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Thursday, 26 June 2008
Page: 3468


Senator LUDWIG (Minister for Human Services) (10:33 AM) —I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

The Protection of the Sea Legislation Amendment Bill 2008 will implement in Australia the Protocol of 2003 to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, generally known as the Supplementary Fund Protocol.

The bill also introduces amendments to the Protection of the Sea (Prevention of Pollution from Ships) Act 1983, known as the MARPOL amendments and amendments to ship levy legislation relating to the definitions of an ‘Australian port’ and ‘Collector’.

The Supplementary Fund Protocol was adopted by the International Maritime Organization in 2003 and entered into force internationally on 3 March 2005. The Protocol will enter into force for Australia three months after the lodgement of the instrument of accession with the Secretary-General of the International Maritime Organization.

Australia is currently party to a two-tier liability and compensation scheme applying to pollution damage resulting from oil spills from oil tankers. The first tier is established by the International Convention on Civil Liability for Oil Pollution Damage, 1992, known as the Civil Liability Convention. The second tier is established by the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1992, known as the 1992 Fund Convention.

Under the first tier, compensation is payable by tanker owners and/or their insurers, known generally as Protection and Indemnity (P&I) Clubs. However, tanker owners are able to limit their liability with the liability limit depending on the size of the tanker.

If the compensation costs resulting from an oil spill exceed a tanker owner’s liability limit, then compensation above that limit is payable by the International Oil Pollution Compensation Fund, known as the IOPC Fund. However, the amount of compensation payable by the IOPC Fund is itself limited so that the maximum amount payable by the tanker owner and the IOPC Fund is approximately $350 million (as at 22 May 2008).

In recent years, significant spills from oil tankers overseas have proven that the maximum amount of compensation afforded under the two tier scheme is insufficient to provide full compensation for all claimants. By way of examples, in the Nakhodka oil spill off the coast of Japan in 1997, the Erika spill off the coast of France in 1999 and the Prestige spill off the coast of Spain in 2002, the amount of funds available under the then two tier regime proved to be insufficient to provide full compensation for all claimants. As a consequence, claimants only received a pro-rata amount of their approved compensation amount.

For Australia, a significant spill of oil from an oil tanker would be devastating if it were to pollute our many fragile marine ecosystems such as the Great Barrier Reef or the Ningaloo Reef.

To date, Australia has suffered a number of marine incidents involving oil tankers.

The most notable incidents involved:

  • The Princess Anne-Marie off the Western Australia coast in July 1975 when approximately 15,000 tons of oil was spilt; and
  • The Kirki off the Western Australia coast in July 1991, when approximately 18,000 tons of crude oil was released after the bow fell off the vessel. Serious pollution of the West Australian coast was avoided due to the dual combination of severe weather conditions and the effects of the Leeuwin Current in dispersing the 7,900 tonnes of oil lost during the initial stages of the spill off Cervantes and Jurien Bay.

While the clean-up costs in the above incidents fell within the limit provided for under the Civil Liability Convention and were consequently paid by the oil tankers’ insurers, a large spill of heavy crude oil from an oil tanker in an environmentally sensitive area could necessitate extensive clean-up and restoration costs which might require drawing on the IOPC Fund. This figure could increase substantially in areas involving extensive commercial fishing and tourism interests, where potential claimants may seek to recover compensation for loss of income. This figure could exceed the IOPC Fund limit.

The Supplementary Fund Protocol creates a third-tier of compensation for damage resulting from spills of oil from an oil tanker, so that the maximum amount payable increases up to 750 million Special Drawing Rights, approximately A$1.3 billion (as at 22 May 2008) per incident.

The Supplementary Fund will be financed through levies on public or private entities in receipt of more than 150,000 tonnes of contributing oil per year in Contracting States. Levies for the Supplementary Fund will only be collected after an oil spill occurred and after the first two tiers of compensation are exhausted.

This bill will ensure that compensation to Australian victims following an oil spill from a tanker incident is maximised and that adequate financial resources are provided for clean-up costs, economic loss, property damage and to help with the natural recovery of Australia’s affected marine environment.

It is also important from a global perspective that Australia becomes a Contracting Party to the Supplementary Fund Protocol because our ratification will add support to the Protocol and will encourage more countries to become parties.

I am pleased today to be introducing this important legislation which will enable Australia to join those countries that are already parties to the Supplementary Fund Protocol of 2003. These countries include France, Germany, Greece, Italy, Japan, Netherlands, Spain and the United Kingdom.

This bill complements the Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Bill 2008 which I introduced into the House during the Autumn sittings of Parliament. That Bill ensures that compensation will be available for anyone who suffers damage or loss as a result of the leakage of bunker oil from a ship other than an oil tanker.

Australia is a Party to the International Convention for the Prevention of Pollution from Ships 1973, known as MARPOL and has implemented all six technical annexes to MARPOL, which deal, respectively, with the prevention of pollution by the discharge of oil, noxious liquid substances in bulk, harmful packaged substances, sewage, garbage and air pollution from ships.

The legislation giving effect to MARPOL in Australia is the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 and the Navigation Act 1912. The amendments will implement changes to Annexes I, III and IV of MARPOL, make miscellaneous amendments to the requirements for maintenance of garbage record books, and allow regulations under the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 to prescribe penalties of up to 50 penalty units. As well, the amendments substitute a new subsection 9(4) (the defence provision) to better reflect the requirements of Regulations 15 and 34 of Annex I of MARPOL.

The bill also substitutes a new definition of the term ‘Australian Port’ to mean a place appointed, proclaimed or prescribed as a port under the Customs Act 1901, or under a law of a State or Territory, in the Marine Navigation Levy Collection Act 1989, the Marine Navigation (Regulatory Functions) Levy Collection Act 1991, and the Protection of the Sea (Shipping Levy Collection) Act 1981.

It is becoming more frequent for ships to load and unload off-shore without entering a port. Ships calling at offshore installations and ships unloading cargo off-shore gain the benefit of Australia’s ship safety and environment protection services and the national aids to navigation network. However, as they do not call at Australian ports, they may dispute their liability to pay the relevant levies for these services.

The amendment will put beyond doubt that a place adjacent to an installation or indeed a place to which a ship comes for the purposes of unloading cargo, even if that place is not immediately adjacent to land, can be a ‘port’, if so prescribed under the Customs Act 1901.

While this bill does not prevent shipping incidents that may result in oil pollution, Australia has a rigorous port State control ship inspection program, conducted by the Australian Maritime Safety Authority, to monitor compliance of foreign ships, entering Australian ports with international safety and environment protection standards. In the highly unlikely event that an incident involving an oil tanker occurred, the measures provided for in this bill will ensure that victims of oil pollution damage are able to obtain prompt, adequate and effective compensation.

The main purpose of this bill is to provide for compensation in the case of an oil pollution incident. It also will play an important role in the protection of the marine environment. An effective liability and compensation scheme as established by the bill is a basic component of any comprehensive marine pollution response regime.

The proposed amendments set out in the bill will improve the robustness of Australia’s maritime environment regulatory regime, and provide clarity and consistency across existing legislation.

Ordered that further consideration of the second reading of this bill be adjourned to the first sitting day of the next period of sittings, in accordance with standing order 111.