Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Transport) Share this | Link to this | Hansard source

I want to commence by making it clear that Labor supports the passage of the Offshore Petroleum Bill 2005 and related bills before the Senate. The Offshore Petroleum Bill 2005 is effectively a rewritten and renamed version of the Petroleum (Submerged Lands) Act 1967, which has been the primary legislation for the administration of Australia’s offshore petroleum resources for 40 years.

The legislative package before the Senate amends the structure and style of Australia’s offshore petroleum legislation and implements a modest number of minor policy amendments. According to the government, the management regime for offshore petroleum exploration, production, processing and conveyance will remain largely unchanged. In his second reading speech in the other place, the Parliamentary Secretary to the Minister for Industry, Tourism and Resources—who was, incidentally, dumped in the recent reshuffle—said the Petroleum (Submerged Lands) Act 1967 and incorporated acts have become complex and unwieldy. The changes are designed to reduce compliance costs for the industry and the state and territory governments who administer them. My colleague the member for Batman noted these comments and compared the size of the current act—less than 600 pages—with its replacement, which is more than 600 pages. The explanatory memorandum is itself over 300 pages long. Legislation is rarely simplified by making it longer, something Australia’s accountants know only too well following the introduction of the government’s new tax system.

There are many challenges confronting our energy sector. In 2003-04 we exported $8 billion worth of crude oil, LNG, and LPG, and a further $1 billion worth of refined products. This sounds good until you understand that, in the same period, we imported well over $10 billion worth of crude oil, LPG, and refined products to fuel our transport sector. In a country which, due to its size, is so reliant on transport, we cannot afford to be complacent about the future of our domestic oil and gas industry. The International Energy Agency’s 2005 review of Australian energy policy noted Australia’s thirst for oil, saying that the transport sector could particularly benefit from efficiency efforts with its fuel efficiency standards at the lower end of IEA countries. The review noted too that transport accounts for 40 per cent of final energy consumption and is projected to grow by two per cent annually over the two decades to 2020.

At the same time, oil production in Australia by 2020 is likely to be less than half of what it is today and demand is likely to exceed production at least threefold. Our reliance on imported oil is already having repercussions. Many motorists are struggling to keep their tanks full and afford other necessities of life. The impact of oil prices is starting to show in patchy retail spending. The transport sector is also feeling the squeeze. Australia is consuming oil three times faster than we are finding it, and we already import 60 per cent of our domestic oil needs. The Howard government has never addressed this fundamental problem of Australia’s reliance on imported fuel or the need to apply the competition blowtorch to the petrol industry. We are running out of time, and Mr Howard is leaving Australia unprepared for the future.

There is no simple solution to the problem of high petrol prices, but there are things the Howard government can do to make a difference. There are responsible steps which the Howard government could take now. First, instead of increasing our reliance on imported oil, the government should help develop an Australian gas to liquids fuel industry. We want Australia’s natural gas developed to make us more self sufficient in transport fuels and less vulnerable to future global oil shocks. Australia’s competitors in the gas industry are way ahead of us, particularly in the Middle East where countries like Qatar already have major gas to liquids projects making refined products for the global market. Second, it should provide a real future for the biofuels industry held back by continual Howard government incompetence, cronyism and mismanagement. Third, it should apply the competition blowtorch to this industry to make sure Australians get the lowest possible prices at the bowser.

I commend to the Senate Kim Beazley’s blueprint speech entitled ‘Developing the Australian fuel industry’. I also commend Mr Beazley’s blueprint speech on skills and schools, which outlines Labor’s plan to address Australia’s growing skills deficit. No industry sector has been harder hit by skills shortages than the energy sector. I also commend to the Senate the many sensible things Martin Ferguson has had to say as Labor’s resources spokesman, including the detailed remarks he made during the debate on these bills in the other place. These bills do not address the big issues facing Australia’s energy sector. They do not address our future domestic fuel needs. They do not address our need for skills. They do not address the provision of infrastructure to support industry development. Having said that, these bills are unlikely to do any harm. It is not high praise, but it is the basis on which Labor extends its support for their passage.

Lyn Allison (Victoria, Australian Democrats) Share this | Link to this | Hansard source

I rise to speak on the Offshore Petroleum Bill 2005 and the five related bills that are being considered by the Senate today. The Offshore Petroleum Bill 2005 is an extensive revamp of the longstanding Petroleum (Submerged Lands) Act 1967, which the government has argued needed rewriting to reduce compliance costs for the industry and for the state and territory governments. The Democrats note that the bill, in addition to reducing complexity, makes some minor changes to the current regime, the majority of which we do not have a strong objection to. We do, of course, have some concerns with the principal act, which enables petroleum exploration in marine parks, a matter which my colleague Senator Bartlett will talk more about later.

I want to say tonight that we are very critical of the fact that efforts have gone into this major rewrite of offshore petroleum policy instead of addressing the more critical issue of the impending oil crises and rising petrol costs. The latest research shows that oil peaking presents the world with a risk management problem of global proportions. There is now an energy security planning vacuum in Australia, as there is in other countries.

When oil consumption begins to exceed production by even a small amount, the price of oil could soar to well over $US100 a barrel, greatly increasing the cost of transport fuels and the petrochemicals used to make thousands of plastic products, fertilisers and pesticides for food production. Within a year or so this could create a global recession. The impact on the wellbeing of Australians, particularly those with outer suburban lifestyles hinged on two-car families and constant car trips to work, school and supermarkets, will be disastrous. I think people need to realise that oil production is not just about transport and the cost of getting to work; it is also about manufacturing, farming and the availability and cost of everyday products and food. Oil decline will have a huge impact on world food production and will have a devastating effect on developing countries in particular.

Since 1980, the gap between oil demand and oil supply, once considerable, has steadily narrowed, and today it is almost negligible. Since 1965 the amount of oil discovered each year has inexorably plunged despite all our advances in technology. Because of the lack of access to accurate data, there is no certainty about when oil production will peak and then decline. Some governments are very concerned about this uncertainty but our government is either unaware or is choosing to ignore the serious threat of reduced oil supplies as we reach 2025.

We know that the United States hit peak oil in 1971; the United Kingdom with its North Sea oil peaked in 1999; and Australia peaked in 2000. The Middle East remains one of the only areas that has not reached peak oil. Many of these countries do not release details about how much oil is extracted from the reservoirs or what methods are used to extract that oil. Nor do they permit audits by outsiders. Indeed, the condition of the Saudi and other OPEC oil fields is a closely guarded secret. According to a report published in the New York Times, Sadad al-Husseini, one of the most respected and accomplished oil men in the world and ex-director of Saudi Aramco, revealed that the Saudi government was seriously overstating its reserves. The report states:

“You look at the globe and ask, ‘Where are the big increments?’ ... if demand and depletion patterns continue, every year the world will need to open enough fields or wells to pump an additional six to eight million barrels a day—at least two million new barrels a day to meet the rising demand and at least four million to compensate for the declining production of existing fields. “That’s like a whole new Saudi Arabia every couple of years,”... “It can’t be done indefinitely. It’s not sustainable.”

Husseini’s message, like that of the Association for the Study of Peak Oil and Gas, is that the world is heading for a devastating oil shortage and contradicts the calming speeches of the Saudi oil minister and predictions of the US Energy Information Administration.

The US Department of Energy called for an investigation. The report, entitled World oil production: impacts, mitigation and risk management, states that action must start 20 years before peak oil to adapt to declining oil supplies. It says:

Prudent risk management requires the planning and implementation of mitigation well before peaking. Early mitigation will almost certainly be less expensive and less damaging to the world’s economies than delayed mitigation.

Based on estimates of peak oil, several scenarios have been identified: (1) that oil production peaks then declines around 2010 inducing a world-wide depression, wrecking the Australian economy and producing mass unemployment; (2) that oil peaks between 2015 and 2025, making a less painful adaptation possible, provided that most developed nations agree to reduce oil dependence with strong government market intervention, the introduction of fuel rationing, fuel efficiency standards and so forth; (3) that oil peaking after 2025 allows a timely adaptation with mutually agreed supply and demand side oil conservation measures recommended by the International Energy Agency.

While many governments are banking on a peak after 2025, the Association for the Study of Peak Oil and Gas predicts that oil will actually peak around 2010. The association’s data shows world oil production increasing by 2.2 per cent per year, which is the rate at which it increased in 2004, according to IEA, and then peaking between 2008 and 2012 followed by a 2.2 per cent per annum decline in production to 2045. Further, as conventional oil production begins to peak, the light, sweet crude gets used up first and the remaining conventional oil gets heavier and more sour with more impurities reducing the energy return on the energy invested and producing more greenhouse gas emissions. Non-conventional oil produces far more CO emissions than conventional oil.

The Energy research Centre in the Netherlands supports the hypothesis that an oil peak sometime in the period 2010 to 2020 is far from impossible, saying:

While there are many events that could postpone an oil peak till after year 2020 there are equally many events that could lead to an oil peak before the year 2020.

                 …         …           …

… an oil peak in the near future is indeed plausible and … it would be very useful to consider the possible consequences for global energy markets and the resulting drive for system innovations.

… we are referring to the period up to 2020 rather than any one particular year. … scenarios with limited availability of oil and sharply rising prices deserve serious attention in terms of the consequences for European energy transitions and related energy research, demonstration and development strategies.

Eric Streitberg, Managing Director of ARC Energy, asked participants at the Australian Petroleum Production and Exploration Association conference to put up their hands if they thought that we had reached peak oil. Fifty per cent of the people in the audience put up their hands, saying that they believe we are at peak oil. These are practising petroleum industry professionals.

Chevron, the US’s largest energy group with a good environment record, has set up a website warning of the pressures of high demand and fewer fields, and offering a forum for discussion. On the website, Chevron says:

One thing is clear: the era of easy oil is over.

It also says:

We call upon scientists and educators, politicians and policymakers, environmentalists, leaders of industry and each one of you to be part of reshaping the next era of energy.

Chevron has also said, ‘Inaction is not an option.’ Even Exxon Mobil, the world’s largest energy group with a bad environmental record, said in a recent advertisement:

The world faces enormous energy challenges. There are no easy answers.

Just last week President George Bush, in his State of the Union address, for the first time admitted that America’s reliance on oil is a real problem. He said:

America is addicted to oil …

He also said:

Keeping America competitive requires affordable energy.

President Bush then went on to announce a 22 per cent increase in clean energy research. He recognised the need to change how we power our homes and offices and invest more in solar and wind technologies. He also argued that Americans must change how they power their automobiles, and promised greater research into better batteries for hybrid and electric cars, and into pollution-free cars that run on hydrogen. He said:

We’ll also fund additional research in cutting-edge methods of producing ethanol, not just from corn, but from wood chips and stalks, or switch grass. Our goal is to make this new kind of ethanol practical and competitive within six years.

While there were some criticisms about the practical effects of President Bush’s announcement, it did signal an important shift in energy policy for the United States.

The question now is: where does that leave Australia? Transport predictions to the year 2010 in Australia for single-occupant car commuting, car travel generally, air passenger travel, intercity road freight and intracity commercial vehicle traffic all show an unsustainable growth in oil dependency. Over the last 40 years, Australia has become addicted to cheap oil, especially for transport, which uses almost 80 per cent of Australia’s petroleum. Fifty-five per cent of road transport fuel is petrol; 39 per cent, diesel; and six per cent, LPG. The oil-dependent transport sector is responsible for 76 per cent of oil consumption; that has to be reduced, as it poses a very serious threat to Australia’s future economy.

Achieving energy efficiency in all sectors of the economy requires action to be taken by individuals, companies and governments, but it is government who can encourage and discourage energy efficiency in so many ways. A key priority in guaranteeing Australia’s energy security is, in our view, to reduce the transport sector’s overdependence on oil. It does not matter that there is uncertainty about when peak oil will occur; what matters is the consensus that that peak will occur. We must act now.

We suggest the following initiatives be undertaken by government. Firstly, the government should develop car fuel efficiency standards to ensure that, by 2015, the average fuel consumption of the car fleet, including most four-wheel drives, be four litres per 100 kilometres and, for the SUV and light truck fleet, 6.5 litres per 100 kilometres, giving an overall 50 per cent increase in fuel efficiency. Secondly, we should conserve oil reserves through the use of natural gas as a transition fuel, the manufacture of energy-efficient hybrid electric cars and LCVs, and the building-up of a strategic six-month reserve of diesel and petrol. Thirdly, we should absorb the costs of oil depletion into the price of diesel, petrol and aviation fuel and utilise other green taxes designed to decouple the growth in oil consumption from the growth of GDP, and use the green taxes to rebuild and enhance rail infrastructure in all urban areas.

Fourthly, the government should promote and fund the uptake of telecommuting, eco-driving, car-pooling and TravelSmart programs in all urban areas. Fifthly, the government should change current land-use planning practice to eliminate residential sprawl, and provide public transport services in new residential and industrial areas. Sixthly, the government should change the constitution of road planning and building agencies to make it their responsibility to reduce the demand for road space and travel by car. Finally, the government should build urban bikeway networks for bicycles and electric bicycles, provide secure bicycle parking at all modal interchanges and railway stations, and encourage the use of electric bicycles with solar electric and/or overnight battery charging.

To implement these recommendations, an Australian energy security policy, with both demand- and supply-side measures should be produced to mitigate oil dependency. As Professor Peter Newman, a transport academic from Murdoch University, pointed out on the television show Catalyst late last year:

We have lots of preparedness for terrorist attacks; but where’s the plan for peak oil? We don’t have one.

In my contribution to the debate on the energy efficiency bill during the last sitting week, I called on the government to make the 2006 budget about the future of Australians and Australia and to invest in energy efficiency schemes, renewable energy, water and other areas in which energy efficiency can be found. Today I add to this list and call on the government to invest in an energy security policy with both demand- and supply-side measures. This is a matter of urgency.

Ruth Webber (WA, Australian Labor Party) Share this | Link to this | Hansard source

The Offshore Petroleum Bill 2005 and its associated bills replace the Petroleum (Submerged Lands) Act 1967. Although we are told that these new bills aim to simply rewrite the 1967 act to make it more user friendly, we are confronted with these new bills that increase in size from some 400 pages to over 600. Of course, in these days of extensive explanatory memoranda, this also runs to about 300 pages. It is interesting that, to make something easier for industry to operate and for government to regulate, it somehow requires more words than the act it is replacing. It puts one in mind of the new fairer, simpler tax act that doubles the length of the tax act. So we should not ever be surprised about how this government talks about the need to simplify but it always ends up with more and more provisions to do so. There must be some perverse logic along the lines that, by making it more complex, longer and more verbose, we are in fact simplifying it.

Having said that, I believe that we, like other industrialised nations, need to do better when it comes to our love affair with petroleum and its products. It is passing strange to hear no less than the President of the United States say exactly the same thing to the people of America in his State of the Union address. Quoting President Bush is not something I thought I would be doing, but the point he made about our overreliance on petroleum was a point well made. Petroleum and other energy products such as LPG represent nearly 10 per cent of Australia’s export revenue. It is an important part of our country’s trade performance and, as such, it deserves our close attention. But the fact remains that, although we exported over $8 billion worth of petroleum and gas and a further $1 billion worth of refined products, we imported over $10 billion worth of the same products. So, whichever way we want to consider it, we are a net importer of petroleum and gas.

So, just like President Bush said to the American people, we also need to do more to reduce our reliance on oil and gas imports. It is simple supply and demand, really. As demand increases, especially in China and India, and as supply remains at its current levels, prices will continue to rise. There is no way to change that simple law of economics. So if we as a country continue to rely on importing oil to drive our cars and fuel our transport sector then we will have to face up to increasing prices. It is estimated that, by the year 2020, the demand for energy in this country will have increased by some 50 per cent. We are looking at a situation in which, by 2020, over 60 of Australia’s requirements for fuels will be imported.

In fact, in March 2003, when I spoke on the Energy Grants (Credits) Scheme Bill in this place, the price of oil at that stage was $37 per barrel. Now, a short three years later, the price is around $60 per barrel and rising. The reality is that our oil reserves are being used at such a rate that, by 2020, we will be producing less than half what we currently produce. Over that same time, demand is likely to increase threefold. The United States Energy Information Administration, in an article posted in 2004 entitled ‘Long-term world oil supply scenarios’, concluded:

Will the world ever physically run out of crude oil? No, but only because it will eventually become very expensive in absence of lower-cost alternatives.

This is the reality that exists for all users of oil. It is a reality that is not often acknowledged. That is why I am pleased to have seen President Bush raise the issue. We all need to understand that, unless we find alternatives, we are destined to eventually reach the position that although oil will still be available we just will not be able to afford it. The report goes on to say:

In any event, the world production peak for conventionally reservoired crude is unlikely to be “right around the corner” as so many other estimators have been predicting. Our analysis shows that it will be closer to the middle of the 21st century than to its beginning. Given the long lead times required for significant mass-market penetration of new energy technologies, this result in no way justifies complacency about both supply-side and demand-side research and development.

Although the Energy Information Administration article concludes that scarcity will not be a problem for decades, it is also clear that the long lead times that are required to move to new technology means that we can no longer afford to wait. If we continue to rely on foreign oil to fuel our transport requirements, we will be facing a substantial decline in our living standards because of increased fuel prices.

However, there are answers and solutions to this dependence on foreign oil. Firstly, we can continue to encourage exploration and investment to bring additional sources of petroleum online here in Australia. We need to engage more actively with industry to find new sources of oil. We need to ensure that the regulatory framework is as efficient and as appropriate as possible. As a nation, we need to ensure that the necessary infrastructure is in place and that there are sufficient skills in the Australian labour market to ensure our maximum exploitation of this industry.

Secondly, we can do as President Bush suggests and use technology and research to find alternative sources of energy. It is a fact that we already possess the technology and raw materials to do just that; what is missing, however, is leadership from the government. Consider these points. We have large reserves of natural gas, particularly in my home state of Western Australia. We have a car industry that already has the capacity to manufacture LPG dedicated vehicles. A motor vehicle travelling 20,000 kilometres a year that is powered solely by gas produces 600 cubic metres fewer greenhouse gas emissions than a car burning petrol. The saving at the petrol station for a car travelling 20,000 kilometres per year is at least $1,200 dollars per year based on current prices.

What is needed here is national leadership. There is no reason why Australian car manufacturers could not become the world leaders in the production of gas powered vehicles. As many of us know, most taxis in this country now run on gas; so why does this government not take a lead by announcing that all new government fleet vehicles must be solely powered by gas? Consider the boost to Australian car makers. Over time, there is no reason why we could not move to phase out petrol powered cars in favour of those powered by gas, especially if the government were prepared to lead by example. The way to do that is exactly the same as we have done in the past. When the manufacture of cars was changed with the introduction of unleaded petrol, the doomsayers predicted all sorts of chaos and pain. However, we have seen that this was not the case and over time we have largely made that transition.

Let us be clear, though: this is not the sort of change that comes about in a short time. It is a change that comes about over decades. That is why we need to start moving towards gas powered vehicles now, to ensure that we make the most of those decades. The worst thing we can do is to not start to address the problem. Why don’t we offer worthwhile rebates to car purchasers to encourage more of them to switch to gas powered vehicles? The current cost for a Ford Falcon powered by gas is $37,280, as opposed to $34,880 for one powered by petrol. If we could, as a nation, increase the market for cars powered solely by gas, I am sure that the price would fall. We have a unique opportunity here to take a lead on this. Why wait until petrol is so expensive that we suffer a decline in our living standards?

Having said that, I believe we also need to consider what we are doing about developing our gas resources onshore. We confront the same situation that we have confronted in this country for many years: we have abundant natural resources, we extract them and then we export them offshore. There is no reason why we should not be developing an Australian industry that converts gas to liquids. I understand that in Qatar they have just spent over $10 billion developing a major infrastructure project to do just that. I fail to understand why Australia is not developing a similar project. Should we end up exporting our gas to Qatar so that they can process it and we can import the refined product back to Australia? We should be taking the opportunity currently available as a result of the resources boom. We need to use the proceeds of this boom to fund the development of new industries that will provide the future economic growth that this country needs, because the current resources boom will not last forever.

Our oil and gas industry does not simply need a rewrite of the previous bill. What is needed is a decent, long-term plan of action that ensures the viability of the oil and gas industry. As I have said before, if we continue as we are, then as the cost of petrol continues to increase so will our standard of living fall. Australia is blessed with abundant natural resources. What we are not blessed with is the vision to use those natural resources most effectively. We need a Commonwealth government that has a plan to reduce our reliance on foreign fuels. Surely, now that the President of the United States is running the argument that the US needs to reduce its reliance on foreign fuel and find alternatives, the Commonwealth government will wake up and confront the same issue.

Compare our approach to the oil issue with that of Sweden. Sweden has just announced the establishment of a committee made up of industrialists, academics, farmers, car makers, public servants and others, which will report to its parliament in several months. The aim of the Swedes is to replace all fossil fuels with renewable energy within 14 years. As their Minister for Sustainable Development has said:

A Sweden free of fossil fuels would give us enormous advantages, not least by reducing the impact from fluctuations in oil prices. The price of oil has tripled since 1996!

Consider the head start the Swedes already have: 20 per cent of all their energy needs in 2003 came from renewable resources. Only 32 per cent of their total energy came from oil, which was down from 77 per cent in 1970. Before Australia takes the option that some have called for, of considering nuclear energy, we should be following the lead of Sweden and beginning to plan for an economy that is not reliant on imported oil.

I would like to conclude my remarks by talking about the state of the oil and gas industry in Western Australia. In the last financial year, the growth of exports from WA’s oil and gas industry has soared. Crude petroleum oils were up $650 million, which is a more than 80 per cent increase over the previous year. Natural gas exports in the same year were up $337 million, or over 64 per cent from the previous year. Those figures speak for themselves. In the June quarter of 2005 the value of oil and gas exports from Western Australia was over $2.5 billion. That is just for one quarter. Currently in Western Australia over $10 billion worth of oil and gas projects are approved or awaiting approval. These are huge projects, which will continue to earn revenue for the Commonwealth and valuable export dollars for Australia. The state government of Western Australia is spending over $180 million on infrastructure projects in the north-west to support those industries. The Commonwealth, however, is spending nothing.

It is all good and well to rewrite the petroleum bill, but when is the Commonwealth going to put its money on the table for infrastructure projects that will support the ongoing growth of Australia’s oil and gas industry? I would like to place on the record the superb work that has been done by Alan Carpenter, now Premier of Western Australia but previously the minister for state development, and his predecessor Clive Brown, in encouraging the expansion of the oil and gas industries and ensuring that the state’s infrastructure plan meets the needs of those industries.

We have a unique opportunity to start working towards reducing our reliance on imported fuels. We must grasp this chance, which is provided on the back of the current resources boom, to build for Australia’s future. What is needed is a vision for the future, not a rewrite of existing legislation.

Andrew Bartlett (Queensland, Australian Democrats) Share this | Link to this | Hansard source

I want to make a few brief comments on the Offshore Petroleum Bill 2005 and related bills. The broader issues that are raised by the proposed laws clearly touch on some of the longer term issues around our country’s reliance on oil and petroleum resources. When even President George Bush is talking about the need to break the addiction of the United States to oil, however genuine or otherwise that pronouncement is, it is a recognition of the significant problems that can occur when nations do not recognise the problems but plough ahead, business as usual, and assume that we will just continue to find more and more oil and petroleum resources to meet our ever-growing consumption—let alone issues like potential export desire.

A couple of aspects need to be emphasised. Other senators have already talked about peak oil. Regardless of different views about when peak might be or how it might be manifested, the simple fact is that we are dealing with a resource that is not renewable and the consumption of which continues to grow. We are also dealing with a resource that is a significant contributor to greenhouse emissions. These bills are a reminder to highlight the importance of putting just as much energy—renewable energy—vigour, and broader assistance into developing alternatives.

The other aspect that needs to be emphasised—and I note that there is an amendment dealing with this—is the environmental impact of petroleum exploration and extraction on the marine environment. Broadly speaking, we know a lot less about the marine environment than we know about the terrestrial environment. That includes knowing less about the total impact of some of the things we do in the marine environment. That should be a reminder about the importance of adopting a precautionary approach. One of the consequences of the continuing demand for oil and petroleum products is the continuing push for exploration in more and more remote areas where we do not know much about the marine environment that we are exploring or extracting from. Not only is there a risk of doing damage; there is a risk of doing damage to things that we do not even know are there. There could be a loss of biodiversity or other impacts before we even realise that it is there to be lost. There needs to be a lot more focus on that.

I take the opportunity to remind the Senate and those who are following this debate that the Senate Environment, Communications, Information Technology and the Arts References Committee has an inquiry currently under way into the effectiveness of our protected area regime throughout Australia. I am pleased that that committee, of which I am the chair, is including marine protected areas in its examination. It is not looking only at how much more marine and land environments we can lock up, throw away the key, and keep people away from. It is also looking at how effective we are in protecting our marine environments, particularly those areas that we recognise as having special values, and designating those protected areas.

I have a particular interest in the Great Barrier Reef Marine Park, being from Queensland. It is a marine environment that is not only of mind-blowing biodiversity and spectacular beauty but also of enormous economic importance to my own state of Queensland. I have attempted in the past—and I have had a private senator’s bill introduced in this place—to try to expand the protection of the Great Barrier Reef Marine Park from the potential risks of offshore petroleum exploration and extraction. It is a simple fact that waters to the east of the designated Great Barrier Reef Marine Park are not protected from exploration and extraction. Clearly, there is always a potential for flow-on negative consequences to the marine park if significant oil reserves are extracted in areas adjoining the Great Barrier Reef Marine Park. That is an issue that deserves to continue to be explored. It is something that I have explored in this chamber and in committees over a few years, and I am pleased that an amendment has been circulated that touches on some of those issues.

I think it is important, with legislation like this, to raise these issues and make sure that we do not glibly brush them to one side. Obviously there is a lot of economic opportunity, prosperity and wealth to be generated from oil reserves. I am not blind to that, ignoring it, or saying that it cannot be of value, but we should not ignore the value—including the economic value—of the marine environment. It may be longer term and it may be harder to measure, but that does not mean that it is not there. We need to do a lot better at recognising that and factoring it into the cost benefit analysis of the various things that we undertake. With those brief comments I conclude my remarks and allow the chamber to proceed to some of the amendments.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I rise to say how absolutely shocked I am that in a supposedly comprehensive rewrite of a piece of legislation, the Offshore Petroleum Bill 2005 and related bills, at this period in our history the environment is practically ignored. For all the talk about ecologically sustainable development, for all the talk about triple bottom-line accounting and for all the public awareness that goes on in relation to whale strandings, seismic testing and the ecosystem approach, neither the word ‘marine’ nor ‘ocean’ appears in the bills. Can you believe that? In 2006, neither the word ‘marine’ nor ‘ocean’ appears in the offshore petroleum bills. Where is offshore? Offshore is the marine environment. I find it absolutely disgusting that these bills have been written with, effectively, a prehistoric approach to our oceans.

Australia has been running around the world in international fora talking up its oceans policy. Australia has an oceans policy, but it writes offshore petroleum legislation that fails to mention the oceans and the marine environment and uses the sea only in jurisdictional reference—as in territorial sea. The generic term ‘environment’ is used but only in a very short section on restoration of the environment—that is a matter of a couple of pages in a massive bill. Even then, it only goes to minimal restoration of the ecosystem and environment.

This legislation should have been framed in the context of Australia’s oceans policy, which was introduced in 1998, and in the context of ecosystem based management—environmentally sustainable development, multiple-use management and regional marine planning. And yet it is not framed that way, not at all. It makes some fundamental assumptions that the marine environment is a free good; that it is there for the sole purpose of providing resources to humankind. So the marine environment only exists as long as it can provide oil, gas, fishing and whatever else humans decide they want to use the marine environment for—and use it for as long as it takes to destroy it without even understanding the complexity of it.

At the World Parks Congress in Durban a couple of years ago, it was recognised that 10 per cent of the world’s terrestrial area is in national parks protected areas of some kind but that less than one per cent of the world’s oceans have the same level of protection. It was moved in Durban that we should aim in the next decade for 10 per cent of the world’s terrestrial environment to be put into protected areas. It has long been understood that if you make marine parks then you not only protect ecosystems but you actually support fisheries, because those marine parks act as breeding grounds. They are protected areas for the fisheries to maintain resilience, breed up fish stocks and so on and maintain the wild fisheries outside those marine protected areas.

Richard Colbeck (Tasmania, Liberal Party, Parliamentary Secretary to the Minister for Finance and Administration) Share this | Link to this | Hansard source

Not true.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

It is absolutely true of marine parks and protected areas. There is a vast amount of literature demonstrating the value to fisheries of marine protected areas. I would suggest that you read some of that literature if you dispute that. It is a matter of fact in ecosystem based management and in fisheries management.

Over this last summer we have had whale strandings around Australia. At the time we had a whale stranding off the south-east coast of Tasmania, we had naval vessels there using sonar and we had the oil and gas industry in Bass Strait also using seismic testing. Both of those things are in fact proven. The Navy admitted that it was there this summer using seismic testing and, indeed, the oil and gas industry were also testing in Bass Strait at the time.

What is Australia supposed to be doing in terms of strandings and tissue testing in regard to the impact of seismic testing on cetaceans? We were supposed to be developing a national network and protocols for rescue and post-mortem. As far as I am aware, little has happened with regard to the development of that protocol for rescue and post-mortem. There has been no word on that for many months. We have to have a protocol that includes investigation of noise pollution in cases where it seems likely that noise is involved. That is currently what is going on in the US. A noise protocol is being developed in the US as a result of court action that was taken because of the impact of noise from seismic testing and sonar activity on whales. The requirement for tissue testing of stranded cetaceans for possible seismic impacts is an issue that ought to be considered in this particular legislation. The marine environment is not a driver in the legislation, and it does not provide sufficient direction in terms of what should be done in relation to offshore petroleum and exploration.

The other problem with this legislation is that there is no reference to other stakeholders: other agencies or authorities of relevance to the marine environment with a stake in knowing what the oil and gas industry is up to. There is nothing about consultation and referrals with those other agencies. The government should have taken the opportunity to better integrate one of the major marine resources statutes—the oceans policy—into this particular legislation, and it has completely ignored it.

Another issue that concerns me is that an exploration permit lasts six years, the renewal of an exploration permit lasts for another five years and the option for a retention lease could last for another 15 if the area is not economically viable in current circumstances. On an initial read of the legislation, it seems possible for a company to have a commercial interest in an area for up to 26 years before production occurs. Add the production time onto that and it could be argued that this is effectively a property right over a public resource that could be used to stymie efforts to establish marine national parks due to claims by the industry for compensation. This cementing of rights appears again in several clauses and in the explanatory memorandum as well: the creation of the express right to recover petroleum in a retention area.

Once again, there is this idea of resource security. So we are giving a public good—the global commons, the marine environment—over to companies effectively for 26 years. If we move because the culture changes and people realise how important the marine environment is and we go to protect marine environment areas, you are going to have the petroleum companies arguing that they should get compensation for not being able to proceed even though they have not proceeded earlier because it suited them and it was not economically viable to do so.

There are no objects in this bill. Can you believe that? We have a complete rewrite of this legislation, and there is no object in the bill. One of the amendments that I intend to move on this bill tonight is to put an object into the bill to ensure that any offshore activities relating to petroleum exploration, recovery, storage and transport are carried out in a way that is consistent with the principles of ecologically sustainable development, especially in relation to the conservation of marine resources. I would argue that that is an entirely appropriate object for a bill of this kind. To bring to this parliament a bill which is effectively an administrative bill to cover the activities of offshore petroleum exploration, mining, drilling, seismic testing and so on and to not have an object in the bill is disgraceful.

Much more environmental detail needs to be in the bill, and it is not there. We need to have a public process with notices in major relevant daily newspapers, on the web, to various organisations and so on. There is no requirement for that. The application process for an exploration lease does not require an environmental constraints assessment; it only requires a statement of the economic viability of the company applying. Before exploration leases are allowed, there should be an environmental constraints assessment. It is unbelievable that a company can apply for an exploration lease but it does not require any assessment of environmental constraints.

This legislation might as well have been written in 1900. That is how backward it is in terms of current oceans policy around the world. This is from a government that, as I said, goes to marine conferences and argues that it is passionate about cetaceans, that it has got an oceans policy and has set up an oceans office. To do what? This is an oceans policy that has no legislative backing. None of the principles of the oceans policy are incorporated into this bill. I would expect that, when Senator Colbeck gets to his feet to explain the government’s position, we will get an explanation as to why there is no reference to environmental or ecosystem management; why there is no reference to ecologically sustainable development; why there is no object in this bill; and why there is carte blanche for the oil and gas industry. It is going to be even more critical in the coming years as we face the oil crisis.

As other senators have mentioned earlier tonight, we are facing an oil crisis. That is why the Greens in this house moved for a reference to a Senate committee to start looking at the strategic planning issues for energy security and oil supply for Australia. The government did not recognise the need for it, because it takes the view that all you have to do is give people more concessions, give companies more corporate welfare, incentives, tax breaks, environmental breaks and whatever else to get them to drill and somehow they will find more—that is, we have a planet which is infinite.

We have a finite planet. The oil and gas companies have pretty well combed the entire planet. They know where the reserves are that are easy to get, and most of them have already been accessed. I believe we have already reached the rollover point where demand has exceeded supply and, if we have not already reached peak oil, we are likely to do so in the next decade. I agree: we need to have some strategic planning to get Australia off the oil drip in the same way as has been talked about for the United States. But that is separate from this issue that we are discussing here tonight, which is a bill about how Australia deals with its offshore petroleum activities.

It should be noted that Australia has the largest marine jurisdiction in the world. We have twice as much water as land, and only five per cent of the world’s ocean area has already been discovered biologically. We hear virtually every month that new sea mounts are being discovered. People are moving rapidly to try to protect the biodiversity around these sea mounts before the trawlers get there and smash the areas as they have currently been doing. The best thing this government could do, if it wanted to take some leadership on the marine environment, would be to protect the sea mounts and ban trawling in Australian waters. That would make a significant contribution, but I do not expect that kind of leadership from the government.

Simply saying that all you have to do when you apply for an exploration licence is give a statement of economic viability of the company, not the environmental constraints of the area, demonstrates precisely where the government is coming from. I am really shocked that the people drafting this bill did not think to incorporate the principles of ecological sustainable development and ecosystem management into this particular legislation.

Senator Bartlett mentioned a moment ago the issue of marine parks and cetaceans—and one of the Australian Greens amendments tonight will be moving to prohibit oil exploration in marine reserves. That is entirely appropriate. If you are going to stop fishing in marine reserves and recognise that marine reserves protect the ecosystem then you do not favour the oil industry by kicking out the fishermen in order to give access to the oil companies, which is effectively what is happening around Australia’s coasts. In goes the oil industry, and what sort of damage do they cause in marine parks, especially when they get involved in seismic testing? It is extremely noisy, as we know, and can have a significant impact on marine species.

It is entirely appropriate that we do not have oil and gas exploration in marine protected areas, and I will be moving that in these amendments. We are also putting an object into the bill that offshore activities relating to petroleum exploration be carried out according to the principles of ecologically sustainable development; that an environmental plan must be required before any petroleum activity is given any kind of approval; that any plan for exploration must comply with an improved environment plan; and that operations must not continue where new environmental risk is identified in compliance with something apparently the drafters and the government have not heard of—that is, the precautionary principle. It is a new idea in Australia, it seems. It is well recognised in other parts of the world and is especially recognised by people who take marine protected areas and ecologically sustainable development seriously.

The other problem is that there is no cradle-to-grave approach to environmental protection from the industry. No mention is made of the EPBC Act at all. Where is the integration between this act and the EPBC Act? It seems like a disjointed approach that will not add up to marine protection and could never be satisfactory. A moment ago I raised the issue of whether the seismic guidelines are in place. Senator Colbeck seems to think that they are. I would like to ask specifically what has happened to the Department of Environment and Heritage seismic steering committee dealing with the EPBC seismic operations and cetacean guidelines. I want to know whether they have been updated, whether the new guidelines that were being drafted are in fact out there and implemented and, if these new guidelines have not been implemented, why haven’t they, because they were hideously outdated and there was a strong recognition that they needed to be.

So we have some big issues with this. We are simply seeing a premise in this bill that the ocean is a free commodity for the benefit of the offshore oil and petroleum industry, providing maximum resource for use in the whole fossil fuel industry and that the environment can be compromised. It is disgraceful and I never want to hear the minister for environment, Senator Ian Campbell, stand up in this place again and talk about oceans policy and how he is the great champion of cetaceans. He is not here tonight. I would like the minister who is representing the minister responsible for this legislation to explain how you can bring in here an offshore petroleum bill which has no object for the bill, no recognition of the problems with cetaceans and in the marine environment, no recognition of the concept of ecologically sustainable development and no recognition of environmental management and does not mention the words ‘oceans’ or ‘marine’ once. What a joke this legislation is!

Richard Colbeck (Tasmania, Liberal Party, Parliamentary Secretary to the Minister for Finance and Administration) Share this | Link to this | Hansard source

That was an interesting presentation by Senator Milne. I thought that some of the things she put on the record she might have been au fait with—certainly in relation to the tissue sampling. My advice is the guidelines on that have been completed. I am sure that you will look forward to getting some advice on that particular matter and some of the others that you raised in your presentation. It is disturbing that issues like blaming the Navy for whale strandings around Tasmania in the last 12 months were placed on the record in the way that they were. The Navy were in the area during two of the whale strandings but they were in fact in port.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

No, they were not.

Richard Colbeck (Tasmania, Liberal Party, Parliamentary Secretary to the Minister for Finance and Administration) Share this | Link to this | Hansard source

They were in port for the first two of the strandings, Senator. They were actually at sea during the third. Obviously, there are investigations going on with that, but to place carte blanche blame on the Navy for all of the events that occurred is, I think, quite disingenuous. It does nobody’s cause any good, including the Greens, to make comments of that nature. I think the public would expect more of us, that we would put these sorts of matters on the public record correctly rather than making broad, sweeping statements that apply blame rather than deal with the specifics of the issue as they stand. It stands us all in poor stead. It certainly does not help those who are genuinely involved in looking at these issues on a proper basis.

I would like to thank everyone who took part in this debate. Australia’s marine jurisdiction is extensive, as has been said, as are the hydrocarbon resources held within those areas and their contribution to the nation’s economy. It is therefore not surprising that a substantial legislative package such as this is needed for encouraging exploration and managing Australia’s offshore petroleum industry. This legislation is also conspicuous by the thoroughness of consultation that was undertaken in its drafting, both with the offshore petroleum industry and state and the Northern Territory governments. I express my gratitude to the Prime Minister, who gave approval for exposure drafts of the bill to be widely circulated to stakeholders during the drafting process. I am particularly grateful to those industry members and officials who examined the draft bills and provided critical comments and constructive suggestions about them. This was important with a view to avoiding inadvertent changes in rewriting provisions from the current acts into the new texts.

We now have before the Senate these best practice items of legislation. Technological developments, global energy markets and the world economy all exert impacts which mean the regulatory framework for offshore petroleum exploration and development is unlikely to stand still for long. Change is inevitable, at times involving subordinate legislation, at times the act itself. That said, I have no doubt that if the bills we are voting on today are passed their titles will become part of the energy resource sector vocabulary for a long time to come. More than that, I am confident that this legislation, by reducing compliance and administration costs for industry and governments, will help make Australia a more attractive place for petroleum exploration and development. I commend the bill to the Senate.

Question agreed to.

Bills read a second time.