in the Offshore Petroleum and Greenhouse Gas Storage Act 2006 to both impose an express statutory duty on titleholders to respond to an escape of petroleum as well as provide a legislative guarantee that all costs of responding to an escape of petroleum, including clean up, remediation of the environment and environmental monitoring, will be met in full by the polluter should they fail to fulfil their statutory duty.

A number of additional policy and technical amendments in this bill will also strengthen the operation of the Offshore Petroleum and Greenhouse Gas Storage Act 2006, including enabling NOPSEMA inspectors to issue environmental prohibition notices and environmental improvement notices to require titleholders to remove significant threats to the environment and to require NOPSEMA to publish environmental and occupational health and safety prohibition and improvement notices issued by inspectors so that lessons from offshore inspections can be shared across the offshore petroleum industry in support of continuous operational improvements and improved occupational health and safety and environmental outcomes. I commend this bill to the House.

Question agreed to.

Bill read a second time.

Ordered that this bill be reported to the House without amendment.