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Thursday, 18 August 2011
Page: 4832


Senator JACINTA COLLINS (VictoriaParliamentary Secretary for School Education and Workplace Relations) (12:53): I present two revised explanatory memoranda and I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

OFFSHORE PETROLEUM AND GREENHOUSE GAS STORAGE AMENDMENT (NATIONAL REGULATOR) BILL 2011

This Bill amends the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (the OPGGS Act) to establish a national offshore regulator of safety, integrity and environmental management of petroleum and greenhouse gas storage activities in Commonwealth waters. A national offshore titles administrator will also be established through amendments in this Bill to administer titles in Commonwealth waters.

This is the principal Bill in a package of complementary amendment bills, which I will be introducing in this session. This Bill will largely implement the Government’s response to the 2009 Productivity Commission’s Review of Regulatory Burden on Upstream Petroleum (Oil and Gas) Sector. The Productivity Commission’s principal recommendation to reduce unnecessary burden on the industry was the establishment of a national offshore petroleum regulator.

The Report of the Montara Commission of Inquiry of June 2010 recommended, amongst other things, that the proposal to establish a national offshore petroleum regulator should be pursued at a minimum.

The Montara Commission specifically recommended the establishment of a single, independent regulatory body looking after safety as a primary objective in addition to well integrity and environmental management.

The 2008 Varanus Island pipeline explosion and the 2009 Montara oil and gas blowout highlighted the need for improvement in the regulatory regime to be robust and seamless. The existing regulatory arrangements are complex, disjointed, and involve inconsistent admin­istration, including regulatory duplication across governments. These inadequacies largely stem from the risk of regulatory gaps arising from the regulation of safety and integrity being separate from the regulation of environment and day-to-day operations. Maintaining the current arrange­ments is not a credible option in light of the Productivity Commission Review and the Report of the Montara Commission of Inquiry.

In 2009, the Productivity Commission identified a significant unnecessary regulatory burden on the industry. The system is burdensome, slow and lacks consistency across jurisdictions. Currently, the Commonwealth Government has responsibility for petroleum operations in Australia’s offshore areas beyond three nautical miles; however the day-to-day regulation is undertaken by the Designated Authority (DA) in each state and the Northern Territory. This system requires seven separate Designated Authority regulators for Common­wealth waters around Australia, resulting in an inefficient approach to regulation. With the reforms contained in this package of legislative amendments the Government is replacing the seven Designated Authorities with an integrated regulatory system, promoting consistency and efficiency across Commonwealth waters.

The administration of titles will be centralised in the new National Offshore Petroleum Titles Administrator (NOPTA), which will replace the Designated Authority system currently in place for Commonwealth waters. However, the Joint Authority, which comprises the Commonwealth Minister and the relevant state or Northern Territory (NT) Minister, will be retained as the decision maker for key petroleum title decisions.

Retaining the Joint Authorities for petroleum titles ensures that each state and the Northern Territory continues to have a role in decision making on key petroleum projects in Commonwealth waters that could impact the individual state or territory. NOPTA will make recommendations to the Joint Authorities on key title decisions as well as administer titles and collect data relating to petroleum and greenhouse gas storage activities in Commonwealth waters.

As is currently the case, the responsible Commonwealth Minister’s view would prevail in the event of a disagreement. The Commonwealth Minister will also remain the decision maker for greenhouse gas storage titles. States and the Northern Territory will have an option to confer their administrative powers in their coastal waters on NOPTA.

The existing National Offshore Petroleum Safety Authority’s (NOPSA) functions are to be increased to complement their expanded responsibility for well-integrity regulation which this Parliament passed last year. A single national offshore petroleum regulator will ensure only one agency regulates the safety of Australia’s offshore petroleum workers and the environment, from exploration through to decommissioning. Safety, environment protec­tion and day to day operational consents are all concerned with integrity and it is essential that they be regulated in an integrated manner. The expanded authority will be known as the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA).

In developing these reforms, the Australian Government has undertaken significant stake­holder consultation over the last 15 months, with states and the Northern Territory, as well as with NOPSA and the industry. As with NOPSA currently, both NOPTA and NOPSEMA will be based in Perth, convenient for the oil and gas industry, and will operate on a full cost recovery basis. This approach is consistent with the Australian Government’s policy on cost recovery and will help ensure minimal cost regulatory and burden to industry.

These cost recovery arrangements will be reviewed regularly, in consultation with the industry. The establishment costs of NOPTA and NOPSEMA will also be cost recovered, through the existing registration fees, paid by the industry on transfers and dealings of offshore titles. Once the establishment costs of NOPSEMA and NOPTA are fully recovered, currently expected in 2013, these fees will be scrapped - representing a significant cost saving for the industry.

Additionally, these reforms also deliver on the Government’s commitment to the Council of Australian Governments (COAG) reform priorities. COAG’s National Partnership Agreement to Deliver a Seamless National Economy includes milestones to implement the agreed Productivity Commission recommend­ations and remove unnecessary burdens on industry.

The offshore oil and gas industry is vital to sustaining our country’s economic prosperity and security. By passing this bill, together with the other complementary bills, will help deliver on the Government’s commitment to ensuring the Australian community’s confidence in the regulation of the offshore petroleum industry by ensuring operating standards are the best and safest in the world.

The reforms put forward through these Bills will help streamline Australia’s regulatory system, ensuring Australia’s continuing competitive advantage for the necessary investment in Australia’s offshore oil and gas industry to develop our resources for all Australians.

OFFSHORE PETROLEUM (ROYALTY) AMENDMENT BILL 2011

This Bill is to make consequential amendments to the Offshore Petroleum (Royalty) Act 2006 (the Royalty Act).

The amendments are a result of the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011, which establishes a National Offshore Petroleum Titles Administrator (NOPTA) and the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA). NOPTA will advise the Joint Authorities on key petroleum title decisions and administer titles and collect and release data. NOPTA will replace the seven Designated Authorities as the administrator of day-to-day petroleum activities in Commonwealth waters.

To reflect this reform, this bill amends the Royalty Act to replace references to the Designated Authority with the Titles Administrator. The Bill has no impact on the level of royalties paid by industry or on the sharing of those royalties with Western Australia.

Senator JACINTA COLLINS: by leave—I move:

That these bills and the Offshore Petroleum and Greenhouse Gas Storage (Registration Fees) Amendment Bill 2011 and related bills be taken together for their remaining stages.

Question agreed to.

Debate adjourned.