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Wednesday, 24 October 1984
Page: 2382


Senator CHANEY (Leader of the Opposition)(10.24) —The Opposition will support the Petroleum (Submerged Lands) Amendment Bill 1984 which seeks to do a number of things. It establishes around the Bass Strait petroleum production facilities an area to be avoided by unauthorised Australian ships over 2,000 tonnes and gives the Commonwealth power to manipulate the amount of oil uplifted from oil pools and the amount of revenue accruing to the Government from oil production by transferring the power to determine the rate of uplift from oil fields from State control to joint Commonwealth State control and by changing the areas subject to control to oil pools rather than to permit areas.

In dealing with this Bill we have been under some difficulty, because when it was introduced into the House of Representatives it was apparent that it required some amendment. We faced the difficulty that it would arrive in the Senate after the House of Representatives had risen, and we therefore had to deal with the matter and conduct the Senate review of the legislation before it had arrived at this place. Until the Government agreed to an amendment in the House of Representatives, the Bill explicitly stated that Commonwealth revenue considerations would be the stated criteria for determining the amount of oil to be uplifted from each pool during any period, although other criteria could be taken into account. The Government had earlier totally rejected a suggested amendment by the Australian Petroleum Exploration Association, the major industry body which is concerned, whose amendment was designed to ensure that government directions as to the amount of uplift of oil from a field should be consistent with good oilfield practices; that is, that the Government would not be able to specify a level of production that would damage a field and reduce the amount of oil able to be recovered from the field.

The amount of uplift has always been decided by State governments on technical grounds, basically to do with good oilfield management, but had never been specified in legislation. Oil has not been allowed to be uplifted at such a rate that it might damage the oilfield structure and reduce the ultimate amount of oil to be obtained from a pool. Instead of using the industry's sensible suggestion, the Government substituted a clause stating that the Commonwealth revenue considerations be a reason for determining the amount of oil to be uplifted. The thrust of the APEA's suggestion has now been included in an amendment which the Government moved in the lower House and which is now incorporated in the legislation which is before the Senate. That follows representations from the Opposition in which we had the support of the Australian Democrats. Senator Jack Evans was of a similar view to that which the Opposition expressed. He joined with us in the representations that we made to the Government. As a result, the Government amended the legislation before it reached this place.

I am aware that honourable senators do not wish to be detained at length on this matter. To summarise the actions and the attitude of the Opposition, I seek leave to incorporate in Hansard my letter to the Minister for Resources and Energy (Senator Walsh) of 1 October 1984 seeking an amendment, the Minister's letter of 3 October 1984 responding to that and suggesting a limited amendment- which was not acceptable to the Opposition or to the Australian Democrats-and a copy of that amendment, the letter of 5 October to the Minister which set out the Opposition's attitude to the amendment and which sought a further amendment, and the Minister's response of 9 October in which he agreed to make the change which is now incorporated in the legislation.

Leave granted.

The letters read as follows-

PARLIAMENT OF AUSTRALIA

The Senate

1 October 1984

My dear Minister,

I am writing to inform you that the Opposition will be seeking to amend the Petroleum (Submerged Lands) Amendment Bill when it comes before the Parliament.

We are concerned at the emphasis given to Commonwealth revenue considerations in the Bill, possibly at the expense of 'good oil field practices'. We support the thrust of the representations made by APEA prior to the preparation of the final draft of the Bill, and we see no reason why a paragraph such as suggested by APEA should not be included in Clause 12. Accordingly we will be moving an amendment along the lines of the amendment enclosed.

If the Government indicates that it would not oppose such an amendment, I propose to have it introduced in the House of Representatives when the Bill is debated this week to ensure that the Bill is passed through all its stages prior to the expected premature rising of the House.

I am sending a copy of this letter to the Democrat spokesman, Senator Jack Evans, for his information.

Yours sincerely,

FRED CHANEY

Senator the Hon. Peter Walsh,Minister for Resources and Energy,Parliament House, Canberra, A.C.T. 2600

MINISTER FOR RESOURCES AND ENERGY

Parliament House Canberra, A.C.T. 2600 3 October 1984

Senator the Hon. F. M. ChaneySenator for Western AustraliaParliament HouseCanberra, A.C.T. 2600

Dear Senator Chaney

Thank you for your letter of 1 October 1984 concerning the Opposition's intention to seek an amendment to the Petroleum (Submerged Lands) Amendment Bill 1984.

Following representations, the Government has given further consideration to the provisions of the proposed sub-section 58 (5) as set out in clause 12 of the Bill and has decided to move an amendment in the Committee stages. The amendment will ensure that, for whatever reasons a direction on rates of petroleum recovery is being considered, good oil-field practice must be taken into account . At the same time the provisions of the sub-section ensure that there is no limitation on the matters which may be taken into account when a direction is being considered (eg national interest considerations would be important in the event of a liquid fuels emergency). The re-cast sub-section (5) proposed to be introduced is attached.

I trust that this amendment will satisfy the requirements of the Opposition.

Yours sincerely

PETER WALSH

ENCL

DRAFT-IN-CONFIDENCE

The draft is supplied in confidence.

It should be given appropriate protection and should not be copied.

If necessary, further copies will be supplied by Parliamentary Counsel.

1983-84

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

HOUSE OF REPRESENTATIVES

PETROLEUM (SUBMERGED LANDS) AMENDMENT BILL 1984

(Amendment to be moved on behalf of the Government)

Clause 12, page 3, lines 35 to 39, omit proposed sub-section (5), insert the following sub-section:

'' '(5) In determining whether to give a direction under sub-section (3) or (4) , the Joint Authority-

(a) shall take into account matters relating to good oil-field practice; and

(b) may take into account matters relating to the effects on Commonwealth revenue of the proposed direction,

but nothing in this sub-section shall be taken as limiting the matters that may be taken into account by the Joint Authority in determining whether to give a direction under sub-section (3) or (4).'.''.

PARLIAMENT OF AUSTRALIA-THE SENATE

My Dear Minister

I wrote to you earlier this week giving notice of the proposed amendment to the Petroleum (Submerged Lands) Amendment Bill 1984.

Since that time there have been a number of discussions between your private office and mine about the form of the amendment.

I am not satisfied that the Government proposals will achieve the objective we are seeking namely 'good oilfield practices' should be maintained and not overriden for short term revenue considerations. I do accept however that the Government needs to be able to override such practices in a situation of national emergency when long term matters need to be traded off against short term considerations.

I suggest that the amendment be redrafted to except action taken by the Government pursuant to provisions of the Liquid Fuel Emergency Act 1984.

I will ask my office to discuss this matter with your office as a matter of urgency as I understand in the Government's reckless rush to an early election the Government has taken legislation through at an unconscionable rate.

It might help if the Bill is put aside for a day so that we can agree on an amendment before it is discussed in the House of Representatives.

Yours sincerely

FRED CHANEY

Senator the Hon Peter Walsh,

Minister for Resources and Energy,

Parliament House,

Canberra, A.C.T. 2600

MINISTER FOR RESOURCES AND ENERGY

Parliament House Canberra, A.C.T. 2600 9 Oct. 1984

Senator the Hon. F. M. Chaney,

Senator for Western Australia,

Parliament House,

Canberra, A.C.T. 2600

Dear Senator Chaney

Thank you for your letter of 5 October 1984 concerning sub-section 58 (5) which is introduced under clause 12 of the Petroleum (Submerged Lands) Amendment Bill 1984.

Attached is a copy of the agreed sub-section 58 (5) which the Government proposes to introduce in the House of Representatives this week.

Yours sincerely

PETER WALSH


Senator CHANEY —I thank the Senate. Again, I wish to acknowledge that in the views that we put forward we had the support of the Australian Democrats, which gave us the potential to say that the legislation would have been amended in this place had the Government not agreed to the amendment. I mention that because I think that Senator Jack Evans was not proposing to speak on the Bill, in deference to the Senate's desire to complete the consideration of this legislation fairly quickly.

The other matters which are considered in the Bill are not matters of contention as far as the Opposition is concerned. Indeed, work on ensuring that there was a greater protected area around the oilfields commenced during the life of the previous Government. It is essentially a technical matter, not a political matter. The Opposition supports the changes which have been made with respect to that. The transfer to the joint authority is, again, not a matter which the Opposition wishes to put in issue.

However, I should like to express the Opposition's concern at some of the proposals which the Government has in mind with respect to changes in this area. This is, as APEA has stated, a volatile time for the industry. There are some reasonably heartening signs from the results of recent oil exploration, but we believe, along with APEA, that with the legislative framework within which the industry operates being extensively changed, with many discoveries being made, with a surplus of oil being produced but a sharp drop in our capacity to produce only a few years away, and with the pattern of exploration changing significantly, the Government needs to be more cautious in the changes which it is seeking to bring about.

In particular, we are concerned about the proposal to introduce cash bidding. It appears to the Opposition that the Government, which is said to be proposing to invite tenders for new permits to explore for oil off the north-west coast of Australia later this year on the basis of a cash bidding system, is entering into uncharted waters, certainly waters for which there is no legislative basis, or is putting forward proposals for which there may be no legislative basis.

If the Government intends to make cash bidding the basis of the tenders which will be made later this year, I ask it to make available the details of the system as soon as possible and to indicate the legal basis on which such changes will be made given that the necessary legislative changes have not been brought forward during this sitting of the Parliament.

I am dealing in a very brief and in a sense pre-emptory way with what is a significant piece of legislation in an area of policy which is very important to Australia. I think it is common ground in this place that the maintenance of a high level of self-sufficiency in oil in Australia is a desirable national objective. We believe that in its taxation policies and in some of its other policies the Government is not giving sufficient emphasis to the need to maintain a high level of incentive for oil exploration. But as far as the provisions of this legislation are concerned, now that the Government has picked up the particular suggestion which we pressed upon it, we would support the legislation and are prepared to see the Bill have a speedy passage.

Debate interrupted.