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Wednesday, 28 November 2012
Page: 13668


Mr MARTIN FERGUSON (BatmanMinister for Resources and Energy and Minister for Tourism) (10:45): I move:

That this bill be now read a second time.

The recent tragic accident on the Stena Clyde rig in the Otway Basin, located in the Bass Strait, which resulted in the deaths of two employees during drilling operations, represents an unfortunate example of the serious and inherent risks associated with the offshore industry.

This incident follows the uncontrolled release of hydrocarbons from the Montara Wellhead platform in August 2009, off the northern coast of Western Australia, and the explosion of the Deepwater Horizon on 20 April 2010 in the Gulf of Mexico.

Collectively, these events demonstrate and emphasise the need for a strong, effective and properly resourced offshore petroleum regulatory regime, to safeguard both human health and safety as well as the Australian marine environment.

The amendments contained in this bill largely continue the work of the Australian government to implement the lessons learnt and agreed in response to the report of the Montara Commission of Inquiry. I have more amendments I intend to introduce in the parliament in 2013 to further implement agreed recommendations coming out of the Montara report.

This bill amends the Offshore Petroleum and Greenhouse Gas Storage Act 2006 to strengthen the offshore petroleum regulatory regime with respect to compliance, safety integrity and environmental management objectives.

The amendments seek to clarify and strength the compliance monitoring, investigation and enforcement powers of the National Offshore Petroleum Regulator and ensure that enforcement measures for contraventions of the act are appropriate in application and severity in the context of a high-hazard industry.

The bill also makes important amendments to provide parties responsible for administration of the act and associated regulations the ability to share information with each other and with other relevant Commonwealth and state and territory bodies. Information will be shared in circumstances where it is appropriate in order to enable those bodies to adequately discharge their legislative functions and powers.

To provide some further context to the amendments, the June 2010 report of the Montara Commission of Inquiry made several recommendations proposing amendments to the offshore petroleum regulatory regime. To give effect to these recommendations the Australian government undertook a comprehensive review of legislation applicable to offshore petroleum activities and the marine environment.

The legislative review

The bill amends the act to implement a number of the findings of the legislative review which aim to strengthen the operating practices of the offshore petroleum industry and provide additional enforcement powers to regulators.

The legislative review proposed, and the Australian government agreed, that due consideration be given to effecting several changes to the act including: the introduction of a civil penalty regime; increases to the current criminal penalty levels under the act to achieve consistency with compliance offences in other major hazard industry legislation; ensuring that penalties, including custodial penalties, for occupational health and safety offences under the act be harmonised with the Work Health and Safety Act 2011, or made greater as appropriate to reflect the serious consequences potentially resulting from regulatory breaches in a major hazard industry; and redrafting the National Offshore Petroleum Safety Environmental Management Authority (NOPSEMA) inspectorate powers to provide greater clarity and consistency between the various powers of each category of inspector and remove unnecessary procedural requirements that are likely to impede NOPSEMA's ability to effectively perform its enforcement functions.

The introduction of civil penalties represents a significant first step in providing alternative enforcement tools, which will enable the regulator to select and apply an appropriate and proportionate regulatory response, depending upon the nature and relative seriousness of the breach that has occurred, and the regulatory response or action which is considered appropriate given the overall set of circumstances.

In addition, the application of civil penalties in the form of financial sanctions as a supplement or alternative to the existing criminal penalties and set at an appropriate level to reflect the nature of the offshore petroleum industry as a high-hazard industry is intended to encourage improved compliance with the act.

This will further enhance the existing objective based regime by supporting continuous improvement by industry, which is responsible under the regime to demonstrate to the regulator that the risk of operations are reduced as low as reasonably practicable.

Another critical measure contained in this bill is that which enables the parties responsible for the administration of the act to share regulatory information in appropriate circumstances. Currently, the act does not include the express provision to enable information obtained during the exercise of powers and functions under the act and regulations to be appropriately shared with other parties.

This legal issue in the offshore regulatory regime was highlighted during federal court proceedings initiated by a company against investigators in 2009 where an injunction was successfully obtained to prevent the sharing of regulatory information during an investigation into the death of a worker.

In the absence of an express provision, it has become evident that there is such potential detrimental legal impediments to regulators being able to share information—where it may be appropriate to do so—for such purposes of a joint investigation to comprehensively investigate an incident and pursue a successful prosecution of companies at fault or to educate other regulators about potential operational risks that have been discovered during the course of compliance monitoring or investigations.

In addition to this proposed amendment to the act, the Commonwealth is working together with the states and the Northern Territory to ensure that similar provisions are incorporated into relevant state and territory legislation to facilitate mutual information sharing, which will ensure that a comprehensive and effective approach to multijurisdictional compliance activities and investigations is possible.

Finally, the bill also implements a decision to remove the responsible state minister for Tasmania, as is his state's preference, from the joint authority arrangements in the offshore regulatory regime.

The current set of amendments will go some way towards addressing issues identified as arising from the Montara incident in August 2009.

However, I also remain committed to the continuing improvement of the offshore regulatory regime and, in line with this commitment, I have a number of further measures currently under consideration developed for progression in 2013, including consideration of a range of further alternative compliance and enforcement tools recommended in the legislative review to strengthen the ability of the regulator to enforce critical safety and environmental management requirements to help protect the Australian offshore workforce and marine environment.

In summary, through a range of measures, including: the introduction of a civil penalty regime; increases to criminal penalty levels contained in the act for offshore health and safety and environmental management; offences to achieve consistency with penalties for comparable offences in Australian legislation, including other major hazard industry legislation; redrafting the inspectorate powers to provide greater clarity and consistency between the various powers of each category of inspector; and remove unnecessary procedural requirements that are likely to impede the regulator's ability to effectively enforce the functions.

This bill underscores the government's commitment to the maintenance and continuing improvement of a strong effective framework for the regulation of offshore petroleum activities.

I commend the bill to the House.

Debate adjourned.