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Wednesday, 6 July 2011
Page: 7731


Mr ADAMS (Lyons) (11:10): The Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill and cognate bills were the subject of an inquiry by the House of Representatives Standing Committee on Agriculture, Resour­ces, Fisheries and Forestry, which gave the House and the public an opportunity to scrutinise these important changes to the offshore regulations. I congratulate the Minister for Resources and Energy and the Selection Committee. I see that the Standing Committee on Procedure has put out a small report on the amount of legislation that is now going through that committee and being referred to our House committees. I think that is a good process and it certainly improves our legislation, and I congratulate the minister for doing that.

The main purpose of the bills is to amend the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and associated acts to implement reforms associated with the establishment of a national offshore regulator in Commonwealth waters. The bills address the regulatory framework for petroleum and greenhouse gas storage activities and do not impinge on the activities themselves. The four main objectives of the reforms in the bills are, firstly, to provide an integrated approach to the regulation of safety, structural integrity and environmental management. I think that point itself is an important one, bringing together the need for regulation of human safety and the safety of what we do offshore, the structural integrity of the wells themselves and of the work out there and environmental management. It is important that we deal with those issues. We can deal with these issues and have proper and good environmental management around the work we do. The processes we get into of constantly trying to stop or lock things up and not use some of our resources I think are very foolish and we need to think of things in a broader way. If we have environmental management done in a proper manner, independently, we can do this in a very modern way. We need to think much broader than we have in the past. I also think it gives us an opportunity of providing within this industry and within the regulating industry some very skilled people.

The second point is to ensure that this regulation is independent and appropriately skilled and resourced, as I said, to separate the resource development function from regulation and retain resource development within government; and to reduce the regulatory inconsistency and duplication that is inherent in the existing regulatory regime.

The Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011, the national regulator bill, will amend the Offshore Petroleum and Greenhouse Gas Storage Act 2006. It will establish two regulatory bodies to administer and regulate petroleum and greenhouse gas storage operations in Commonwealth waters in the Australian offshore area. The new bodies will replace the designated authorities—the state and Northern Territory ministers who, through their departments, have performed functions and exercised powers conferred directly on them by the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and its predecessor act, the Petroleum (Submerged Lands) Act 1967. The purpose of the Offshore Petroleum and Greenhouse Gas Storage (Registration Fees) Amendment Bill 2011 is to amend the Offshore Petroleum and Greenhouse Gas Storage (Registration Fees) Act 2006 to reference the new National Offshore Petroleum Titles Administrator, NOPTA, which will be established through the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Act 2011. The purpose of the Offshore Petroleum (Royalty) Amendment Bill 2011 is to amend the Offshore Petroleum (Royalty) Act 2006 to reference NOPTA, and the purpose of the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No.2) Bill 2011 is to amend the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003 to impose new cost-recovery levies on holders of offshore petroleum and greenhouse gas storage titles. The levies will recover the costs of NOPTA in undertaking its regulatory functions in relation to titles administration and the National Offshore Petroleum Safety and Environmental Management Authority, NOPSEMA, in undertaking its regulatory functions in relation to environmental management.

The purpose of the Offshore Resources Legislation Amendment (Personal Property Securities) Bill 2011 is to amend the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and the Offshore Minerals Act 1994 to exclude application of the Personal Property Securities Act 2009. The Productivity Commission delivered its 'Review of regulatory burden on the upstream petroleum (oil and gas) sector' in April 2009 and identified significant unnecessary regulatory burdens on the sector. Its principal recommendation to reduce those burdens was the establishment of a national offshore regulator.

The reason these bills came about can be traced back to April 2007, to the Australian Petroleum Production and Exploration Association's strategic leaders report, Platform for prosperity. This report identified more efficient national petroleum regulation as a policy priority. The APPEA called for the Productivity Commission to carry out a review of the onshore and offshore regulatory framework in order to assist implementation of a more efficient and nationally consistent petroleum regulatory regime.

In 2008 the Council of Australian Governments, COAG, identified the upstream petroleum sector as one area where overlapping and inconsistent regulation threatens to impede economic activity and agreed that the Productivity Commission should undertake a review, which occurred, and the report of the review of regulatory burden on the upstream petroleum (oil and gas) sector was released in April 2009. This identified significant unnecessary regulatory burdens on the sector. Its principal recommendation to reduce those burdens was the establishment of a national offshore regulator. The Productivity Commission also identified significant potential national income gains, in the order of billions of dollars each year, from the implementation of its recommended reforms.

The Commonwealth government sought to develop an all-of-government response to the Productivity Commission report through the Ministerial Council on Mineral and Petroleum Resources, the MCMPR, and established a working group of officials involving all jurisdictions to develop the responses. By the end of 2009, the MCMPR had agreed 25 responses to the Productivity Commission recommendations but deferred its consideration of the recommendations for a national offshore regulator pending the outcomes of the Montara Commission of Inquiry

The Montara incident in 2009 highlighted problems arising from regulatory gaps between regulation of safety separate from regulation of integrity, environment and day-to-day operations. The Commonwealth's draft response included the reform model that is now in the current amendment bills. Stakeholders were provided three months to comment on the draft response. On 18 February 2011, the MCMPR met to consider the Commonwealth's proposed establishment of a national offshore regulator and set up a working group from all jurisdictions, and the bills were developed from their findings.

The starting point for these bills is the essential reforms identified by the Productivity Commission report and the report of the Montara Commission of Inquiry. The House standing committee agrees with the government that failing to address the findings of these reports is not an option. We also believe that these bills do fulfil the objectives laid down by those reports. The bills are actually reforming regulatory processes, tidying up the present arrangement between regulatory bodies for the new era we are now in for the regulation of offshore petroleum. They are making the regulatory environment more efficient and effective and are moving towards world's best practice.

An essential part of this is cooperation between the Commonwealth, the states and the Northern Territory in the transition to the national regulator. The committee is heartened by the evidence of cooperation between Western Australia and the Com­monwealth in the formulation of a memorandum of understanding to guide government and industry along the new regulatory path. The success of that process is essential to the future of the industry. Both governments have a responsibility to make it work, to make it operate. There are great opportunities for our nation in having this regulator in place.

These bills endorse the formation of NOPTA and NOPSEMA to replace the current regulatory regime. We endorse the retention of the joint authorities but with NOPTA as the principal source of technical advice. We fully endorse the independence of NOPSEMA and do not believe that its activities should be compromised by mandatory consultation with outside bodies. The independence of the regulator of safety, structural integrity and environmental management should be ensured.

I thank the Minister for Resources and Energy, the member for Batman, Martin Ferguson, for his assistance in bringing these issues to the attention of the House of Representatives Standing Committee on Agriculture, Resources, Fisheries and Forest­ry. As I have said, it is heartening to see that more and more legislation is coming before House committees for consideration. I am sure that we end up with much better bills as a result of that consideration. I commend the bills to the House.