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Monday, 21 March 2011
Page: 2482


Mr MARTIN FERGUSON (Minister for Resources and Energy and Minister for Tourism) (6:52 PM) —in reply—I express my appreciation to the members for Groom, Canning, Robertson, Corangamite and Lyons for their constructive contribution to this debate. As has been evidenced by the debate to date, those who have contributed understand the importance of the petroleum industry to Australia. They also appreciate the need for government to be decisive, to ensure that we have the best possible regulatory regime in place as part of our commitment to proper practice with respect to both environmental and health and safety related issues. It is for those reasons that the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 1) Bill 2011 and the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies (Consequential Amendments) Bill 2011 were brought forward.

The bills amend the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Act 2003 and make consequential amendments to the Offshore Petroleum and Greenhouse Gas Storage Act 2006. These important amendments impose well and well related activities on petroleum titleholders to ensure that the National Offshore Petroleum Safety Authority can recover the costs associated with undertaking its regulatory functions in relation to structural integrity and the safety of wells and well related equipment. I remind the House that the operation of NOPSA is a full cost-recovery model, hence the expansion of responsibilities to do with wells and well related activities requires additional revenue to be raised.

I also acknowledged that the bills underscore the Australian government’s commitment, which is very much supported by the opposition, to ensuring that NOPSA has sufficient powers and capability to effectively regulate all aspects of occupational health and safety for the offshore petroleum industry, including in relation to the operation and integrity of wells. The collection of these levies will ensure that NOPSA is adequately resourced to carry out its well related functions under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and associated regulations.

I will briefly respond to a couple of issues raised by the member for Canning, for the purposes of correcting the record. Firstly, I indicate that this legislation applies to Commonwealth waters only. Obviously, much of the petroleum industry is off the coast of Western Australia. Constitutionally it is clearly a Commonwealth responsibility. That is not questioned. I also indicate that, contrary to the member for Canning’s suggestion, 80 per cent of the petroleum activities off the coast of Western Australia are actually in Commonwealth waters, not Western Australian waters. I note also that the existing safety investigation levy is exactly the same threshold as the proposed well investigation levy. The levy is not necessarily triggered every time there is an investigation.

I further remind the member for Canning that there have been a number of reports, other than the Montara Commission of Inquiry, recommending the transfer of structural integrity to the National Offshore Petroleum Safety Authority, including the 2009 offshore petroleum regulatory inquiry and the 2008 NOPSA operational review. In essence, there are now three separate reports recommending that the Commonwealth further strengthen the role of NOPSA in view of the need to establish a single national regulator with additional health and safety and environmental responsibilities. This change is perceived as being potentially of great benefit to industry from a regulatory point of view and, from a productivity point of view, represents the opportunity to make considerable savings over time in the cost of operations of this industry.

Hence, I can indicate to the House that industry largely supports these changes—contrary to the member for Canning’s suggestions. Industry understands that, given the Macondo incident in the Gulf of Mexico and our own Montara accident, we have to go out of our way to ensure that industry’s social licence to operate is understood and accepted within the Australian community. From an economic point of view this is exceptionally important to Australia. Firstly, at the moment, in petroleum products we have a net trade deficit of $16 billion per year that will potentially blow out to $30 billion by 2015. I also indicate that in terms of the strength of the economy the petroleum sector is very much underpinning a pipeline of investment from an Australian perspective. This has taken us close to capacity in our ability to supply skilled labour to support these projects in Australia. Be it on the west coast, with projects such as Gorgon, the biggest ever single investment Australia’s history, be it INPEX in the Northern Territory, or be it the recent approval for a new industry on the east coast of Australia, the coal seam methane industry, the pipeline of investment for Australia represents a tremendous economic opportunity.

I also remind the House that the wages and conditions applicable to workers in this industry are exceptionally good. In actual fact, many workers in other industries are envious of the rates of pay and conditions of employment applicable to this industry.

I will say a few words about the overall importance of this debate. Firstly, the issue of well integrity was actually thrown up in previous reports for the government to attend to. We have acted; hence the cost-recovery processes have kicked in. Secondly, the Commonwealth remains committed to putting in place, as a result of these three reports, a single national regulator with additional responsibilities relating to not only health and safety but also appropriate environmental matters. I say that because I am reminding you that if you have an accident it has the same potential ramifications from an environmental as from a health and safety point of view—hence the need for a strong national approach to regulation. This is supported by industry very rigorously and supported by all states and territories, with the exception of Western Australia.

I remain committed to trying to reach, one way or another, an outcome with the Western Australia government that suits all our needs. Western Australia is a huge beneficiary of economic activity conducted in Commonwealth waters off the Western Australian coast. They should appreciate that, given Macondo in the Gulf of Mexico, and Montara, the Australian community is not prepared to accept a failure by the Commonwealth to act to ensure that we have the best possible regulatory regime in place to match the economic importance of this industry and its environmental significance. I commend the bills to the House.

Question agreed to.

Bill read a second time.