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Tuesday, 5 July 2011
Page: 7664


Mr IRONS (Swan) (20:34): I rise today to speak on the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011, 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. The national regulator bill is the principal bill and the remaining bills are consequential.

At the outset, can I say that as a coalition we do support the effective regulation of the gas and oil industry, but as a Western Australian I oppose key elements of this bill. One of the main reasons is that there is no agreement with the Western Australian government. We have just heard the member for Dobell take the shadow minister, the member for Groom, and also the Western Australia government to task for not agreeing with this bill. If he had listened closely to the shadow minister, he would have understood that we do support the bill in principle but the fact is that it was not supposed to be brought forward until there was an agreement with all the state governments. That agreement has not been achieved. I see the member for Dobell has left the chamber and has not bothered to hear what the actual facts are. The fact is that the government has not reached an agreement with the state governments. He should understand that and not try to take the opposition to task for agreeing with the principle of the bill but not actually agreeing with it because there is no agreement with the state governments.

We need to make sure that incidents like the Varanus Island gas explosion and the recent oil leak off the coast of Western Australia do not happen again. Never again do we want to see our environment and our supply of energy compromised in Western Australia. We in the coalition do recognise the thousands of people, many in my own electorate of Swan, who are employed in this sector of the economy. As such, we understand the scale and importance of Australia's oil and gas industry and are fully appreciative that it must be able to continue to operate in a safe and sustainable way. On reading the explanatory memorandum to these bills it seems that a major reason for the federal government's introducing this legislation is to respond to the Varanus Island gas pipeline explosion in 2008 and the Montara wellhead platform incident in 2009. The government's solution is a takeover of key regulatory institutions from the states. It is doing this by creating two new regulatory bodies. Currently, and consistent with the Offshore Constitutional Settlement, each of the states and the Northern Territory share the administration of the Commonwealth offshore petroleum legislation through two institutions.

The joint authorities comprise the relevant federal and state ministers and make decisions about granting, imposing condit­ions on and cancelling petroleum titles. In addition, they make decisions about resource management and resource security. The designated authorities are state and territory ministers who perform day-to-day regulatory and administrative duties. In addition, NOPSA regulates occupational health and safety.

Under the proposed changes in the legislation the new bodies replace the designated authorities, and the joint authorities are retained. These new bodies are the National Offshore Petroleum Safety and Environmental Management Authority and the National Offshore Petroleum Titles Administrator. These are designed to administer and regulate petroleum and greenhouse gas storage operations in Commonwealth waters in the Australian offshore area.

The coalition certainly understands the need for oversight. As the member for Groom said earlier, the oil leak off the coast of Western Australia has forever changed the way the oil and gas industry is perceived. This is an opportunity to make sure that oil and gas projects in Australian waters meet the highest international standards and can be carried out safely and successfully. However, it does not necessarily follow that the Commonwealth will be better at doing this than the states. I note that a key WA government witness to the Senate Economics Legislation Committee inquiry into this legislation said that one of the major reasons for the Varanus Island gas explosion was the subcontracting of the supervisory role to the Commonwealth agency NOPSA. In fact, many reports around the world suggest that the more regional the supervision and regulation the better. So we need to carefully scrutinise this Commonwealth takeover, and that is what I intend to do in my speech this evening.

As I have touched on briefly already, this legislation does have significant ramifi­cations for Western Australia. In making my response to this issue I want to raise some of the many concerns that have been raised by Western Australian senators and the Western Australian government. These concerns led to these bills being referred to a Senate inquiry. I know that the WA members of the Senate have been particularly vocal about these bills, and I intend to add my voice to their number today. In doing this I commend Senator Eggleston for his excellent work in his role on the Economics Legislation. Committee. Like senators in the other place, I am of the opinion that the government needs to concentrate on finalising its negotiations with the WA government before passing this legislation. Many people cannot understand why the government has brought on this debate without finalising these negotiations. However, I am sure that the government speakers will enlighten us in their contributions.

Western Australia is, of course, the most active petroleum jurisdiction within Australia. Roughly 60 per cent of offshore activity is conducted off the coast of Western Australia in Commonwealth waters. Any legislation that deals with these matters is of significance to the state of WA. Concerns have been expressed by the WA government that on the subject of licences there will be no requirement for the Commonwealth to advise WA regarding the location of licences. It is important that the state continues to have a say in these matters, for all sorts of reasons, including making sure that appropriate consideration is given to the environment. The federal government does not have a good history of ensuring that adequate protection is given to the environment. The recent Senate inquiry into changes to the Perth flight paths highlighted this, with the former Minister for Environment Protection, Heritage and the Arts, the member for Kingsford Smith, failing to implement any EPA report, as was his responsibility. This was just another abject failure by Minister Garrett.

Also included in the Senate inquiry report are concerns from the WA government regarding the potential removal from its administration of royalty amendments for the North West Shelf project. Through the supplanting of the designated authority and the allocation of these powers to NOPTA or NOPSEMA, the WA government may not have any estimates of royalty revenues until payments are actually received from the Commonwealth. Without this, it will be difficult for the WA government to plan for the infrastructure required for our mining areas.

There has been widespread commentary about the WA government's recent decision to increase mining royalties, and I have spoken in this parliament about this matter previously. It is easy to see why Western Australia is so concerned about royalties when it is asked to comment on legislation that will move the following responsibilities from the Department of Mines and Petroleum to NOPTA: involvement in setting royalty rates, negotiations of wellhead royalty schedules, determination of the wellhead point and the value of petroleum at the wellhead, assessment or determination of the quantity of petroleum recovered, assessment and audit of the monthly royalties payable and exemption from royalties.

I also raise the potential constitutional issues referred to in the Senate inquiry. Coalition senators are particularly concerned that the 1979 offshore constitutional settle­ment, which was an agreement between the Commonwealth and the states on taking a cooperative approach to administering the offshore area, is being overridden by removing the role of the designated authority. These are all significant issues. Importantly, these are all issues that are subject to negotiation between the Comm­onwealth and the Western Australian government. It therefore seems strange that the government is today reintroducing this legislation into the House without these negotiations having been completed. This legislation is important to Western Australia. The west has 60 per cent of titles in Commonwealth waters. The royalty paym­ents component applies solely to Western Australia. It is therefore incumbent on the government to get this legislation right.

In conclusion, the coalition supports, and has always supported, the effective regu­lation of offshore oil and gas. However, the government seems to be running away from negotiating with the WA government and running away from addressing these decisions. Thus the coalition looks forward to seeing the final, mutually-agreed-to result that will ensure that the industry can operate and grow with confidence. I look forward to the government members' contributions to ensure that there will be a mutually acceptable agreement between the federal government and the WA government.