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Wednesday, 15 October 2003
Page: 16451


Senator O'BRIEN (10:11 AM) —I was very surprised to see this piece of legislation come before the Senate so quickly this morning, given its place in the order of business today. I apologise if my inability to get to the chamber at the appointed time inconvenienced the Senate, but that was caused by the fact that there was no notice of this piece of legislation coming on almost until the ringing of the bells for a quorum.

The Petroleum (Submerged Lands) Amendment Bill 2003 amends the Petroleum (Submerged Lands) Act 1967, and its primary purpose is to create a nationally consistent occupational health and safety regime for the offshore petroleum industry by the establishment of the National Offshore Petroleum Safety Authority. Provision is also made for the National Offshore Petroleum Safety Authority to have jurisdiction over onshore petroleum industry sites should the relevant state or territory agree. Schedule 2 of the bill corrects a minor anomaly relating to the GST component of certain fees levied on the industry, whilst schedule 3 establishes new industry data management practices.

The offshore petroleum industry is strategically and economically important to Australia, and any serious disruption to supply due to an accident would have major economic consequences. The authority, to be established by Commonwealth legislation, will deliver a uniform, national safety regulatory regime for Australia's offshore petroleum industry and will reduce the regulatory burden faced by industry participants. We understand that it is to be an independent agency, accountable to Commonwealth, state and Northern Territory ministers, and that it will be established via an amendment to the Petroleum (Submerged Lands) Act 1967, as mentioned earlier.

The bill also contains amendments to the occupational health and safety provisions of the act. These amendments will improve safety administration and outcomes for offshore petroleum facilities and pipelines and will also, importantly, reduce risks to the environment. Amendments in the bill, when mirrored by state and Northern Territory legislation, will also provide a consistent safety regulatory regime across all Commonwealth waters and state and Northern Territory coastal waters.

There are two further sets of amendments in the bill. Schedule 2 seeks to amend section 129 of the act to rectify an anomaly whereby the full amount of fees paid by the offshore petroleum industry need to be redirected back to the states and the Northern Territory, yet the goods and services tax legislation requires GST deductions from some of these fees. Schedule 3 seeks to amend the data and management provisions in the act. These provisions cover the submission of data by petroleum owners to the regulator and the later releases of some of that data to the public. The amendments will enable the machinery provisions covering both submission and release of these data to be placed in new objective based data management regulations under the act.

Since 1967 the act has provided for the regulation of all aspects of offshore petroleum and mining, including titles, exploration, production, pipelines and safety regulation. Following a High Court decision in 1975 that confirmed Commonwealth jurisdiction offshore—that is, below the low-water mark—in June 1979 the Commonwealth and the states agreed to a division of offshore powers and responsibilities, known collectively as the offshore constitutional settlement. The purpose of the settlement was to generally maintain the states' role in the management of offshore areas.

In relation to offshore petroleum arrangements post OCS, the states and the Northern Territory have been granted by the Commonwealth title to all waters, including seabed and landward of the three nautical mile limit, and have the same powers to legislate over those coastal waters as they do over their land territory. Another significant outcome of the OCS was an amendment to confine the application of the Commonwealth act to waters outside the three nautical mile limit, with the states and the Northern Territory enacting mirror legislation applying in waters landward of that boundary.

Beyond the coastal waters, cooperative governance of the Commonwealth's legislation vests executive powers in a joint authority—which is the Commonwealth minister and the relevant state or Northern Territory minister in respect of each adjacent area—on all major decisions affecting petroleum exploration and development, with the Commonwealth minister's view to prevail in the event of disagreement. Day-to-day administrative duties and regulatory functions have been exercised by the designated authority, who is the relevant state or Northern Territory minister.

Until the safety authority commences operations on 1 January 2005, safety regulation will continue to be administered under the existing legislation and arrangement. A particular feature of the act in its present form—prior to 1 January 2005—is that the occupational health and safety requirements in schedule 7 of the act do not apply to Commonwealth waters adjacent to a state or the Northern Territory if the law of that state or the Territory provides, to any extent, for matters relating to the occupational health and safety of persons employed in the area. In that case, the occupational health and safety laws of the state or the Territory apply. As a result, each jurisdiction except Western Australia has applied its own state or, in the case of the Northern Territory, Territory occupational health and safety law in its own coastal waters, and that law was applied by the Commonwealth act in Commonwealth waters. Western Australia has relied on the application of schedule 7 of the act. Each of these laws is different. Consequently, companies with offshore facilities in more than one state or in the Northern Territory adjacent area have had to meet the requirements of these different laws. Furthermore, those companies operating mobile facilities, such as drilling rigs, have had to comply with different requirements as their rigs move from job to job around Australia.

In response to the 1988 Piper Alpha disaster in the North Sea, the act was amended in 1992 to include schedule 7 and in 1995 to provide for implementation by regulations of a safety case regime. The term `safety case' is used to describe a sophisticated, comprehensive and integrated risk management system. This is characterised by an acceptance that the ongoing management of safety on individual facilities is the direct responsibility of the operators and not the regulator, whose key function is to provide guidance as to the safety objectives to be achieved and an assessment of performance against those objectives.

The operators can achieve those objectives by developing systems and procedures that best suit their needs and agreeing these with the regulator. This safety case then forms the rules by which the operation of the facility is governed. The safety case also forms the basis for ongoing audits by the regulator of the facility and its operation throughout its life. The safety case regime has been fully operational since 1996, when detailed safety case regulations under the act, underpinned by guidelines for their preparation and submission, came into effect. The safety case regime remains as it is and is not altered by this bill. It is proposed, however, to revise the regulations to clarify the operation of the regulations.

In August 2001, the Commonwealth government report on offshore safety, entitled Future arrangements for the regulation of offshore petroleum safety, was delivered to the former Minister for Industry, Science and Resources. The primary conclusion of the review was:

... the Australian legal and administrative framework, and the day to day application of this framework, for regulation of health, safety and environment in the offshore petroleum industry is complicated and insufficient to ensure appropriate, effective and cost efficient regulation of the offshore petroleum industry. Much would require improvement for the regime to deliver world-class safety practice.

In particular, an independent review that formed part of the above report recommended that a national petroleum regulatory authority be developed to oversee the regulation of safety in Commonwealth offshore waters. The Commonwealth view, strongly supported by industry and employees, and the ACTU in particular, was that it would be more efficient and effective—and it would reduce the regulatory burden—to have a single national agency covering both Commonwealth waters and state and Northern Territory coastal waters, a view subsequently shared by states and the Northern Territory.

The Ministerial Council on Mineral and Petroleum Resources subsequently endorsed a set of principles for regulation of safety of petroleum activities in Commonwealth waters and state and Northern Territory coastal waters in Australia and agreed that the council's standing committee of officials would examine how best to improve offshore safety outcomes, primarily through a single joint national safety agency. This work led to the agreement upon which this bill is based.

The safety authority will function as a regulator of occupational health and safety in relation to offshore petroleum facilities and offshore petroleum diving operations in Commonwealth and designated coastal waters. Individual states or the Northern Territory may also confer powers on the safety authority under the onshore legislation of the state or Territory in respect of particular petroleum operations. Where this occurs, this bill authorises the authority to exercise those powers. In acting under state or Northern Territory `onshore' legislation, the authority will be entirely subject to the governance arrangements established by that legislation.

Labor support this bill, which we note enjoys the support of all industry players and the support of the ACTU. With regard to Senator Brown's comments about an amendment which is in the process of being drafted, I personally knew nothing of that proposition before it was announced today. We would be reluctant to deny Senator Brown the opportunity to move his amendment, and we suggest to the government that, before we proceed to the committee stage of this bill, we ascertain the status of that drafting so that, if it is intended to proceed to the committee stage, we do not do so in a way that would prejudice any senator's opportunity to put an amendment to the Senate for consideration.