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Thursday, 25 June 2009
Page: 7282


Ms JACKSON (10:46 AM) —Like the shadow minister, I rise to support the legislation before the House, the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment Bill 2009 and the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2009. As the shadow minister has identified, both pieces of legislation largely deal with technical and minor amendments which streamline requirements, provide clarification or reduce the overall regulatory burden on industry. These changes result primarily from three reviews of different aspects of the offshore petroleum regulatory system which have been conducted by the Department of Resources, Energy and Tourism over the past couple of years. Some of the amendments to the Offshore Petroleum and Greenhouse Gas Storage Act also arise as a result of amendments to the legislation in the Senate.

I can reassure the chamber that there are no adverse effects on industry from these bills, or indeed any additional costs. It is interesting to see so many Western Australian members in the Main Committee at the moment. I think it is important to acknowledge how enormously significant the offshore petroleum industry in Western Australia is, not only to our state but to Australia generally. In the Western Australian economy, it is a $19.4 billion sector. About 69 per cent of Australia’s natural gas production and 70 per cent of crude oil and condensate production are located in Western Australia. Seventy-two per cent of Australia’s petroleum exploration expenditure in 2008 was spent in Western Australia.

The industry creates significant wealth for the country, including through the employment of tens of thousands of Australians, some of whom are resident in my electorate of Hasluck. The industry underpins the revenue collection of governments and generates valuable export revenue. Particularly in the case of gas, it is also wonderful at replacing costly imported petroleum. It is a strong and vibrant industry and it is essential to the ongoing health of the Australian economy.

Gas activities have been impacted by the economic downturn, with LNG imports having fallen in some countries and investment in production infrastructure having been delayed or deferred as a result of falling investment in gas based processing projects in Australia, although I think the long-term outlook is good and LNG demand, in particular in the Asia-Pacific region, is expected to continue to increase. It may not increase at the growth rates previously envisaged, but I do think it will be a very positive future.

I note in particular Woodside and the current Pluto project in the north-west of Western Australia, which is currently employing some 3,000 people—soon to increase to 4,500 in September-October this year. It is pleasing to see that sort of project development continuing even when there are significant pressures in the international economy. We know what enormous potential these gas projects provide to Australia, particularly in the areas of employment creation, investment and long-term infrastructure, with improvements in government revenues being perhaps amongst the most tangible.

I know that the government is acting now to help Australian business prepare for the economic recovery and it is looking at ways in which we can introduce reforms and make other changes that will promote investment in the Australian gas and mineral resources sector. In this area I would especially acknowledge the work of the Minister for Resources and Energy, the Hon. Martin Ferguson. It is quite clear that our role as a government in these circumstances is to look at what reforms we can make to best prepare Australian business for economic recovery. As the minister said in a media statement on 9 April 2009:

Our role in the present economic climate is to deliver micro-economic reforms that get rid of red tape, reduce the cost of regulation, simplify the tax system, and get the balance right between taxation of production and consumption, investment and savings.

In other words, we also need to ensure that we do the right thing by preparing the Australian workforce for the skills and jobs of the future in these industries.

I have said how important this industry is to the Western Australian and Australian economies. I was also pleased to see the minister announce earlier this month the release of some 31 new offshore petroleum exploration areas and two special areas in Commonwealth waters. I think that is a reflection that you cannot promote project development opportunities in these industries without ensuring that you have a strong exploration industry. That is where project development opportunities come from, and I am pleased to see that those additional offshore exploration areas have been identified.

Most pleasing for me was the release of the retention lease discussion paper a couple of weeks ago. I think it is a timely discussion to have in this sector. Yes, we have these wonderful resources available but we have to actually make sure that where companies have those leases they do eventually use them. I was interested to see the minister’s media release when he released the discussion paper. He said:

The challenge we face is to realign the national interest of Australia with the commercial interest of investors. I have already flagged that my Department and I will apply a ‘use it or lose it’ principle to retention lease applications. That means we will rigorously apply the commerciality test to ensure gas fields are developed at the earliest possible time.

The government remains strongly committed not only to open and transparent investment regimes and to looking at ways to promote project development in Australia but also to keeping the balance right with the national interest. I commend the minister on his agenda and on the progress to date in these areas.

One aspect of the legislation deals with changes to the safety regulations covering pipelines. This will see pipelines being treated on the same basis as other facilities under the safety regulations and will see the removal of pipeline management plans and pipeline safety management plans from regulations. As such, the pipeline safety management plan levy will become a safety case levy. These changes in levy arrangements are set out in the bills, with amendments to the Offshore Petroleum and Greenhouse Gas Storage Act and the safety levies act.

I think this is a positive change. I would make the general observation that this amendment ultimately will ensure that all facilities, including pipelines, will come under the general oversight or regulation of the National Offshore Petroleum Safety Authority, and I think this is a good thing. It is certainly something that has been recommended in the past, by reviews during 2007. From a Western Australian perspective, having lived through the aftermath of the Varanus Island pipeline explosion in 2008—its terrible consequences in terms of the impact on business as well as domestic consumers—it is my hope that the changes to this legislation in this regard will see a better system put in place for dealing with safety and the like in these areas. So I commend and support those changes.

There are also changes in the legislation dealing with an expedited consultation process on the granting of access authorities and making the joint authority the decision maker in relation to declarations of location and granting of scientific investigation consents. All of these changes are designed to streamline current arrangements and to ensure that the requirements of the act become less onerous and that there is less duplication. I think we all commend legislation which reduces a red-tape or regulatory burden. Again, I think this is a positive step in the right direction for these industries.

The legislation also gives the Commonwealth government a role in the declaration of a petroleum location, which leads to an application for either a retention lease or a production licence. These decisions will be made by the joint authority. This is entirely appropriate, given that some of the exploration leases are over Commonwealth waters, and in line with the United Nations Convention on the Law of the Sea.

The changes to the greenhouse gas storage provisions of the act are to remove several inconsistencies and ambiguities arising from amendments made in the Senate. These changes are purely technical and make no policy changes to greenhouse gas storage related operations—although they do provide me with an opportunity to congratulate the Rudd government on the Global Carbon Capture and Storage Institute that was launched earlier this year. We know from media and other reports that this initiative has received strong and widespread international support. It is consistent with the government’s climate change strategy, which is designed not only to reduce our carbon pollution but also to help us adapt to the impact of climate change. We have to be involved in finding a global solution to the issues associated with climate change. I look forward to reading more about the Global Carbon Capture and Storage Institute. As I said, it has received significant support globally, and of course we have seen a significant budget allocation to accelerate the deployment of carbon capture and storage projects globally.

As I indicated, most of the amendments in this legislation are quite small, but together they will improve the effectiveness of the act and further streamline regulations. I commend the bills to the House.