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

I rise to speak to the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 1) Bill 2011 and the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies (Consequential Amendments) Bill 2011 and to say from the outset that the coalition will be supporting this legislation. It is important that we do everything we can to ensure that we have ample resources to oversee the operation of the offshore oil and gas industry. This legislation is in direct response to that and also ensures that we learn the lessons from, particularly, the Montara incident up in the Timor Sea, which I will come back to in a moment. The coalition will support this legislation and will treat it as non-controversial.

The Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 1) Bill 2011 seeks to impose a cost recovery levy on holders of offshore petroleum titles in respect of oil and gas wells and well related activities in those title holders’ title areas. This is to ensure that the people who own the title to the well, and therefore own the well and the contents of the reservoir it exploits, pay their way in terms of the overall monitoring of this industry.

The levies will recover the costs of the National Offshore Petroleum Safety Authority, otherwise known as NOPSA, in undertaking its assessment, monitoring and enforcement functions in relation to—and this is particularly important—the structural integrity of wells and well operations over their lives. Obviously, a well comes into being when an exploration licence is executed and the well is spudded, as they say in the industry. From that time on, the operation of the drilling exercise needs to be carefully monitored. The well needs to be monitored in particular by the company that has the responsibility of drilling it, the operator, but the owner of the title also has the responsibility to ensure that correct procedure is followed. The industry had an impeccable record for 25 years before, unfortunately, the Montara incident occurred off the coast of Western Australia. Due to poor practice and a lack of supervision, hydrocarbons, particularly light crude oil, escaped from that well, and it took a great deal of time to recover that situation.

We in the coalition will support the government on this bill. It is important to collect levies to ensure the complete operation of NOPSA and to ensure that those levies are collected right across the board, in terms of the title holders of the wells as well as the company operating the drilling platforms. Once oil, gas or both have been discovered and a well is capped, that well needs to continue to be monitored. Primarily that will be done by the company that owns the title, but NOPSA will also have an overseeing role. The main bill and the levy that goes with it will facilitate that oversight being performed to a high standard.

The cognate bill contains consequential amendments to the Offshore Petroleum and Greenhouse Gas Storage Act 2006, which seems to be a recurring dream in this building. The act comes back to this chamber regularly for a minor tweaking here and there. The amendments to the act will enable NOPSA, which is funded on a cost recovery basis, to raise levies from the offshore petroleum industry to recover costs associated with undertaking its augmented integrity and other well related functions. We want to see this done properly, and in a way that ensures that there is no repeat of the Montara incident.

Amendments to the Offshore Petroleum and Greenhouse Gas Storage Act came into force in November 2010, augmenting NOPSA’s functions to include regulatory oversight of non-occupational health and safety structural integrity issues relating to wells and well related equipment and clarifying title holder duty of care in relation to wells and well related equipment. To give full effect to these augmentation legislative functions, regulatory functions and powers relating to management of well operations under part 5 of the Offshore Petroleum and Greenhouse Gas Storage (Safety) Regulations will be transferred to NOPSA in 2011.

As NOPSA is funded partially on a cost-recovery basis, levies imposed by the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act are required for NOPSA to carry out its functions and responsibilities. Current levies imposed by the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act are not appropriate in terms of either their purpose or the entities from which they are collected, and these bills ensure that NOPSA is able to collect levies relating to their augmentation well functions from the correct entity—in this case, the titleholder.

We have seen a very unfortunate incident off north-western Western Australia. The industry is now working hard with government, and in cooperation with experience from around the world, to ensure that well integrity and the exploration of petroleum resources in offshore Australia is done at the very highest of world standards. It is worth noting that, whilst for Australia the Montara well failure was a disaster, we were fortunate that there was no environmental damage. But from what happened next in the Gulf of Mexico we got an insight into just how serious a malfunction in a well can be. I do not think anyone will forget those graphic images from BP’s well in the Gulf of Mexico in which oil and hydrocarbons escaped uncontrollably and, unfortunately, were all washed up onshore, particularly on the southern shores of the United States. We need to learn from those events. There was a very significant environmental cost in that exercise, and a number of lessons can be learned from it.

I know that my colleague sitting to my left, the member for Dickson, occasionally accuses me of cooperating too much with the Minister for Resources and Energy, but the reality is that the consultation process enables the minister’s experience, his department’s experience and my experience as the minister for resources for six years to be used to ensure that we put in place processes that are not overly onerous and are still more than sufficient to do the job. The coalition supported the Minister for Resources and Energy when he asked that the Montara Commission of Inquiry into the uncontrolled release of oil and gas from the Montara wellhead platform in the Timor Sea be put in place, and that process has been pursued to its completion. Of course, there is still some more work to be done there, and the industry and the industry association, APIA, are working to ensure that the correct set of guidelines is put in place.

I should say that there will be more to come in relation to this issue, but we need to ensure that the oil and gas industry has the confidence of the Australian community as it goes about the challenge of recovering those resources in offshore situations. The community must have confidence not only that we have in place the right set of rules but also that those rules are overseen in a way that ensures that the rules and regulations are followed. I believe that, as we move forward on this issue, we will be able to do that. If we do not do that, the industry will become beset with uncertainty. This industry is not merely beset but besieged with uncertainty from the Gillard government.

This is one of those industries which produces in particular liquefied natural gas and exports it to the world. For every tonne of CO2 emitted securing LNG, we save around eight tonnes of CO2 from the replacement of a coal fired power station in China. So this industry is incredibly important when it comes to reducing carbon emissions. Yet we know that, here today and in previous weeks, the LNG industry is under threat from this government through the imposition of a very poorly thought out carbon tax. I was involved in a negotiation to try to ensure that the LNG industry was protected from the economic impact of the previous scheme—the CPRS—which the current Prime Minister abandoned for fear of a voter backlash. But yet again we see that none of those lessons have been learned and that this government is hell-bent on placing an impost on the liquefied natural gas industry which will make that industry uncompetitive in comparison to the rest of the world.

I do not know why the government is embarking on this role. Why would it impose a carbon tax against an industry that reduces emissions eightfold? It makes no sense to us, and it creates another area of uncertainty for this industry which has already been subjected to changes in government policy and increases in taxes. We saw several years ago the imposition of a tax on condensate—which is a product that comes out of gas wells—on this industry. All we have seen from this government is a series of legislative and regulatory changes causing further uncertainty.

We will work with this government to try to create some certainty for the industry as to where the regulatory process will go. We do not want to go down the extreme path that the government’s alliance partners want to go down—that is, basically to shut down the fossil fuel industry in Australia. The Australian Greens would be quite happy to see the coal industry shut down tomorrow, followed by the oil and gas industry. They are partners in government. Some would say that Senator Bob Brown is in fact the Prime Minister—that he is the one who is actually in power and that, while the Gillard government may be the government, the Greens are controlling the agenda. That level of uncertainty and regulatory potential is scaring the daylights out of the oil and gas industry. We want to make sure that we can produce legislation that gives the community confidence without letting the Greens control so much of the agenda that this industry ceases to exist.

As we learn from the experiences of Montara and read carefully the Commission of Inquiry’s report, we realise that there will potentially need to be further changes to the structure and operation of NOPSA. I have spoken in this chamber about that before. The Liberal and National parties support in principle the establishment of a national offshore petroleum regulator that includes the oversight of environmental impacts, but we see that only in the context of it being a national body, not a federal body—that is, it is a national regulator, not a federal regulator, made up of a partnership between the federal government and the various state governments represented on the Ministerial Council on Mineral and Petroleum Resources. We want to see a partnership formed. In saying that, there are concerns being expressed by my colleagues in Western Australia—more particularly by the Western Australian Minister for Mines and Petroleum, Norman Moore. I intend to have some further discussions with Minister Moore and I also intend to talk with my colleagues, as I am talking with the minister for resources, to ensure that we can move forward on a process which satisfies the Western Australians and the other states in Australia, for that matter. I hate to tell Western Australians, but Western Australia is not the only state with offshore gas, but it is the major state. We need to look at a process whereby we not only fund the current operations of NOPSA but actually expand NOPSA to NOPSEMA, the National Offshore Petroleum Safety and Environmental Management Authority.

We have a challenge in front of us. We need to ensure that we produce an optimal outcome that has the confidence of the community in how we regulate, how we monitor and how we ensure safety in terms of occupational health and safety and, just as importantly, the environment as this industry continues to produce not only the jobs and the exports that we need but also the raw materials that we use every day in operating our motor vehicles, heating our houses and running our power stations. Gas is becoming an increasingly important energy source in Australia and we need to ensure that we maintain our self-sufficiency.

One of the things that will also help in bringing certainty—and I would be remiss to not mention it in this speech—is of course the need for an energy white paper. Member for Dickson, where I differ very strongly with the Minister for Resources and Energy is the fact that the Gillard government, like the Rudd government before it, has failed to give any energy certainty to Australia. It has failed to deliver on an energy white paper and it has failed to give this industry any road map moving forward about where Australia is going to source its energy. In relation to offshore greenhouse gas storage legislation, we have also seen a complete halt in confidence and progress in relation to carbon capture and storage. In fact, we have seen a number of exercises aimed at getting a 30-second story on the news at night, but, in terms of actually offering a path forward for the coal industry to capture carbon and store it, we are seeing nothing from the government.

In conclusion, the opposition will continue to work with the government whilst ever reasonable proposals are put forward and whilst ever the industry is consulted on those proposals before they are brought to this chamber. It is important that we not only have the confidence of the community but also have a regulatory process that works—a regulatory process that is practical, allows all responsible parties to pay their way in terms of the operation of that oversight and ensures that, as we do that, we do not choke the industry with regulation to a point where the industry no longer has the confidence to invest in Australia. The reality is that, while Australia has a very stable geological structure, there are plenty of countries in the world that have oil and gas. We want that investment here. We want the billions of dollars that are currently being invested by Woodside, Chevron, Shell and BHP—the whole raft of companies that invest—to continue here, but we want it to continue on a basis where it is properly regulated and correctly oversighted and where the community has confidence in the overall process.

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

I am very pleased to speak today to the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 1) Bill 2011 and related bill which will ensure safer petroleum and gas operations off our coastline. For those members of the Australian public who are listening and might have cause to be a little alarmed by some of the comments of the member for Groom, let me just put on the record a contrasting and more accurate view about a carbon price and its impact on this industry. The Prime Minister has made it very clear, unlike the indications we have just heard from the member for Groom, that putting a price on carbon, and our plans for that, will make sure that polluters will pay. The Prime Minister made it very clear. I note that the member for Groom was talking about the need for certainty. There is certainty in our position. By making the polluters pay and gathering those dollars, the government has plans to make sure that the money goes to three very important elements: firstly, to generous assistance for households; secondly, to support businesses to transition to sustainable practices in a clean energy economy to keep jobs in those critical industries; and, thirdly, every cent that is raised from making the polluters pay will go to climate change programs that will engage young Australians in looking at innovative ways to change our practices with regard to our carbon impact on our environment.

In contrast, in such important industries as our minerals, coal and gas industries, claims for certainty cannot be guaranteed in any way by those from the opposition who one day are climate change deniers and the next day are its proponents, depending on the context of the conversation. To demonstrate that we all know that Mr Abbott is a climate change denier, his policy is complete nonsense. Despite his best efforts to convince people that he really does accept the climate science, we know that he has not changed his view and that he has always talked about climate change as being ‘crap’. The uncertainty of this flip-flopping from one position to another is exactly in opposition to certainty, the importance of which the member for Groom has indicated.

Having cleared that up a little, to make sure listeners have no misunderstanding about the importance of our agreement on this element of the bill, I would like to move forward and talk to the bills in question: the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 1) Bill 2011 and the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies (Consequential Amendments) Bill 2011. Put simply, these bills impose levies on offshore petroleum titleholders to recover the operational costs for the augmented safety regime carried out by NOPSA, the National Offshore Petroleum Safety Authority.

The new levies include three elements: a new well investigation levy, an annual well levy and a well activity levy. What can one say but ‘Well, well, well’? I think the usual rejoinder of British bobbies in comedies of a certain area was, ‘Well, well, well—what have we here then?’ To stretch the metaphor a little further, what we have here is a means for the safety regulator, NOPSA, to marshal sufficient resources to effectively perform the augmented integrity and regulatory functions that were granted by the parliament last year.

By way of background, the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act currently imposes safety related levies relating to offshore petroleum and greenhouse gas facilities which are payable by the operator. At the moment, though, these safety related levies do not extend to NOPSA’s well related regulatory functions and powers. Importantly, the new and revised provisions place obligations on titleholders, not facility operators. This assessment and monitoring goes to the structural integrity of wells and well operations for the life of the well. The safety benefits of these measures should be pretty obvious. They are essential for NOPSA to effectively and fully do its job of determining the integrity and safety of wells and minimising risks to people at or near those wells.

This is particularly important in light of the issues arising from the Montara oil spill incident in August 2009, and I am pleased to say that the member for Groom gave a very fair representation of Australia’s general deep concern about the impact on the environment of that spill. As commissioner David Borthwick noted in his report of the Montara Commission of Inquiry in June last year, the magnitude of the blow-out from the Montara wellhead platform was one that Australia had not seen the like of in 20 years. While the risks of such an incident are low, the results could have been catastrophic—and the government have taken that on board. I note that the commission of inquiry recommended enforcing requirements of the Offshore Petroleum and Greenhouse Gas Storage Act and the regulations as they relate to well integrity, and clearly we are following through.

There are a couple of noteworthy aspects of these levies that I should mention. A well investigation levy is only imposed on petroleum titleholders where the reasonable costs incurred by NOPSA in conducting an inspection into a breach or suspected breach of the OPGGS Act exceed $30,000. That threshold is high and it reflects the purpose of imposing the well investigation levy separately from the annual well levy and the well activity levy. The imposition of the well investigation levy, coupled with it being triggered by a threshold, is to avoid an unacceptable level of cross-subsidisation between titleholders whose activities require a high level of investigatory activity by NOPSA and those whose activities do not require such a level of activity.

As a result of the measures, consequential amendments to the OPGGS Act are required to enable the effective calculation and collection of the new well levies. The amendments provide that the new levies become due and payable at a time specified in the regulations. In addition, the amendments ensure that each of the well related levies payable under the regulatory levies act are credited to the national offshore petroleum safety account.

The consequential amendments we are debating here today also provide for a late payment penalty to be payable by a titleholder where one of these new levies imposed on the titleholder remains wholly or partly unpaid after the day it becomes due and payable. This penalty is naturally designed to encourage and ensure that levies are paid on time. Given the importance of NOPSA’s function in regulating safety and integrity matters for the offshore oil and gas industry and the fact that it is funded through levies, it is critical that the industry pays these levies in a timely fashion.

Separately, the government is working on a proposal to establish a national offshore petroleum safety and environmental management authority, NOPSEMA, and a national offshore petroleum titles administrator, NOPTA, by 1 January next year. I am advised that the minister is looking to introduce amendments to the act to establish these two new bodies in the first half of this year. I look forward to speaking to the debate when that legislation comes before the House. In the meantime, I commend these bills to the House.

Don Randall (Canning, Liberal Party, Shadow Parliamentary Secretary for Local Government) Share this | Link to this | Hansard source

I am pleased to speak on the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 1) Bill 2011 and the related bill. As a Western Australian, I am obliged to talk to these bills because they have such an effect on our state. I noticed that the member for Groom and the shadow minister tried to make some sort of flippant comment that other states were relevant in this debate. I understand Queensland is heading towards coal seam gas in a big way and we know about Santos in South Australia and Bass Strait and these sorts of issues, but let’s understand the accepted figures: 67 per cent of petroleum produced in Australia comes from Western Australia and 80 per cent of the reserves are in Western Australian waters, generally. It tends to put our bona fides out there.

It would be remiss of me to allow the member for Robertson to leave without censuring her for trying to somehow connect the CPRS and the tax on carbon dioxide to this bill. It is like the Greens saying that climate change has something to do with the tsunami and earthquake in Japan. It is totally irrelevant and misses the point. A new staff member that knows something about writing on legislation might be handy for the member for Robertson so she stays relevant to the bill.

It is true that this bill imposes three levies. The purpose of the bill is to help discharge its regulatory functions and it will indicate a widening of its ambit to include levies relating to wells as has been said before. Again, to get it on the record, this bill will strengthen the legislation that came into effect on 1 January 2005. The National Offshore Petroleum Safety Authority is an independent statutory authority created under the Petroleum Act. It is jointly administered by the Australian government and state and Northern Territory ministers, who have the responsibility for the offshore petroleum industry et cetera.

The three levies, I will point out early in the piece, which have also been mentioned, are the annual well levy, the well activity levy and the well investigation levy. As I said, it has been pointed out earlier that this is heading towards full cost recovery for the administration and oversight of these operations. That is interesting in itself because one of the parts of the explanatory memorandum to this bill is that anything over $30,000 will trigger a levy. Can you imagine anything in an offshore area being under $30,000? It would probably cost you $30,000 to get a helicopter and a team of guys out there to do an inspection. In other words, they are going to qualify in just about every aspect of investigation. Interestingly, some of the jury is out on whether this is a tax or a levy, and there is a fair bit of discussion as to whether it qualifies as a tax or a levy because a tax is uncapped and a levy is capped. The work on these inspections and monitoring is open-ended. You can continue to collect a levy for a whole range of activities and see it grow and grow as to the sort of work that is being done in relation to that.

Everybody keeps talking about this being a response to the Montara well head platform blow-out which occurred. I heard the minister say it was off Western Australia; it was actually off the Northern Territory, I understand. That is why it came under the jurisdiction of the Northern Territory regulators. In fact the Northern Territory Department of Resources was found not to be diligent after the commission of inquiry. I wonder why they were not diligent. I understand only three people work in the department and one of them seems to be on leave much of the time, so two people from the Northern Territory department are trying to monitor and control what happens in their jurisdiction. The existing legislative regime needs to be adjusted to make sure it covers any of those contingencies.

I am concerned, particularly as a member from Western Australia, because we need to be careful about the centralisation of powers to Canberra. We need a national approach but we do not need a Canberra-centric or centralist approach. We have seen this before. I want to make a comparison that may be a little bizarre but I will point it out in any case—I see my colleague Senator Back from Western Australia entering the chamber and he will understand this very well; dare I say it happened under our watch under the Howard government—when we created the Environmental Protection and Biodiversity Conservation Act under Senator Hill as environment minister, we did not realise what a can of worms we were opening for individual states and jurisdictions. Lo and behold: we now have someone in Canberra—and I will give you an example from my electorate—who decides whether you can have a development in a particular area because there might be black cockatoos on the land. This is relevant to the bill because it shows what happens when you centralise powers to Canberra. You have some hairy pitted, kaftan-wearing, bead-wearing person in the department saying, ‘You can’t have development on that land because we’ve found some black cockatoos or Carnaby’s cockies on that particular bit of land.’

I had one of my businesspeople in the electorate trying to expand a simple sandpit. They did a $10,000 survey and found there were no birds there but, because birds might have been there, they were not allowed to expand. The Dawesville Catholic Primary School was not allowed to expand its sporting oval because it might have been a potential habitat for black cockatoos. This is what comes out of Canberra. When you are 3,000 miles away in Western Australia and you have got somebody in a department in Canberra telling you how you are going to run the show on the west coast, it is not very relevant.

This is why not only me but other members are concerned about some elements of this bill. It is correct: yes, we support the intention of the bill but we are flagging some of the issues that could be a problem. For example, we have not had any bad incidents over the 40-odd years that it has been administered by the Western Australian state government over a number of state governments—not just the coalition government; certainly, the previous government was Labor. The only one I can think of was the Varanus Island blow-out but that was dealt with immediately. It was when the Apache Corporation allowed some of the materials to be run down and it caused a problem with gas flow to Western Australian industry and houses. To say that this needs to be done because of the Montara blow-out is, I suspect, an overreaction and a potential power grab from Canberra. We are not satisfied totally as a state government in Western Australia that the arrangements today are the best option for our state and the industry in general.

The federal Labor government is intent on centralising power and diminishing the role of the states. We have seen this in Western Australia in terms of our services. Western Australia is seen as almost too far away and a great cash cow. You only need to look at the way they view us in terms of the GST: 68c in the dollar at the moment, and going to 72c, while Queensland is 91c and New South Wales is 93c. We are sick and tired of being used as the cash cow for Australia. Most of the resources, not only oil and gas but the mineral industry, are centralised in Western Australia. They wanted to give us a mining tax. They want to give us a tax on carbon dioxide so that we can export jobs and pollution offshore. We are getting sick and tired of Canberra dictating to us about how much good they are going to do for us 3,000 miles away.

These centralist initiatives are all too common, particularly from the Rudd and Gillard governments. This is being driven by the coalition of the Gillard-Brown government. We need to make sure that it is understood that this is not the Gillard government; this is the Gillard-Brown government that is now deciding that it is going to impose a whole lot of social and environmental measures on us that would not have been done before, because the green tail is wagging the red dog.

The Western Australian state mines minister, Norman Moore, is very concerned that some of the powers in Western Australia will be taken away from his department. Not only that, but $15 million will now be taken out of the Western Australian state budget. The full cost recovery of levies for this oversight will now be sent to Canberra and it will be administered from Canberra, and Western Australia will be left out. The Western Australian Premier, Colin Barnett, opposes Mr Ferguson’s plans to set up a single national offshore petroleum regulator. He said it was a mistake made by the Northern Territory department of resources and it would not have occurred in Western Australia. We do not mind if you go and have a look at the Northern Territory; after all, it is a territory, not a state. They might need some help in terms of resources. They are undermanned in their department in any case. We realise that there needs to be a national approach, but those on the ground in Western Australia—with a magnificent track record—need to be kept in the loop. I understand that there is no company that is involved in exploration or production in Western Australia that wants to see this measure taken into account. I know that Woodside have not been out there pushing for it, and they are probably our most high-profile company at the moment.

Norman Moore, in a letter to the editor, has said that oil and gas projects cross boundaries between state borders, islands and mainland areas—and they do. There are a whole lot of boundary jurisdictions around who is responsible and how far out the zone goes. It is not a line like the offshore economic zone, which is 200 kilometres. It varies depending on the continental shelf and other factors, and islands and all those sorts of things. As he said, ‘I’ve had no-one knocking my door down to do anything about this.’

The Western Australian minister, Norman Moore, went further and said that to strip this regulatory responsibility from Western Australia and hand it to Canberra was something that he did not agree with. States would act as designated authorities and administer regulations regardless of whether the offshore operations were in Commonwealth or state waters. The current system is not broken and it has worked well for 50 years.

Coming to a conclusion, to demonstrate why we are concerned about this issue: there was meant to be consultation after a Senate committee, and I understand that the consultation has not been as forthcoming as it should have been. In talking to industry bodies today—this needs to be verified but it is information I have received from them today; we even talked to APIA today—to placate the territories and states, particularly Norman Moore, there appears to be some move towards saying that the minister in the state had the final say. If this is a move towards a resolution to this, that is good. But I would like to see it in the bill, I would like to see it in any part of the memorandum so that it can be referred to and held to account for any future contests in this area. As much as we support a strong national regulation—rather than a Canberra regulation—and the states having a proper say in this area, we support the bill.

Darren Cheeseman (Corangamite, Australian Labor Party) Share this | Link to this | Hansard source

I too rise to speak on the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 1) Bill 2011 and the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies (Consequential Amendments) Bill 2011. These bills will play an important role in future development of industries in Australia and industries in my electorate of Corangamite. They have implications for jobs, the environment and future investment. They are about the Australian government putting down a regulatory framework for good governance and good corporate citizenship.

There are substantial investment opportunities within the Otway Basin, which of course contains a very significant gas resource, for us to exploit in future generations, particularly with the setting of a price on carbon and investment migrating from brown coal in Victoria to baseload gas, providing enormous investment opportunities within my region.

These bills impose levies on the offshore petroleum titleholders to enable the National Offshore Petroleum Safety Authority to recover costs associated with undertaking its assessment, monitoring and enforcement functions. That is very important work in ensuring that we are able to exploit these gas reserves in a way that is sustainable and safe for the environment and in a way that enables us to invest in this important economic opportunity for Australia and of course for my region. It is important that regulatory action is undertaken to ensure safety and good governance take place within this environment.

These bills change the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act 2003—the safety levies act—to impose levies on offshore petroleum titleholders to enable the National Offshore Petroleum Safety Authority to recover the costs associated with undertaking regulatory functions in relation to wells and well-related equipment, which of course is critical to exploration. Importantly, the bills also make consequential amendments to the Offshore Petroleum and Greenhouse Gas Storage Act 2006 to enable effective calculation and collection of the new well levies. The imposition of these levies will ensure that NOPSA—which is funded on a cost-recovery basis from levies raised from the offshore petroleum industry—has sufficient resources to effectively perform its functions.

This legislation is about Australia and the Australian government not only making sure that this industry is well regulated in order to protect our environment but also ensuring that there is a suitable environment for investment as we go forward. It would be very easy to not regulate in this area, but of course that would have substantial consequences, particularly in light of the many offshore accidents that have occurred throughout Australia’s history and in many other countries that have been able to exploit their environment for gas and other petroleum-related products. These bills are another important cog in the wheel of policy that the Gillard government is moving to address.

This industry has the opportunity to create many jobs and future investment opportunities throughout our nation. It is important that we look at this in the context of many areas like Corangamite, where there is a very substantial resource that we will be able to exploit in the years to come, particularly as we move from baseload energy—being largely derived in Victoria from brown coal—to being able to take up the economic opportunities that come from offshore gas. The Otway Basin, in my electorate, has been developed in recent times and I am sure that, as we place a price on carbon, there will be further investment in this field, creating jobs in my local area, enabling us to reduce our carbon footprint in Victoria and providing investment opportunities and wealth for our nation and for my region. It is important that we put in place the necessary regulatory steps so that this industry can develop safely and so the financial community has certainty that we can exploit these resources in a way that enables investment to flow and opportunities to be taken up.

Getting this framework right is important and will also flow to other bills that this parliament will debate in the months to come in terms of putting in place the necessary steps to set a price on carbon. It is important that we take these steps. In recent times we have seen many examples where things have gone drastically wrong, creating uncertainty here in Australia—as other speakers have alluded to—and in many other jurisdictions around the world where incidents have occurred. In many regions in Australia and around the world it is true to say that we are drilling at distances further from the coast at depths greater than what we have been able to drill to historically. But, with that, comes some very substantial risks. That is why it is important that we put in place the necessary mechanisms to ensure that it is done safely and that there is proper oversight. We of course want to exploit these resources but we need to make sure that we do it in a safe way.

For many years whilst I was at university I studied geology. I am probably one of the very few people in this place that has a connection to the earth sciences. Certainly, there are very substantial investment opportunities right throughout this nation. In my electorate we have the Otway Basin off my coast that has huge opportunity for us in Victoria, but there are many other parts of Australia where there are huge opportunities for investment, opportunities to create jobs and export a resource to the rest of the world that will help them reduce their carbon footprint as they hopefully migrate from coal and other more heavy carbon footprint products to gas.

In my region in recent times exploration has taken place. It is true to say that there are huge investment opportunities that will take place in the months and years to come. But we need to make sure that we have proper regulatory oversight in place. We do need to make sure that there is a cost-recovery mechanism put in place so that the regulator has the necessary resources to ensure that this industry is undertaken and developed in a way that is sustainable and, importantly, safe.

There is no doubt in my mind that with the gas industry being further developed we can substantially reduce our carbon footprint. Of course, we do know that many areas such as mine do have a large carbon footprint. Any mechanism, any industry that is developed that assists in reducing our carbon footprint is something that people in my electorate of Corangamite, and I am sure in the electorate of the member for Corio, certainly will embrace.

Within our region we do have very substantial low-lying coastal communities. When I talk to those communities they certainly encourage me to raise these issues within the parliament, and I certainly take every opportunity to do that where I can. We have areas such as the Great Ocean Road, the Surf Coast and the Bellarine Peninsula which will be at threat of coastal inundation with sea level rise. It is for those reasons that I take every opportunity to encourage the development of a future gas industry off my coastline because I believe that it can play a very substantial role in reducing our carbon footprint.

As I said earlier in my speech in this debate, it is important that we do have proper regulatory oversight and that it is done in a way which goes to cost recovery. In a broad sense that is what these amendment bills do, and I therefore commend these bills to the House.

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

The Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 1) Bill 2011 and the associated bill help to bring together the regulatory regime which has been put together along with all the other legislation which has taken several years. I have been pleased that during that time the House of Representatives Standing Committee on Primary Industry and Resources was able to bring down the report, Down under: greenhouse gas storage as a start for the minister’s legislation and we have moved on to where we are now.

These bills deal with the cost recovery of having a proper process by bringing titleholders and title areas into being to carry the cost for the National Offshore Petroleum Safety Authority. That authority’s role is to have the skill base to carry out the work to ensure that everything is done in the proper and correct way. To achieve that there are several different parts of these amendment bills. I understand there is some urgency to make sure that the resource management and administrative regulations commence in April this year, which is only a month away, so it is certainly appropriate that these bills are passed soon.

When we did the Down under report we found that the public need to feel reassured that there is a regime in place that they are comfortable with, that they have confidence in, and that they will give full support to. We are all aware that what occurred in the Gulf of Mexico a short time ago disrupted the lives of thousands, probably millions, of Americans and brought disruption to their economy in parts of the country.

This legislation introduces a cost-recovery mechanism. We need to have that to make sure that the right people are paying for safety. Safety does cost; regulations do cost. To have a proper regulatory regime in place will give us the right processes so that this industry continues to play a significant role in this country. I certainly support the bills.

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

in reply—I express my appreciation to the members for Groom, Canning, Robertson, Corangamite and Lyons for their constructive contribution to this debate. As has been evidenced by the debate to date, those who have contributed understand the importance of the petroleum industry to Australia. They also appreciate the need for government to be decisive, to ensure that we have the best possible regulatory regime in place as part of our commitment to proper practice with respect to both environmental and health and safety related issues. It is for those reasons that the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 1) Bill 2011 and the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies (Consequential Amendments) Bill 2011 were brought forward.

The bills amend the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act 2003 and make consequential amendments to the Offshore Petroleum and Greenhouse Gas Storage Act 2006. These important amendments impose well and well related activities on petroleum titleholders to ensure that the National Offshore Petroleum Safety Authority can recover the costs associated with undertaking its regulatory functions in relation to structural integrity and the safety of wells and well related equipment. I remind the House that the operation of NOPSA is a full cost-recovery model, hence the expansion of responsibilities to do with wells and well related activities requires additional revenue to be raised.

I also acknowledged that the bills underscore the Australian government’s commitment, which is very much supported by the opposition, to ensuring that NOPSA has sufficient powers and capability to effectively regulate all aspects of occupational health and safety for the offshore petroleum industry, including in relation to the operation and integrity of wells. The collection of these levies will ensure that NOPSA is adequately resourced to carry out its well related functions under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and associated regulations.

I will briefly respond to a couple of issues raised by the member for Canning, for the purposes of correcting the record. Firstly, I indicate that this legislation applies to Commonwealth waters only. Obviously, much of the petroleum industry is off the coast of Western Australia. Constitutionally it is clearly a Commonwealth responsibility. That is not questioned. I also indicate that, contrary to the member for Canning’s suggestion, 80 per cent of the petroleum activities off the coast of Western Australia are actually in Commonwealth waters, not Western Australian waters. I note also that the existing safety investigation levy is exactly the same threshold as the proposed well investigation levy. The levy is not necessarily triggered every time there is an investigation.

I further remind the member for Canning that there have been a number of reports, other than the Montara Commission of Inquiry, recommending the transfer of structural integrity to the National Offshore Petroleum Safety Authority, including the 2009 offshore petroleum regulatory inquiry and the 2008 NOPSA operational review. In essence, there are now three separate reports recommending that the Commonwealth further strengthen the role of NOPSA in view of the need to establish a single national regulator with additional health and safety and environmental responsibilities. This change is perceived as being potentially of great benefit to industry from a regulatory point of view and, from a productivity point of view, represents the opportunity to make considerable savings over time in the cost of operations of this industry.

Hence, I can indicate to the House that industry largely supports these changes—contrary to the member for Canning’s suggestions. Industry understands that, given the Macondo incident in the Gulf of Mexico and our own Montara accident, we have to go out of our way to ensure that industry’s social licence to operate is understood and accepted within the Australian community. From an economic point of view this is exceptionally important to Australia. Firstly, at the moment, in petroleum products we have a net trade deficit of $16 billion per year that will potentially blow out to $30 billion by 2015. I also indicate that in terms of the strength of the economy the petroleum sector is very much underpinning a pipeline of investment from an Australian perspective. This has taken us close to capacity in our ability to supply skilled labour to support these projects in Australia. Be it on the west coast, with projects such as Gorgon, the biggest ever single investment Australia’s history, be it INPEX in the Northern Territory, or be it the recent approval for a new industry on the east coast of Australia, the coal seam methane industry, the pipeline of investment for Australia represents a tremendous economic opportunity.

I also remind the House that the wages and conditions applicable to workers in this industry are exceptionally good. In actual fact, many workers in other industries are envious of the rates of pay and conditions of employment applicable to this industry.

I will say a few words about the overall importance of this debate. Firstly, the issue of well integrity was actually thrown up in previous reports for the government to attend to. We have acted; hence the cost-recovery processes have kicked in. Secondly, the Commonwealth remains committed to putting in place, as a result of these three reports, a single national regulator with additional responsibilities relating to not only health and safety but also appropriate environmental matters. I say that because I am reminding you that if you have an accident it has the same potential ramifications from an environmental as from a health and safety point of view—hence the need for a strong national approach to regulation. This is supported by industry very rigorously and supported by all states and territories, with the exception of Western Australia.

I remain committed to trying to reach, one way or another, an outcome with the Western Australia government that suits all our needs. Western Australia is a huge beneficiary of economic activity conducted in Commonwealth waters off the Western Australian coast. They should appreciate that, given Macondo in the Gulf of Mexico, and Montara, the Australian community is not prepared to accept a failure by the Commonwealth to act to ensure that we have the best possible regulatory regime in place to match the economic importance of this industry and its environmental significance. I commend the bills to the House.

Question agreed to.

Bill read a second time.