Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

When I was last address­ing the legislation before the chair, the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011 and related bills, we were making the point that the legislation had a number of objectives. I concluded my discussion on the first objective. Secondly, the legislation seeks to establish a single national body for the administration of title in Commonwealth waters. It will be known as the National Offshore Petroleum Titles Administrator, NOPTA.

Under the new system the administration of titles will be centralised, replacing the designated authority system currently in place. The result is that there will be consist­ency and efficiency across Commonwealth waters. It should be noted, however, that the joint authority, comprising the Common­wealth minister and the relevant state or territory minister, will be retained. This will ensure the joint authority remains the decision maker for key petroleum title decisions. There is a continuing role for ministers in decision making on petroleum projects that could impact upon their state or territory. In effect, NOPTA will make reco­mmendations to the joint authorities on key title decisions. It will also administer titles and collect data relating to petroleum and greenhouse gas storage activities in Commonwealth waters. As is currently the case, the responsible Commonwealth mini­ster's view would prevail in the event of a disagreement.

NOPTA will not be an independent statutory authority, ensuring that, in turn, it remains properly responsive to the joint authority. With the separation of offshore regulation and titles administration, the reforms seek to avoid conflicts between these two separate functions.

It is also important to note that the reforms include full cost recovery from industry. This move is likely to eventually reduce costs on the sector. Fees will be used exclusively for the regulation of petroleum and greenhouse gas storage activities and not for other government activities. Of course, fees will be subject to regular reviews and there will be annual financial reports.

Ninety per cent of Australia's known petroleum resources are located in Common­wealth waters. That said, Western Australia plays an important role in supporting the oil and gas industry. The North West Shelf Venture, located off our coastline, is the largest resource development project in Australia. To date, it is the largest resource development project in Australia's history. It accounts for more than 40 per cent of Australia's oil and gas production. So I for one am not suggesting that states and terri­tories should be sidelined. Indeed, it is critical that they are involved. But there is an argument for a national approach.

Obviously, a national regulator will have implications for state and territory admini­strative responsibilities, staffing and reven­ues. But that does not mean that states will not have a say in the process. There is no doubt that a national offshore regulator is a pressing and necessary reform. The Producti­vity Commission's review recommended it as a minimum and industry overall supports it. The current system is riddled with unnec­essary regulatory burdens. A single authority would avoid much of the duplication that currently exists.

The new authority will have responsibility for resource management, pipelines and environmental approvals, and compliance. This recognises the fundamental link bet­ween the safety of people and the protection of the environment. We believe that, by including the functions to regulate environ­ment plans and day-to-day operations, it will ensure a streamlined administrative process. The removal of bureaucratic duplication should also reduce approval times for projects.

Those are the principal objectives of the bills, but what of the vision? As I have previously said, the aim is to have a national regulatory authority that is well resourced. The vision is that, ultimately, it will have an international dimension. Most petroleum companies operate in multiple jurisdictions. While each jurisdiction has its own regulat­ory framework, the goal is the same: to protect workers and to protect the environ­ment. We need to play our part by having effective prevention and intervention meas­ures. We also need to be prepared to respond if the worst occurs. As the Minister for Resources and Energy has previously stated, from the Montara Commission of Inquiry:

… we learned what happened, what should have happened, and what changes are needed to addresses the deficiencies identified.

With the expansion of LNG projects, particularly in Western Australia, we are on target to become the second largest exporter in the next five years. That is a huge industry to manage effectively, properly and efficien­tly. However, with great opportunities invar­iably come great challenges. So the govern­ment believes maintaining the status quo is not an option. As we have seen in the case of both the Montara and Macondo incidents, their impact can have long-term conse­quences not confined to small or limited geographical locations.

Reports of inquiries into both incidents found they were preventable. It was also found that there was a culture of compla­cency within industry and its regulators. As a result, the bar for best practice in safety performance has been raised. Community expectations are greater and scrutiny is being and will continue to be intensified. To effect change we all understand there has to be meaningful collaboration between industry, government and regulators. Our common goal is or should be a safe and sustainable sector.

As I have said, it has been a long process, but we have the support of industry and, I understand from comments made here today, the in principle support of the shadow mini­ster and the opposition.

There has been, however, resistance from some sections that view the new authority as nothing more than a power grab by the Commonwealth. That is a short-sighted view. Perth is already a centre for offshore petroleum exploration and development companies. We also have an enviable reputa­tion in offshore petroleum production. With our vast resources and rapidly expanding oil and gas sector we are clearly the oil and gas capital of Australia. The announcement that the federal government will headquarter the independent national regulatory authority in Perth will further cement that position.

Further, we do have the potential to look beyond the horizon. We are uniquely placed to be industry leaders in the South-East Asia region. It is an opportunity we should grasp. It is an ambition we should all share.

Recently, the federal government hosted an International Offshore Petroleum Regula­tors and Operators Summit in Perth. This summit brought together over 400 represent­atives from governments, regulators and operators. Events such as this showcase our expertise, our innovation and our commit­ment to improving safety performance. It also acknowledges the importance of the offshore oil and gas industry in sustaining our country's economic prosperity and security.

I can say with confidence that these reforms to our regulatory system have strong support. The new authority will ensure oper­ating standards are the best and safest in the world. Western Australian senators have a further incentive to support these measures. The National Offshore Petroleum Safety and Environmental Management Authority will enhance our state's standing in the global oil and gas industry, provide guidance in the future and a system that others can emulate and copy. In a state and in an industry that has such an international focus and that is faced by international demands, that is a significant development and something we should all welcome.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

I would like to rise to concur and note that the coalition will be supporting the government on this issue in a sense of bipartisanship and a sense that we have the capacity to work together to bring about effective government. Despite the illusion that so many people try to dispel, that we always say no, this is yet another example of where we say yes. Support for this type of legislation, the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011 and related bills, shows the capacity of the government and opposition to work together. I know Senator Eggleston will be having something to say on this.

It is interesting to note at this point in time how issues such as this get through because they are competent, they are logical and they move forward. Yet on other issues such as the carbon tax, which is completely illogical, we have every reason to oppose it. It is amazing that in our nation on a day like today, where we see Moody's downgrading the French banks, with all the uncertainty in the world, we have the juxtaposition of two different issues. One is the export of a product to try and bring strength to the Australian economy, to protect the Australian economy, to keep it vibrant and to extend our capacity to earn money. That is one thing we should be supporting.

But in the other place, on its way here, is another piece of legislation that in a time of absolute global uncertainty takes us down the perilous, stupid and culpable path of bringing in a carbon tax. It will completely pull the economic rug out from underneath Australia and lead us down the path of so-called green jobs. What we have here in this legislation is assistance for real jobs so people can earn real money to keep our nation strong, as it should be in this time. What the carbon tax will do is send us down the tube.

Alan Eggleston (WA, Liberal Party) Share this | Link to this | Hansard source

I must say I agree with the comments made by my colleague Senator Joyce. The carbon tax certainly is a flight of fancy which is going to add greatly to the cost of almost everything in Australia and leave us out on a limb, as nobody else in the world seems to be going down this pathway. One has to wonder why common sense does not prevail and we do not just stop and wait for a while and see whether anybody else is going to follow this example.

But what I would like to talk about is the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011 and related bills. This legislation in its final form is actually a victory for the Senate processes. Over 60 per cent of Aust­ralian oil and gas processing is conducted in WA waters, with well-known names such as the North West Shelf and Pluto soon to be joined by other great projects such as Gorgon, Browse and so many others. There will be at least five large LNG plants on the Western Australian coast.

In the past the oil and gas industry off the WA coast was jointly regulated by the Western Australian and Commonwealth gov­ernments, and these arrangements worked very well for many years. However, over the last year or so the Commonwealth decided that it should have sole responsibility for the regulation of offshore petroleum developm­ents and proposed to terminate the joint Commonwealth-state administration of these matters in Western Australia. In its place, the Commonwealth sought to establish a nation­al regulator by transforming the NOPSA agency into NOPSEMA—the National Offs­hore Petroleum Safety and Environmental Management Authority—and creating a Nat­ional Offshore Petroleum Titles Admini­strator.

Under this legislation's original proposals, the joint arrangements would have ceased and the Commonwealth would have become the sole regulator. The Western Australian government had some very serious and legitimate concerns about these proposals and began a process of negotiating with the Commonwealth to address these concerns and, in particular, to preserve the joint adm­inistrative structure, which, as I said, had worked well. There really did not seem to be any reason why this arrangement should not have continued.

The Commonwealth justified the setting up of a single offshore regulator on the grounds of safety, very largely. It referred to the Varanus Island explosion off the north-west coast and the Montara spill off the coast of the Northern Territory as justification for having a single national administrator. How­ever, in evidence to the Senate Economics Legislation Committee the WA Department of Mines and Petroleum witnesses suggested that in fact the Commonwealth agency, NOPSA, was the key agency at fault in both of those incidents. In the case of Montara it failed to supervise the Northern Territory agency responsible, and in the case of the Varanus explosion the WA Department of Mines and Petroleum had contracted out the supervision of the maintenance of the pipe­lines and wells to NOPSA, which did not carry out that supervision. It seems there was a failure there in the inspection of the pipes.

Other concerns of the WA government included that there was no requirement to notify WA of the location of any exploration licences issued by the Commonwealth off the Western Australian coast, and of course there are many environmentally significant areas near the WA coast such as the Ningaloo Reef in the north-west and the pristine Margaret River in the south. These are areas where the WA government would not be happy for oil exploration to occur, and yet under this legislation as proposed the WA government was not given any right of consultation over projects in sensitive areas. Even if they happened to be in what were legally Commonwealth waters, the WA government felt there was a need to have consultation with them about the location of projects because there is always an onshore component to any offshore oil and gas project, which would involve the state provi­ding infrastructure such as port facilities, housing, towns, roads, airports and so on. Accordingly, the WA government had the quite reasonable view that it should have some prior knowledge of the location of such developments as it would have to bear the cost of the onshore infrastructure.

Importantly, in the new legislation the WA government was excluded from the process of calculating royalties from the North West Shelf which had been provided for under the constitutional settlement with the Fraser government. This would have meant that the WA government would not have known the amount of royalties due to it for three to six months after these moneys were actually collected, which would have posed problems for budgeting and forecast­ing for the state. Amazingly, even though the WA government was in the process of nego­tiating a solution to these issues in good faith, the Commonwealth abruptly termin­ated the discussions and introduced new legislation which did not address any of the Western Australian government's concerns. While this heavy-handed action led to legislation which was passed in the House, the Senate exercised its house of review option and referred the legislation to the Senate Economics Legislation Committee. A Senate inquiry was held in which the coalition members of the committee high­lighted the quite legitimate concerns of the Western Australian government. In the Senate inquiry, the coalition senators in their dissenting report concluded:

The manner in which the Commonwealth government has introduced this legislation without having advised the WA government given that the ongoing negotiations with them were not concluded, is disgraceful.

Further, in Western Australia, the Commonwealth government's actions in doing this imply a totally unacceptable attitude of disrespect over the interests of the sovereign state of Western Australia and the underlying precepts of the federation.

Fairly strong words. The coalition senators' dissenting report also recommended:

That this legislation not be proceeded with until:

The Titles Administrator would have been a Commonwealth official. The strength of these criticisms by the coalition senators on the committee apparently resulted in the Commonwealth reconsidering its position and produced the very different and much more acceptable legislative package which is before the Senate today. Under these new arrangements there is an in-principle agree­ment to co-locate NOPSEMA, NOPTA and elements of the WA Department of Mines and Petroleum, as has already been referred to by a number of speakers. This will mean that these agencies will be located in Perth subject to resolving operational details. That is appropriate given that such a large proportion of the offshore oil and gas industry is located in Western Australia.

The legislation also provides for resolu­tion of the issue of offshore petroleum royalties. The role of the WA government in the administration of offshore royalties has been restored in this legislation. The legisla­tion also provides for consultation and notification by the Commonwealth on envir­onmental plans with both the WA and Northern Territory governments. Also provi­ded for is notification of actions which might have an impact on local communities and early notification of incidents such as oil spills. There is also acknowledgement of the issue of resource security. Given that WA receives 90 per cent of its domestic gas from the Commonwealth offshore areas and that the state electricity system depends on this gas, the state of Western Australia needs to know without delay about anything which could affect gas supplies to the south-west. Furthermore, a protocol has been developed to ensure that consistent approvals are in place for the different jurisdictions through which any pipeline might pass from an offshore well to the state controlled waters and on to state land. There is also provision for the Western Australian government to be informed about proposed new developments so that WA can, in a timely way, plan infra­structure to support any offshore activities in Commonwealth waters.

These arrangements go a long way to satisfying what were the legitimate concerns of the WA government about the way the Commonwealth initially went about putting in place this legislation. Nevertheless, the question that remains is why the federal government did not deal with the Western Australian government more respectfully in the first place and conduct real and meaning­ful negotiations on these issues and seek to reach an agreement earlier than occurred. It is tempting to conclude, regretfully, that some Canberra bureaucrats seem to have forgotten that the Commonwealth of Australia is a federation of sovereign states and that the states do have legitimate and legal rights and interests.

In conclusio n, this is why this legislation, responding to the legitimate interests of the WA government as well as those of the Northern Territory, is a victory for the processes of the Senate, which after all is the states house in the Australian parliamentary system.

Nick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | Link to this | Hansard source

It is with great pleasure that I conclude the second reading debate on the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011 and associated bills on behalf of the government and my ministerial colleague Mr Martin Ferguson, the Minister for Resources and Energy and the Minister for Tourism. Firstly, I thank all senators who participated in the debate. I do not necess­arily agree with all the views expressed, but certainly as a group they have well outlined the intent of the legislation. The reforms in this bill, together with those in the comple­mentary bills, will help deliver on the Aust­ralian government's commitment to ensure the Australian community's confi­dence in the regulation of offshore petroleum and reinforce our competitive advantage as a preferred location for investment.

I note there has been some criticism of my colleague Mr Ferguson, the minister. I strongly refute and reject that criticism. I think this is a very, very sound outcome of the negotiations between Minister Ferguson and the Western Australian Minister for Mines and Petroleum, the Hon. Norman Moore MLC. Yes, there has been a lot of intense and strong discussion, but there has been an outcome; there has been an agree­ment. I can assure the Senate that Minister Ferguson, one of the most hardworking, committed and knowledgeable ministers in his areas of responsibility, has been at the forefront of bringing those discussions to a conclusion.

The other point I would make is just a mild rebuke to the previous speaker. I do not think it is fair to blame, as he did, some Canberra bureaucrats for having forgotten the views of the states. I have been involved in a lot of negotiations with Commonwealth public servants and the states, in my capacity as Minister Assisting on Deregulation and Public Sector Superannuation, over the seamless national economy reforms. At the end of the day, of course, the minister, subject to cabinet, makes the final call. I do not think bureaucrats should be unfairly criticised for their hard work and the commitment that they bring to these types of negotiations. So I do not accept that criticism of so-called Canberra bureaucrats.

I am pleased to advise that the Minister for Resources and Energy, the Hon. Martin Ferguson, and the Western Australian Minister for Mines and Petroleum, the Hon. Norman Moore MLC, have recently finalised their negotiations and have now executed a memorandum of understanding on cooperative working arrangements between the proposed Commonwealth regulator and the WA Department of Mines and Petro­leum. The ministers have also exchanged correspondence outlining their agreement on how the new regulatory arrangements will proceed. I understand these agreements have now removed the Western Australian gov­ernment's opposition to the national regulator bills. I commend the Western Australian mini­ster, Minister Moore, for his constru­ctive contribution to the development of these arrangements. As I said earlier, the intent of the legislation has been very well outlined by a range of speakers and, while I do not necessarily accept some of the critique, we have had significant debate on these measures. They have been well out­lined, so I do not intend to repeat what has been said by previous speakers on a number of occasions.

To conclude, before we go to the committee stage—I know there are a couple of amendments to consider—I table the memorandum of understanding and the related correspondence.

Question agreed to.

Bills read a second time.