Ben Small (WA, Liberal Party) Share this | Hansard source

I acknowledge at the outset that I am a former Woodside employee. That's a matter of public record, but it is important to be transparent with the chamber. I also acknowledge the decency and integrity of Senator Whish-Wilson, who, in a wide-ranging assessment of the bill—an assessment that I mostly disagree with—did have the honesty to acknowledge that Woodside, a company that features very relevantly in this conversation, has been a very significant Australian taxpayer—indeed, contributing $4.9 billion in income tax and royalties in the five years from 2013 to 2018 and then, more recently, $493 million in 2018, $583 million in 2019 and $707 million in 2020. I think that is important context as we consider the Offshore Petroleum and Greenhouse Gas Storage Amendment (Titles Administration and Other Measures) Bill 2021, which makes the necessary legislative changes to the act to implement some aspects of the department's enhanced decommissioning framework and the relevant recommendations from the independent Review of the Circumstances That Led to the Administration of the Northern Oil & Gas Australia (NOGA) Group of Companies, otherwise known as the Walker review.

As part of the Morrison government, I do support these very important steps in the right direction, but, as a Western Australian, as someone who was part of the industry and as a taxpayer, I am concerned that the conversation can't stop here. Decommissioning is a very significant issue for the nation, and, indeed, we must take steps to ensure that Australian taxpayers and Australians derive the maximum benefit from the exploitation of these resources. On that, I totally agree with Senator Patrick. I suspect we might disagree on the mechanisms.

What have we got so far? We've got a bill that provides a trailing liability by expanding the remedial directions and provisions in the act. That requires any former titleholder or related person, which is a broadening of the definition, to carry out decommissioning if the current or immediate former titleholder is unable to do so. Whilst that is a measure of last resort where all other regulatory options have been exhausted, it does aim to ensure that the risks and liabilities of petroleum exploitation remain the responsibility of those who have been involved in the project. The bill increases regulatory oversight and scrutiny by providing for specific decision-making criteria to ensure that the entities are and, importantly, remain suitable to undertake petroleum project activities. So, in all, this bill is very sensible in taking those steps towards ensuring that the situation we've seen with NOGA and the Northern Endeavour is not repeated. However, in light of my comments that this is just the beginning, let me outline some of the important facts.

The decommissioning liability in Australia has been modelled at more than $60 billion of expenditure over the next 30 years. Assets in the North West Shelf and Bass Strait comprise the vast majority, some 73 per cent, of that estimated $60 billion liability. There is an opportunity to materially reduce this cost with smart regulation, industry cooperation and the adoption of best practice here in Australia. Australian legislation, in my view, does not provide adequate guidance on the decommissioning options that are most in tune with international best practice, and I fear that the impact is to Australian taxpayers if we don't amend the current statute position on the mandatory removal of all infrastructure, which I do acknowledge is worked around by NOPSEMA, which uses regulatory processes to appropriately approve alternative arrangements.

In her last contribution on this bill, Senator Brown, on behalf of the Labor Party, did clearly articulate how little they understand of the resources industry and how their concern is partisan politics on this issue and not being wedged by the Greens. Their interests are not acting on behalf of Australian taxpayers, who potentially fundamentally forgo 58c in the dollar where decommissioning spend is deductible against both company income tax and PRRT, meaning that a significant proportion of decommissioning costs—as much as $17.8 billion in the next 10 years alone—is borne by Australian taxpayers through taxation relief, perfectly lawfully and perfectly legitimately. That's a massive number: $17.8 billion in the next 10 years. The economic benefit, when you consider that liability, is premised on the regulatory default of full removal of all infrastructure, particularly as it relates to the removal of long-distance export pipelines and interfield pipelines—we're talking about steel and concrete here—where clear alternatives exist internationally. Limiting decommissioning activities to the preparation, disconnection, cleaning and site remediation to leave all export and interfield pipelines in place would save some $9 billion on the overall liability alone. These are pipelines that have existed on the sea floor for some 40 years, in some cases, and they have formed natural habitats. They not only attract industry through enhanced fish stocks but are important to local communities in regional Australia in supporting the community recreation that's associated with those areas.

That is the magnitude of what we're talking about here: billions of dollars of forgone tax revenue, an impact to the environment that makes no sense whatsoever and an impact to our regional Australian communities. Implementing alternative arrangements for pipelines alone would save the taxpayer some $5.2 billion. We must also talk in terms of the environmental impact because, at the end of the day, everyone that comes to this place enjoys Australia's pristine ocean environment. As a Western Australian who's visited Exmouth and Coral Bay on the site of the world-famous Ningaloo reef, I associate with that deeply. But the oil and gas infrastructure we're talking about is often under water for decades and is covered in marine life. Requiring operators to fully remove that infrastructure doesn't always make environmental sense.

Few studies of the environmental impact of leaving the infrastructure offshore in situ in Australia have been completed and that's a problem. However, studies from comparable international environments are already available. Under controlled guidelines, there is reasonable evidence already available which shows that, in some circumstances, leaving offshore infrastructure in situ or partially removing it is not only sufficient but, in fact, better for the ocean environment as compared to complete removal. There are multiple factors which need to be weighed, and that makes decommissioning a complex matter. It shouldn't be a partisan political football because of the impact to Australians.

Some examples of those environmental benefits include: attracting fish at all stages, whether adult, larval or juvenile fish, including commercially significant species; providing a spawning habitat for marine life; and introducing hard surfaces, which allow for greater marine biodiversity. Marine life that thrives at varying depths often settles along vertical infrastructure in locations that would not normally be available due to the prevailing water depth. Infrastructure can provide shelter, protection from fisheries and a natural protection, thereby enhancing production levels of commercially significant fish species within a region. Creating those artificial reefs also provides fishing, tourism and community amenity in regional Australia.

The concern that any proposed change to the act permitting in-situ decommissioning is inconsistent with our obligations as a signatory to the London convention is, frankly, rubbish. Indeed, the United Kingdom has world best practice legislation to deal with decommissioning liabilities and they are, of course, where the London protocol was signed. In fact, the UK's decommissioning legislation, which requires that a consideration and advice on alternatives to abandoning or decommissioning where it comes to the installation or pipelines, such as reusing or preserving it, is enshrined in the United Kingdom's legislation. That's what we are talking about here—other jurisdictions who have already taken steps to recognise not only the environmental but the economic, community and social factors that this issue raises.

Considering that the United Kingdom is not alone in this, with the United States, Norway and Japan already employing these best practices, the Australian oil and gas industry is in need of further legislative reform. Those other nations are slightly ahead of Australia's industry because their oil and gas assets are slightly older; therefore, they are further advanced in the decommissioning phase of their infrastructure life cycle, but they are tangible examples that show that these improved methods can be sustainably implemented. It's noteworthy that not only the United Kingdom but also Norway, the United States and Japan are fellow signatories to the London protocol.

So whilst I understand that this bill is an important and positive step to developing a solution to preventing recurrence of the Northern Endeavour situation, it's important in my view that the research and advice to the department be pulled together, along with consultation with industry experts and stakeholders, and should be considered, invested in. It warrants further consideration. This legislation is a step in the right direction, but it is not the destination in which Australian taxpayers need us to go. When you consider the looming task of a maturing offshore oil and gas industry, assets and the related financial liabilities associated, these growing demands do require our attention quite urgently. That number of $17.8 billion of taxation revenue foregone in the next 10 years sticks very clearly in my mind when it comes to paying for the sorts of services and investments that Australia needs as we move beyond the COVID-19 pandemic.

I welcome this legislation and I am here to advocate that we further consider in a more holistic way the needs of decommissioning so that it is balancing environmental, economic, social and community factors in what is a complex and nuanced area of Australian legislation. I commend this bill to the Senate.