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Wednesday, 19 March 2008
Page: 2354

Mr IAN MACFARLANE (10:00 AM) —The Offshore Petroleum Amendment (Miscellaneous Measures) Bill 2008 was originally introduced by the previous government—and what a good government it was and what an excellent minister for resources it had!—for the main purpose of updating the longstanding Petroleum (Submerged Lands) Act 1967. It is a technical bill, but it is an important one as well. The Petroleum (Submerged Lands) Act has been the primary legislation for the administration of Australia’s offshore petroleum resources. Now, 40 years on, the legislation has been outgrown. The Offshore Petroleum Act will replace this older act.

This amendment bill will provide clarity and certainty in terms of licence duration and important technical definitions. It will also confer on those in the industry a greater ability to work in the modern environment. As members will have heard, there are three main components to this bill. The first is to correct technical errors. The second is to repeal a provision of the act relating to declarations of emergency by the minister. The third and final component is to convert geodetic data references to the Geocentric Datum of Australia.

While these are not major policy changes, they are important administrative features. They will impact directly on the resources sector. Australia’s resources remain among the most important assets of this nation. They are assets which make an enormous contribution to the wealth of this country not only in terms of exports but also in terms of energy security, the creation of jobs and the underpinning of our entire economic system. It is therefore essential that the operations of those in the industry come under the clearest guidelines and legal frameworks. Higher export prices and anticipated higher prices for commodities, including iron ore and coal, are forecast to see Australia’s energy and mineral exports rise by around 33 per cent to around $153.4 billion in 2008-09.

While the most recent figures show that international demand for energy commodities remained strong in the December quarter, at around $26.7 billion, forecasters also predict that the next financial year will see Australian oil production increase by seven per cent, largely due to increased output at offshore locations. Additionally, Australian oil exports as a proportion of production are projected to increase over the outlook period. With these types of figures in mind, it is therefore essential that the industry has a firm basis on which to operate.

This is an industry which sees literally billions of dollars invested in single projects. From talking with resource companies in the petroleum sector—that is, the oil and gas sector—I know their confidence in those investments is still strong, but we need to ensure that they are able to operate efficiently and effectively and within the guidelines laid down by the community in which we all live. The previous government worked hard to ensure that Australia’s resource sector had a strong future. Last year saw a significant increase in the number of new companies applying to explore in Australian waters, demonstrating that the previous government’s initiatives were there to boost exploration. ‘Confidence’ means both confidence that you can operate in a secure way and confidence in terms of exploration leases—that is, should you find a deposit, you know you will be able then to fully develop that deposit in a proper commercial and secure framework.

To do anything that may damage that confidence, particularly in the area of retention leases, will not only jeopardise the enthusiasm of companies to explore but also jeopardise the enthusiasm of companies to be involved in the development of Australia’s rich petroleum assets. We have seen the previous government work hard to ensure that incentives were put in place for exploration and that security of tenure was provided. Some examples of that include the $58.9 million for research to better understand the geological potential, I am sure, for both minerals and petroleum. As well, we allocated some $76.4 million to encourage exploration in frontier areas offshore. Those frontier areas offer Australia some of the best hope in terms of finding more deposits of oil and gas, particularly oil, to ensure that we are able to supply Australia’s and the world’s growing needs.

The offshore exploration industry has also benefited from the 150 per cent uplift on the petroleum resource rent tax deductions in designated offshore frontier areas under the previous government. The amendments in this bill before the House today will allow this important industry to continue to do its work. You cannot understate the importance of the resource industry to Australia, and you cannot understate the financial risk that companies that invest in that industry take, particularly in the exploration area but also in the development of those products. Updating the Petroleum (Submerged Lands) Act 1967 is something that will enjoy bipartisan support in this House because it is important that both the government and the opposition—that is, the parliament as a whole—send a very clear message to those who are thinking of investing in this field. That message is that Australia is a secure place to invest. If we do not offer that security, if we offer any ambiguity, if we fail to update the legislation which covers this and a whole range of areas then we run the risk of frightening away that investment.

Australia is not alone in petroleum resources. Yes, we have probably one of the most stable government systems in the world. Yes, we have clear delineation in how those processes work. We also have a willing and very highly skilled workforce to both explore and develop those resources, and that goes back many generations. In fact, my grandfather was the senior geologist for the Queensland government and in his day pioneered a lot of work not only in the mineral area of exploration but also in laying down some early prospecting that then led to the successful drilling for gas. It is a great honour for me to still have his geologist’s hammer in my office. I very rarely raise it these days in anger—and by ‘in anger’ I mean to strike a rock, of course; it could be used for other purposes, and those things cross my mind from time to time. But it is a constant reminder to me not only of my heritage but also of the fact that resources, including petroleum resources, have played an enormous part in the development of Australia.

So it is important that this legislation is amended. It is important that we have the most up-to-date guidance legislation in the world. It is important that we continue to attract the investment from overseas that we need. That investment then sees rich fields right around Australia not only explored but then developed. We have some of the highest quality oil in the world, and much of that oil is exported due to the situation with our refineries. As those refineries are set more for the heavier crudes, we see a lot of particularly Western Australian oil exported offshore.

But there is no doubt that we need to find more, and I notice that the Minister for Resources and Energy, Martin Ferguson, is spending quite a bit of energy on seeing how he can encourage that to happen. I commend him on his work on that. Providing that it is done in a sensible way and that, particularly with retention leases, there are no knee-jerk political reactions in terms of the ability of companies to explore and maintain those leases until they can be developed, I can assure the minister that he will enjoy the coalition’s full support.

This legislation will provide a great deal of comfort to those in the industry and to the department that administers it—a department I remain fond of. The work that needs to be done on providing the legislative and legal framework for the petroleum industry to continue to prosper in Australia will continue.