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Thursday, 9 October 2003
Page: 21088


Mr NAIRN (10:16 AM) —I am pleased to speak in support of the Petroleum (Submerged Lands) Amendment Bill 2003 and the Offshore Petroleum (Safety Levies) Bill 2003. In particular, I would like to describe how the bills improve the safety outcomes for operators and those working on facilities in Commonwealth waters and state and Northern Territory coastal waters. For particular companies, the offshore petroleum industry offers high rewards, of which the North West Shelf's $25 billion LNG export deal with China is a notable recent example. However, given the nature of the offshore environment, the high flammability of oil and gas, and the high pressure and temperatures under which they are produced, extracted and processed, it is a major hazard industry. There are around 60 petroleum facilities in Australian waters, including large, fixed production platforms such as the North Rankin platform on the North West Shelf, floating production and storage facilities such as the Griffin Venture on the North West Shelf and the Northern Endeavour in the Timor Sea, and mobile drilling rigs and support facilities such as barges for pipeline laying, accommodation and construction. I have a particular interest in this topic from my electorate point of view. Quite substantial numbers of people who live in the Eden area of my electorate fly out to rigs in Bass Strait, work on the Bass Strait rigs in various ways and then come back into Eden. So the safety aspects are of particular importance to me and those people in my electorate.

A typical production facility is, in effect, a mixture of hotel, chemical processing plant and heliport, all within a confined structure that is separated from land by many kilometres of ocean. Add some extreme weather, such as winter storms in Bass Strait or cyclones on the North West Shelf, and you have a working environment with a high potential for danger and with a complex set of risks to manage in order to ensure the safety of the work force and the facility. While I do not quite have personal experience of that, many of my former colleagues in the surveying and mapping industry—my profession during my time in the north of Australia—were involved in some very dangerous circumstances in the positioning of many of these rigs and, particularly, in the exploration aspect of it. I personally was somewhat involved with respect to the titling, the property rights, the lease holding and those sorts of things of that part of the industry.

Fortunately, the Australian offshore petroleum industry has not experienced a catastrophic accident involving significant loss of life and injury. However, we have experienced fatalities and serious injuries from isolated accidents. In order to avoid catastrophic accidents and to minimise other fatalities and injuries we have learned from overseas experience. Most notably, we have learned from the North Sea Piper Alpha disaster. The Piper Alpha disaster, which occurred on the evening of 6 July 1988, claimed the lives of 167 of the 226 persons on board the platform and two of the crew of a rescue craft. The death toll from the series of explosions, the fire and the subsequent collapse of the platform was the highest in the history of offshore petroleum operations. The UK public inquiry into the disaster recommended that a different approach to safety regulation be adopted. As a result, safety case regulation, which puts the onus on industry to identify risks and develop systems and strategies to manage those risks, was introduced for the offshore petroleum industry.

As part of Australia's response to the Piper Alpha disaster, we also adopted a safety case approach for offshore facilities, through a series of amendments to the Petroleum (Submerged Lands) Act and regulations in the early 1990s. Now, all petroleum facilities, new and existing, are required to have a safety case. The safety case approach to regulation has significant advantages and benefits over more prescriptive regulation. For example, safety cases can be adapted or tailored for unique facilities and to accommodate technological advances, which is an important feature for an industry characterised by innovation and rapid change. By comparison, prescriptive regulation is inflexible and may present an obstacle to the adoption of new technology and processes, or can become outdated as new approaches and procedures are adopted.

I turn now to a number of important improvements in the legislative framework for occupational health and safety applying to the offshore petroleum industry. A particular feature of the current Petroleum (Submerged Lands) Act is that the occupational health and safety requirements of the act do not apply if the states and Northern Territory have their own OHS law that is capable of applying offshore. As a result, each jurisdiction except Western Australia has applied its own state or Northern Territory OHS law, while Western Australia has relied on the Commonwealth legislation. As each of these laws are different, companies with offshore facilities in more than one state or in the Northern Territory adjacent area have had to meet different requirements. This situation is particularly difficult for operators of mobile facilities, such as drilling rigs, which typically move from job to job around Australia.

The amendments to schedule 7 of the Commonwealth Petroleum (Submerged Lands) Act and the enactment of mirror provisions in state and Northern Territory legislation will provide for one body of occupational health and safety law to regulate all Australian waters and will improve and clarify the duty of care provisions. The duty of care provisions place all embracing duties on those controlling offshore petroleum activities to secure the health and safety of all people working offshore. The current law assumes that the only people primarily responsible are employers and that the people to whom employers owe a duty of care are primarily their employees.

This does not reflect how the offshore petroleum industry works. It does not recognise the prominence of contractor arrangements. It also does not reflect the key role played by the operator of the facility, who is the person in control of the facility and the person who submits the safety case, which is at the heart of the regulatory approach. The bill corrects this by assigning duties to the operator and ensuring that the duties protect all persons who are exposed to the risk. These duties are not unlimited. Removing all risk is impossible, so these duties are qualified by the term `reasonably practicable'.

This is an important concept and is widely understood in the offshore petroleum industry and more widely in the field of occupational health and safety both here and internationally. In the offshore petroleum industry, it is generally known as the ALARP concept—it sounds like somebody has been talking to Defence when you hear acronyms like that—or `as low as is reasonably practicable'. In a practical sense, the bill requires that risk has to be weighed against the cost of the measures necessary to eliminate the risk, taking account of the state of knowledge about the risk and the ways it may be reduced. The greater the risk, or the greater the uncertainty, the less weight is given to the factor of cost. In recognition that a given duty holder may not be able to exercise control over all risks, this bill imposes duties on a range of persons, including manufacturers and suppliers as well as operators and employers.

The government takes the view that it is facility operators and their work forces who are best placed to deliver safe offshore petroleum operations. The active involvement of the work force is essential and, if a member of the work force sees a potential hazard, it is his or her responsibility to deal with it, if possible, and make sure the appropriate people on the operator's staff are informed. There is a safeguard in the legislation. In the unlikely event that the operator does not take appropriate action, there is the option of the work force calling upon the regulatory body for additional expertise or, should this be necessary, from an appropriate union, described in the legislation as a `registered employee organisation'.

This bill does not seek to change in any fundamental way the existing arrangements, which have stood the test of time. But it does seek to further strengthen these arrangements by making them reflect the practical realities of the offshore petroleum industry. As an example, this has been done in relation to the election of health and safety representatives by making the operator of the facility responsible for organising the designated work groups. In a similar move to strengthen the health and safety representative system, any member of the work force, whether or not they are members of a union, can request an operator of a facility to enter into consultations to establish a designated working group and elect a health and safety representative.

These improvements to the duty of care, combined with the retention of the successful safety case approach and enhancements to the existing arrangements to involve the work force, will ensure that improved safety outcomes can be obtained in a more consistent, effective and efficient manner. For an industry whose participants operate across jurisdictions the benefits will include greater certainty and clarity and reduced compliance costs. I commend the bills to the House.