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Wednesday, 14 September 2011
Page: 6118


Senator EGGLESTON (Western Australia) (17:32): I must say I agree with the comments made by my colleague Senator Joyce. The carbon tax certainly is a flight of fancy which is going to add greatly to the cost of almost everything in Australia and leave us out on a limb, as nobody else in the world seems to be going down this pathway. One has to wonder why common sense does not prevail and we do not just stop and wait for a while and see whether anybody else is going to follow this example.

But what I would like to talk about is the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011 and related bills. This legislation in its final form is actually a victory for the Senate processes. Over 60 per cent of Aust­ralian oil and gas processing is conducted in WA waters, with well-known names such as the North West Shelf and Pluto soon to be joined by other great projects such as Gorgon, Browse and so many others. There will be at least five large LNG plants on the Western Australian coast.

In the past the oil and gas industry off the WA coast was jointly regulated by the Western Australian and Commonwealth gov­ernments, and these arrangements worked very well for many years. However, over the last year or so the Commonwealth decided that it should have sole responsibility for the regulation of offshore petroleum developm­ents and proposed to terminate the joint Commonwealth-state administration of these matters in Western Australia. In its place, the Commonwealth sought to establish a nation­al regulator by transforming the NOPSA agency into NOPSEMA—the National Offs­hore Petroleum Safety and Environmental Management Authority—and creating a Nat­ional Offshore Petroleum Titles Admini­strator.

Under this legislation's original proposals, the joint arrangements would have ceased and the Commonwealth would have become the sole regulator. The Western Australian government had some very serious and legitimate concerns about these proposals and began a process of negotiating with the Commonwealth to address these concerns and, in particular, to preserve the joint adm­inistrative structure, which, as I said, had worked well. There really did not seem to be any reason why this arrangement should not have continued.

The Commonwealth justified the setting up of a single offshore regulator on the grounds of safety, very largely. It referred to the Varanus Island explosion off the north-west coast and the Montara spill off the coast of the Northern Territory as justification for having a single national administrator. How­ever, in evidence to the Senate Economics Legislation Committee the WA Department of Mines and Petroleum witnesses suggested that in fact the Commonwealth agency, NOPSA, was the key agency at fault in both of those incidents. In the case of Montara it failed to supervise the Northern Territory agency responsible, and in the case of the Varanus explosion the WA Department of Mines and Petroleum had contracted out the supervision of the maintenance of the pipe­lines and wells to NOPSA, which did not carry out that supervision. It seems there was a failure there in the inspection of the pipes.

Other concerns of the WA government included that there was no requirement to notify WA of the location of any exploration licences issued by the Commonwealth off the Western Australian coast, and of course there are many environmentally significant areas near the WA coast such as the Ningaloo Reef in the north-west and the pristine Margaret River in the south. These are areas where the WA government would not be happy for oil exploration to occur, and yet under this legislation as proposed the WA government was not given any right of consultation over projects in sensitive areas. Even if they happened to be in what were legally Commonwealth waters, the WA government felt there was a need to have consultation with them about the location of projects because there is always an onshore component to any offshore oil and gas project, which would involve the state provi­ding infrastructure such as port facilities, housing, towns, roads, airports and so on. Accordingly, the WA government had the quite reasonable view that it should have some prior knowledge of the location of such developments as it would have to bear the cost of the onshore infrastructure.

Importantly, in the new legislation the WA government was excluded from the process of calculating royalties from the North West Shelf which had been provided for under the constitutional settlement with the Fraser government. This would have meant that the WA government would not have known the amount of royalties due to it for three to six months after these moneys were actually collected, which would have posed problems for budgeting and forecast­ing for the state. Amazingly, even though the WA government was in the process of nego­tiating a solution to these issues in good faith, the Commonwealth abruptly termin­ated the discussions and introduced new legislation which did not address any of the Western Australian government's concerns. While this heavy-handed action led to legislation which was passed in the House, the Senate exercised its house of review option and referred the legislation to the Senate Economics Legislation Committee. A Senate inquiry was held in which the coalition members of the committee high­lighted the quite legitimate concerns of the Western Australian government. In the Senate inquiry, the coalition senators in their dissenting report concluded:

The manner in which the Commonwealth government has introduced this legislation without having advised the WA government given that the ongoing negotiations with them were not concluded, is disgraceful.

Further, in Western Australia, the Commonwealth government's actions in doing this imply a totally unacceptable attitude of disrespect over the interests of the sovereign state of Western Australia and the underlying precepts of the federation.

Fairly strong words. The coalition senators' dissenting report also recommended:

That this legislation not be proceeded with until:

The current ongoing negotiations between the Commonwealth and WA government are concluded;

the very reasonable concerns of the WA government have been resolved by agreement between the two governments concerned; and

references to the 'Designated Authority' are changed to 'the Western Australian Member of the Joint Authority' rather than the proposed 'Titles Administrator'.

The Titles Administrator would have been a Commonwealth official. The strength of these criticisms by the coalition senators on the committee apparently resulted in the Commonwealth reconsidering its position and produced the very different and much more acceptable legislative package which is before the Senate today. Under these new arrangements there is an in-principle agree­ment to co-locate NOPSEMA, NOPTA and elements of the WA Department of Mines and Petroleum, as has already been referred to by a number of speakers. This will mean that these agencies will be located in Perth subject to resolving operational details. That is appropriate given that such a large proportion of the offshore oil and gas industry is located in Western Australia.

The legislation also provides for resolu­tion of the issue of offshore petroleum royalties. The role of the WA government in the administration of offshore royalties has been restored in this legislation. The legisla­tion also provides for consultation and notification by the Commonwealth on envir­onmental plans with both the WA and Northern Territory governments. Also provi­ded for is notification of actions which might have an impact on local communities and early notification of incidents such as oil spills. There is also acknowledgement of the issue of resource security. Given that WA receives 90 per cent of its domestic gas from the Commonwealth offshore areas and that the state electricity system depends on this gas, the state of Western Australia needs to know without delay about anything which could affect gas supplies to the south-west. Furthermore, a protocol has been developed to ensure that consistent approvals are in place for the different jurisdictions through which any pipeline might pass from an offshore well to the state controlled waters and on to state land. There is also provision for the Western Australian government to be informed about proposed new developments so that WA can, in a timely way, plan infra­structure to support any offshore activities in Commonwealth waters.

These arrangements go a long way to satisfying what were the legitimate concerns of the WA government about the way the Commonwealth initially went about putting in place this legislation. Nevertheless, the question that remains is why the federal government did not deal with the Western Australian government more respectfully in the first place and conduct real and meaning­ful negotiations on these issues and seek to reach an agreement earlier than occurred. It is tempting to conclude, regretfully, that some Canberra bureaucrats seem to have forgotten that the Commonwealth of Australia is a federation of sovereign states and that the states do have legitimate and legal rights and interests.

In conclusio n, this is why this legislation, responding to the legitimate interests of the WA government as well as those of the Northern Territory, is a victory for the processes of the Senate, which after all is the states house in the Australian parliamentary system.