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Tuesday, 5 July 2011
Page: 7654


Mr IAN MACFARLANE (Groom) (19:40): It is with some regret that I rise to speak on the Offshore Petroleum and Green­house Gas Storage Amendment (National Regulator) Bill 2011 because I had hoped that the coalition would be able to support this legislation in the House. The Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011 and related bills—the Offshore Petroleum and Greenhouse Gas Storage (Registration Fees) Amendment Bill 2011, the Offshore Petroleum (Royalty) Amendment Bill 2011, the Offshore Resources Legislation Amend­ment (Personal Property Securities) Bill 2011 and the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No. 2) Bill 2011—all fit broadly within the coalition's policy position of ensuring that we are able to continue to explore and exploit the natural oil and gas resources in offshore Australia. These bills should have been largely procedural but, more signi­ficantly than that, they usher in important changes to the regulatory environment for offshore oil and gas.

By far the most significant aspect of this set of bills is the establishment of two new regulatory bodies to administer and regulate petroleum and greenhouse gas storage operations in Commonwealth waters in the Australian offshore area, which is an industry of ongoing significance for the Australian resource sector and the Australian economy. As I said, these bills do achieve what the coalition would like to see in regard to the long-term objectives of regulating those waters. These new bodies would replace the designated authorities, which are the ministers from the states and the Northern Territory who, through their departments, have performed that function and exercised powers conferred directly on them by the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and its predecessor act, the Petroleum (Submerged Lands) Act 1967. The Commonwealth conferred these powers on the states and territories as part of the then decision to spread these regulatory bodies around the states. The government does not propose, under these bills, to change the joint authority arrangements for petroleum titles that have been in place since 1980.

These bills require the support of not only this House but also the state governments. I had hoped that by the time these bills had arrived to be voted on in this House we would have been able to resolve some of the outstanding issues, particularly between the Commonwealth and the Western Australian governments. I understand that the Western Australian minister, Norman Moore, has been engaged in discussions with Minister Ferguson. I have been involved in discussions with both those ministers as we have tried to reach a point of agreement. I thought we had an understanding that these bills would not be debated until that understanding had been completed. I am disappointed that I cannot offer the coalition's support to these bills, on the basis that there are matters still to be resolved between the Western Australian minister in particular and the federal Minister for Resources and Energy. That is an unfort­unate state of affairs because these matters of regulating the exploration and exploitation of resources and doing it in a humanly and environmentally safe way are of critical importance. It is without doubt that there have been deficiencies in the past in the way this regulation has taken place, and I will come to that a little later.

The two new regulatory bodies will be the National Offshore Petroleum Safety and Environmental Management Authority, to be known as NOPSEMA, and the National Offshore Petroleum Titles Administrator, to be known as the titles administrator. NOPSEMA will be an expanded version of the National Offshore Petroleum Safety Authority, which I set up when I was min­ister and is known as NOPSA. NOPSEMA's principal functions will be occupational health and safety; structural integrity of facilities, wells and well related equipment; environmental management; and the regu­lation of day-to-day petroleum operations. There is no doubt that the regulation of the offshore oil and gas industry is a very important issue to be brought before this parliament.

The size and significance of the oil and gas exploration and extraction industry mean we have a great deal at stake in getting this process right. Again, I note with some disappointment that this process is being rushed. I am not sure what happened. I am not sure whether it is related to 1 July and the 'Greening' of the Senate and the alliance between the Greens and the Labor Party, but something clicked over and we were advised late last night that these bills would be debated today. As I say, I would prefer that this issue were not concluded until we were able to ensure the important issue that is at stake—that is, that we give the public the confidence that exploration and exploitation of petroleum in Australian national waters will take place in an absolutely safe environment. From my experience as the responsible minister, I understand that regul­ation is an ongoing process which must be regularly reviewed to ensure the best possible system of regulation is in place. I am pleased—and I say this with all sincerity—that the current minister is endeavouring to uphold that principle.

Some of the vital considerations that have informed the establishment of a new operating system for the industry include the safety of workers, which I mentioned earlier, and, just as importantly, the integrity of the environment. As well as that, the number of jobs in the offshore oil and gas industry create an opportunity, indicating the econo­mic significance of the industry to both the states and the Commonwealth. I can assure the House that the coalition fully understand the scale and importance of the Australian oil and gas industry and are fully appreciative of the fact that it must be able to continue to operate in a safe and sustainable way. Therefore, we have made ongoing and genuine efforts to work cooperatively with the government and the minister on this issue, and I appreciate the shared comm­itment of the government to ensure the coalition have been given access to a full range of relevant information during that process. This has not been an overnight process and it is a process which I am sure we would all agree has taken a little longer than we had wished.

The coalition have always been broadly supportive of the principle behind the government's proposal to strengthen the regulatory regime for the sector and the proposals to clarify the procedures and principles for responding to emergency situ­ations. But it is essential that this process is completed properly and that the full range of issues are resolved before the legislation is passed. That may not be possible and that is why the coalition are not supporting this legislation at this point in time. But it is essential that the steps still to be taken are taken to ensure that the remaining issues are resolved and the best outcome is achieved for all stakeholders.

The fact remains that Australians are now more aware than ever before of the activities of the oil and gas industry. There have been a number of issues in relation to the oil and gas industry and some fall under the purview of this legislation. Most prominent of those, of course, is the oil leak that occurred off the coast of Western Australia, which is known as the Montara incident and, in fact, sparked the initiative for this change, as well as the disaster in the Gulf of Mexico, where the Deepwater Horizon rig exploded with the resultant loss of life in the incident known as Macondo. Those two incidents alone have changed the way in which Australians perceive the offshore oil and gas industry. When you add to that the explosion in the domestic gas plant on Varanus Island, which not only caused industrial disruption and a shortage of gas but endangered the lives of the people working on that plant, there is obviously a need for greater effectiveness of regulation.

These incidents have also resulted in a greater level of public scrutiny and more concern from the public than ever before. The public reaction in regard to these incidents is not irrational behaviour; it is a logical and appropriate response to the images Australians have seen as a result of two major oil leaks and the resultant fires, which we saw in graphic television reports. The real issues concern the environment where the oil, particularly in the Macondo incident in the Gulf of Mexico, found its way to shore. We were more fortunate with the Montara incident because the oil was a lighter type and evaporated and, to our knowledge, did not make landfall anywhere, thus minimising damage to the environment, but it is not something that this industry wants to see ever again.

Prior to the Montara incident, the offshore oil and gas industry had a faultless record for 25 years. Obviously we can learn from issues which came out of that incident. There has been an extensive investigation into it and reports from it and recommendations have been made. Part of those recommendations form the basis of this legislation. Just as the public are now demanding greater scrutiny and are more aware of it, the industry should not see that as in any way detrimental. It should not shy away from the challenge or consider this legislation a burden to the development of new projects. Instead, it is an opportunity to make sure that all oil and gas projects in Australian waters meet the highest of international standards and can be carried out safely and successfully. Thous­ands of jobs and billions of dollars of investment are at stake, which is why it is essential that we get this legislation right.

I share the view that the offshore oil and gas industry can operate in a manner which allows it to grow without exposing either the workers or the environment to unnecessary risk. There is the opportunity for the industry, if it continues to work together—and it has a displayed a great capacity for that, particularly since Montara—to find the solutions we need not only to make sure this does not happen again but also to ensure that the public will have the confidence to allow the industry to continue. Some oil and gas wells are in the proximity of sensitive environmental areas, and some of them are near World Heritage listed reefs et cetera. We need to ensure that the public has confidence so that this exploration can continue without endangering the environ­ment in any way.

One of the important functions of the new body, NOPSEMA, will be to streamline the environmental approval process with the rest of the regulatory conditions for offshore projects. One of the issues which the indust­ry is keen to see addressed and which the coalition supports is a certainty of process in how this all works together. Studying the environmental issues in relation to an oil and gas project is an extraordinarily complex procedure which requires not only know­ledge of the environment but very sound and deep knowledge of how the petroleum industry itself works and how an exploration and production rig works in that situation. So having NOPSEMA able to streamline the environmental approval process is a common-sense change.

I emphasise that that is not to suggest that all projects should get an automatic green light; quite the contrary. It is not in any way to suggest that the environmental concerns should be given any lesser priority. In fact, I would be confident that, under NOPSEMA, when we eventually resolve the issues with Western Australia, the model will be more robust in ensuring safe environmental outcomes. NOPSEMA will allow a comprehensive and complete consideration of all projects and eliminate, as much as is humanly possible, the risk of a piecemeal or fragmented process. By having the process conducted in a way where all the facts can be put on the table and discussed and the issues resolved, with the environmental risk minimised to the lowest possible denom­inator, we will be in a far better position going forward. That is important in ensuring both the preservation of the environment and the confidence of the general public. This resolution and streamlining the process is something I believe all affected groups in the oil and gas industry and the environmental stakeholders should welcome.

I note that stakeholders were given the opportunity to put forward submissions to the commission of inquiry as a result of the Montara incident, which led to this new legislation. That has helped to ensure that the new regulatory conditions are both workable and effective. Whatever we put in place has to work in the end. It has to be practical. It does not want to be bound up in fine print and red tape. It needs to be workable and effective. Certainly the principles contained in this legislation will achieve that.

It is now time to give the offshore oil and gas industry the certainty it needs and, at the same time, to give the public the confidence they require so that these projects can be completed without unnecessary risk to workers or to the environment. From my discussions with industry, I understand it is an issue that industry is very engaged in. These discussions have been going on for some time and I have also been involved in discussions direct with industry and with companies themselves. As those discussions were taking place, the Macondo incident occurred in the Gulf of Mexico and again the industry exchanged a great many ideas and much advice as to how we best move forward.

The industry shares the aspiration to ensure it can develop in a safe and sustainable manner. This has been evidenced in the open and transparent manner which industry representatives have demonstrated when participating in this process. I also applaud the commitment from industry, as outlined by the minister, by which the Australian Petroleum Production and Exploration Association, known as APPEA, has worked to create. On the point about APPEA, if I may digress for a moment, I acknowledge the imminent retirement of their CEO, Belinda Robinson. Belinda has made an enormous contribution to this industry. She came to APPEA from the forest industry. She took up this position when I was the Minister for Industry, Tourism and Resources. Her stewardship of APPEA as that organisation has moved forward over the last six or eight years has been critical to ensuring that the industry itself has not only interfaced with government, which APPEA has done very effectively, but also understood the expect­ations of the general public and the industry's requirement to have that public licence, so to speak. APPEA have developed a draft mutual aid memorandum of understanding relating to incident response, a self-audit tool for the management of well operations and also an oil spill preparedness and response improvement plan.

Without the industry support and cooperation, the establishment of a new and comprehensive regulatory regime for the sector would have been needlessly confront­ational and would have risked Australia's ability to reach the best possible outcome. When you consider all that is at stake and the quantum of the changes being proposed, it is to the credit of the industry and the various governments that there has not been a head-to-head confrontation on this. Just as importantly, there has not been a distasteful public row. Sure, there have been disagree­ments and issues which have had to be resolved—as I have said, those issues have not been swept under the carpet, but they have been resolved in a very transparent way—but at all times all players have understood the need to make sure that we resolve the issues and that we put in place something that will do the job better than what we have now. I do not think anyone would argue that there have been faults in our current system.

Many of those faults were exposed in the Montara inquiry and no-one is without blame, so no-one should cast the first stone. But we have a situation where those issues have been resolved. There have still been a number of significant sticking points in that process, particularly in regard to the practical implementation of the single regulator. I appreciate the fact that the Western Aust­ralian government has been concerned that one of its most important industries is properly regulated without being stifled, as is the right of any state when it is considering one of its most important economic drivers. I want to thank Norman Moore, the Western Australian minister for energy, for his attitude on this matter, given the fact that he has maintained the dialogue, he has maintained the attitude that he wants to resolve these issues. It is unfortunate that Minister Ferguson has chosen to proceed with this debate on this bill before all of those issues have been resolved. It is equally unfortunate that because of that the coalition will not be supporting the package of bills.

Nonetheless, in the face of these philoso­phical differences, I am confident that the matter can be resolved in time. I would like to acknowledge the role of the Western Australian department of energy in working in good faith to come up with the best outcome for the oversight and regulation of the oil and gas sector. This negotiation process is ongoing, but I trust progress is being made, given the shared objective of both sides of this House and of the Western Australian government to provide a workable and productive solution to the offshore oil and gas industry ably supported by the industry itself and, as I have mentioned, APPEA. I have confidence that these differences can be bridged, but more work must be done.

The Montara oil leak was a very serious incident and an incident which was without precedent in Australia's oil and gas offshore industry. Nonetheless, there are lessons to be learnt from both this incident and the oil leak in the Gulf of Mexico, known as the Macondo incident. It is incumbent on the Commonwealth government to draw the appropriate lessons from the Montara incident and to ensure actions are taken to give the public, workers and the industry confidence that the best measures have been put in place to do all that is reasonable to prevent a similar incident. The coalition is confident that the Commonwealth response is a fair and meaningful attempt—although not yet completed I add—to create the best possible operating framework for the oil and gas industry. However, the response must not be just about prevention and response. It is also about ensuring that the public have confidence that the authorities responsible for the oil and gas sector—and the wider resources industry—are able to perform the tasks that are laid out in front of them. So not only do we need a structure that works but also we then need the bodies in that structure to work.

Offshore exploration and drilling is something that is essential to Australia's future, to our economic growth, and also to our energy supplies. Ours is a country that is in the fortunate position—in fact, we are one of the few OECD countries as to this—to be a net exporter of energy and part of that net export is in the area of gas. There is huge potential in that industry, and, of course, it would be wonderful if Australia could crack a bit of oil every now and again to try to lower the amount of crude oil that we are importing into Australia for refining and also the amount of refined motor spirit and distillate that we import into this country. We will need to see this industry play a fundamental role in our energy security in the future and that is why a solid and comprehensive national framework for regulation and response is essential.

I look forward to seeing the final, mutually agreed result that will ensure that the industry can operate and grow in confidence and that the public will have confidence that, as that industry operates and grows, the environment and the workers who work on these oil rigs will be safe. We all need to work together. As I have said repeatedly through this speech, it is a great regret to me that this bill has been proceeded with before negotiations with the Western Australian government have been able to be brought to fruition and it is with some disappointment that I state that the coalition will not be supporting the package of bills.

Debate adjourned.