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

by leave—Today I present the government's response to the report of the Montara Commission of Inquiry and the Productivity Commission's review of the regulatory burden on the upstream petroleum oil and gas sector. Both reports go to the all important question of strengthening the safety of our offshore petroleum framework. The Australian government remains firmly committed to improving the protection of human health and safety and the protection of the marine environment to ensure that Australia's offshore petroleum industry is the best and safest in the world and is able to contribute to Australia's ongoing energy security and economic prosperity. Our action in response to these two reports delivers on that commitment.

Dealing first with the Productivity Commission review that was presented to the government on 30 April 2009, the review found evidence of duplication overlap and inconsistent administration in the current regime that imposed significant unnecessary burdens on the oil and gas sector and threatened Australia's competitiveness. The commission recommended the establishment of a new national regulator for offshore petroleum as well as implementation of best practice regulatory principles in all jurisdictions. This recommendation is consistent with the recommendations of the Montara report.

The government's final response to Montara refines the draft response with the benefit of a three-month period of consultation including consideration of 17 submissions. While full implementation of the government's final response will require sustained efforts over several years by governments, regulators and industry, I am pleased to note that a significant number of recommendations have already been implemented or are in the process of being implemented. This includes measures relating to PTTEP in the Northern Territory in its role as designated authority and amendments made to the Offshore Petroleum and Greenhouse Gas Storage Act 2006 to provide the National Offshore Petroleum Safety Authority with regulatory responsibility for non-occupational health and safety aspects of structural integrity for facilities, wells and well related equipment in Commonwealth waters.

The core recommendations of both reports is the establishment of a single national regulator. This morning I introduced a package of amendment bills that established the National Offshore Petroleum Safety Environment Management Authority and the National Offshore Petroleum Titles Administrator. The government will also review all other Commonwealth legislation applicable to the marine and offshore petroleum environment to strengthen the marine and offshore petroleum legislative frameworks to ensure a comprehensive consistent approach to the regulation of petroleum activities in Commonwealth waters.

We have commenced a review of Australia's national incident response framework for the national plan to combat pollution of the sea by oil and other noxious and hazardous substances aimed at strengthening Australia's response arrangements and adding a guarantee that all costs of responding to the incident will be met by the polluter. My department and the Australian Maritime Safety Authority have agreed to a set of principles to inform equitable cost-sharing arrangements between the shipping and offshore petroleum industries in relation to all spill preparedness and response capabilities.

The government has determined that in the unlikely event of a future offshore petroleum incident the Department of Resources, Energy and Tourism will be responsible for the coordination of the response arrangements. This includes providing clear lines of communication between governments, regulators, industry and stakeholders more generally. We are clarifying and strengthening the current regulatory regime through the actions of the regulators in discharging their regulatory obligations by, firstly, issuing a statement of expectations to the designated authorities and to NOPSA; secondly, developing a national legislative compliance framework to provide a consistent best practice approach by regulators; and, thirdly, establishing agreed principles for appropriate engagement between the regulator and industry during an emergency response situation.

Government action alone is not sufficient. Industry must support our efforts and match them with their own actions to improve operations. In that respect I am pleased to inform the House that the offshore petroleum industry has made tangible improvements both here and globally in their oil field practices and spill prevention and mitigation techniques. The bar for best practice has been raised significantly. The Australian Petroleum Production and Exploration Association, together with its members, has developed, firstly, a draft mutual aid memorandum of understanding which provides clear guidance to industry and the government on the lease of equipment in responding to an incident; secondly, a self-audit tool of the management of well operations; and, thirdly, oil spill preparedness and response improvement plans. Globally the offshore petroleum industry has been working to improve well incident prevention, intervention and response capability. The industry must continue to show that it deserves to maintain its social licence to operate.

I say in conclusion that the Montara incident in the Timor Sea and the Macondo incident in the Gulf of Mexico changed community expectations regarding the operations of the offshore petroleum industry. There are clear parallels and common lessons between these two incidents which will be examined in greater detail at the Australian government hosted International Offshore Petroleum Regulators and Operators Summit, to be held in Perth in August this year. The Montara and Macondo reports both recognise the energy security and economic imperatives behind maintaining an offshore petroleum industry and the importance of balancing this with our responsibilities to ensure the sustainability of our marine environments. Both reports found that these incidents were preventable and pointed to a culture of complacency by the industry and its regulators. Governments, regulators and industry here in Australia and abroad are implementing the lessons from both spills and, in partnership with industry, directors, managers, workers, regulators, ministers and officials, will continue on a path of continuous improvement.

I commend both reports to the House and, in doing so, I present copies of the final government response to the report of theMontara Commission of Inquiry, the Commonwealth government response to theProductivity Commission'sReview of regulatory burden on the upstream petroleum (oil and gas) sector, and a copy of my ministerial statement. I ask leave of the House to move a motion to enable the member for Groom to speak for a period of no more than 6½ minutes.

Leave granted.

I move:

That so much of the standing and sessional orders be suspended as would prevent Mr Macfarlane speaking for a period not exceeding six and a half minutes.

Question agreed to.

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

I know it is a dry topic, but it seemed like a lot longer than 6½ minutes to me. I thank the minister for his presentation to the House regarding the government's response to the Montara Commission of Inquiry and the Productivity Commission's Review of regulatory burden on the upstream petroleum (oil and gas) sector.

Mr Tony Burke (Watson, Australian Labor Party, Minister for Sustainability, Environment, Water, Population and Communities) Share this | Link to this | Hansard source

Time!

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

I think he is supporting New South Wales but I will show him who is in charge. Like the government, the coalition understands the significance of Australia's oil and gas industry and is aware of the importance of ensuring it can operate within a safe and sustainable environment. From the outset the coalition have made a genuine commitment to work with the government on this issue and have never sought to politicise the issue for our own gain. I thank the minister and his office for their cooperation in ensuring that during that period the coalition has been fully briefed on the matter.

The minister is right in saying that the Montara incident and the disaster in the Gulf of Mexico have changed the way the offshore oil and gas industry is perceived, not only here and in America but right around the world. But this intensified scrutiny is not something the industry or the government should shy away from, rather it is an opportunity to enhance an industry that is fundamental to the energy and resources sector. Just as people are more aware of the nature of oil and gas exploration and extraction, they are also increasingly aware of the scale of the projects, the level of investment they attract and the economic benefits and job opportunities that are created by them. Indeed, thousands of jobs and billions of dollars of investment are at stake, which is why it is essential that we get this right. I share the view that the offshore oil and gas industry can operate in a manner that allows it to grow without exposing either its workers or the environment to unnecessary risks.

In terms of the government's acceptance of the recommendation for a single national regulator, the coalition supports this idea in principle and will now scrutinise the full details of the amendment bills presented to the House this morning that will set up the National Offshore Petroleum Safety and Environmental Management Authority, NOPSEMA, and the National Offshore Petroleum Titles Administrator, NOPTA. The coalition is also broadly supportive of the government's proposals to strengthen the regulatory regime for the sector and for clarifying the procedures and principles for responding to emergency situations.

I also acknowledge the opportunity that has been afforded to the industry to provide input to the government's response to the Montara Commission of Inquiry. From my discussions with industry—and they have been extensive—I understand this is an issue that they are very engaged in. They share the same aspirations to make sure the industry can develop in a safe and sustainable manner while preserving and not impacting on the environment. I applaud the commitment from the industry, as outlined by the minister, by which the Australian Petroleum Production and Exploration Association, APPEA, and its members have worked to create. APPEA has created a draft mutual aid memorandum of understanding relating to incident response, a self-audit tool for the management of well operations, and an oil spill preparedness and response improvement plan.

I would also like to acknowledge the role of the Western Australian government in negotiating the best outcome for the oversight and regulation of the oil and gas sector. As we know, in offshore terms, Western Australia is far and away the majority partner in the oil and gas industry in Australia.

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

Hear, hear!

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

For the member's information—I did not see her but I can guess who it was—I remind her that, in terms of reserves, Queensland has much more gas. I appreciate that the Western Australian government has had some philosophical and practical differences with regard to the idea of a single regulator. Nonetheless, and very much to his credit, the WA minister, Minister Moore, has played a constructive role in the negotiations to ensure the industry can move forward.

The Montara oil leak was a very serious incident and an incident which was without precedent in the oil and gas offshore industry in Australia. Nonetheless, there are lessons to be drawn from both that incident and the oil leak in the Gulf of Mexico. It has been extremely pleasing to see the Western Australian government Minister Norman Moore, the Minister for Resources and Energy, who has just presented his statement, and the industry, along with the coalition, working together to produce a non-controversial but best-case outcome. I congratulate Minister Moore in particular for that approach. I know that, at times, states fear that the Commonwealth is trying to take them over, but the minister realised early that we could all win out of this scenario; in fact, give the community, in particular, the confidence they need to continue to support the exploration and development of the oil and gas industry. The government and industry need to learn from the mistakes that have been made and make changes to the structures and operations that are necessary to make sure that incidents like Montara do not happen again.

The proposals outlined by the minister are an important step in that direction; however, the response must not be just about prevention. It must also be about ensuring the public have the confidence that the authorities responsible for the oil and gas sector and the wider resource industry are able to perform and protect the industry and the environment.