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Thursday, 25 July 2019
Page: 984

Mr EVANS (BrisbaneAssistant Minister for Waste Reduction and Environmental Management) (09:56): I move:

That this bill be now read a second time.

This bill contains important measures making amendments to the Offshore Petroleum and Greenhouse Gas Storage Act 2006.

The bill will transfer regulatory oversight for offshore greenhouse gas storage environmental management and well operations from the responsible Commonwealth minister to the National Offshore Petroleum Safety and Environmental Management Authority, or NOPSEMA. Currently, NOPSEMA is the regulator for offshore petroleum environmental management and well operations.

The reason for the division of petroleum and greenhouse gas responsibilities is largely historical. NOPSEMA did not have any environmental management functions in 2008, when the greenhouse gas regulatory provisions were introduced into the act. With the potential for an increase in greenhouse gas storage activities in future, there is a renewed focus on the adequacy of regulatory arrangements.

NOPSEMA has developed expertise in the regulation of offshore environmental management and well operations through its responsibility for regulation of offshore petroleum activities. The Australian government proposes to transfer regulatory oversight for offshore greenhouse gas storage environmental management and well operations from the minister to NOPSEMA. This will ensure we have an experienced and independent regulator for offshore greenhouse gas operations. The proposal will be effected through a suite of amendments.

The minister will retain responsibility for major resource related decisions concerning the granting of greenhouse gas titles, the imposition of title conditions and the cancellation of titles, as well as core decisions about resource management and resource security.

The amendments in this bill will strengthen and clarify the powers of NOPSEMA inspectors to determine whether regulated entities are compliant with their obligations under the act and associated regulations.

The amendments will expand and clarify the categories of premises that inspectors may enter without a warrant to monitor compliance with environmental and occupational health and safety obligations. This will include premises of a body corporate that is related to a titleholder—

Mr Husic: Mr Speaker, I'd like to draw your attention to the state of the House.

The bells being rung—

The SPEAKER: I'm going to make the point quite early on that, if members read the Practice, of course they're entitled to draw attention to the state of House, but there are precedents where Speakers have said a reasonable period of time should elapse before the calling. I'm just flagging that now. While you're waiting for the bells to ring, there's some quite interesting reading there in the Practice, which I'm sure is in your drawer.

(Quorum formed)

Mr EVANS: The amendments will expand and clarify the categories of premises that inspectors may enter, without a warrant, to monitor compliance with environmental and occupational health and safety obligations. This will include premises of a body corporate that is related to a titleholder, such as a parent company which may make decisions about operations carried out under the title. It will also include the premises of titleholders' contractors, including entities who have agreed to provide response equipment in the event of an oil spill.

The amendments in this bill will also enable inspectors to undertake inspections without a warrant to monitor compliance by titleholders with well integrity-related obligations under the act and regulations. These powers will be equivalent to existing powers that inspectors may exercise to conduct environmental or OHS inspections.

In the context of a high-hazard industry, it's particularly important that the regulator has sufficient powers to ensure that regulatory obligations are being complied with. Noncompliance may increase risks to health or safety or to the environment, with potentially serious consequences. The requirement to obtain a warrant may impede NOPSEMA's ability to conduct inspections. This is due to the difficulty in accessing offshore facilities and changes to titleholders' operational decisions on the timing of well activities. The requirement to obtain a warrant may also impede NOPSEMA's ability to respond quickly in an emergency.

Inspectors will still be required to obtain a warrant before exercising any powers to search for or gather evidence of contraventions of provisions.

The bill further amends the act to introduce enforceable undertakings. This will enable the minister, the National Offshore Petroleum Titles Administrator and the CEO of NOPSEMA to accept and enforce undertakings in relation to compliance with provisions of the act and regulations. The introduction of enforceable undertakings form part of a graduated enforcement framework.

Although regulators currently have access to a range of enforcement tools, enforceable undertakings offer a unique benefit. Existing tools can require a duty holder to cease an activity or reach a minimum standard of compliance. Enforceable undertakings can go beyond these enforcement tools to effect meaningful changes to overall compliance culture.

Enforceable undertakings allow the regulator to secure more timely and cost-effective outcomes than a prosecution. For example, a prosecution may take months or years to achieve a result, whereas an enforceable undertaking can require the duty holder to take steps to comply as soon as the undertaking has been accepted by the regulator. Enforceable undertakings remove the need for the regulator to pay the potentially sizeable costs associated with prosecutions. Undertakings also enable the regulator to tailor the enforcement response, taking specific titleholder and broader industry considerations into account.

In accordance with a graduated enforcement framework, regulators will determine if it is appropriate to accept an undertaking given by a person, taking into account a range of factors. These factors include the circumstances in which the undertaking is given and the compliance history of the person giving the undertaking. The bill includes specific circumstances in which the regulator must not accept an undertaking in response to an alleged contravention of an OHS provision of the act or regulations. For example, the regulator must not accept an undertaking if an alleged contravention contributed to the death of another person or if the alleged contravention involved recklessness. These express limitations are considered to be appropriate in the context of a high-hazard industry.

The bill was previously introduced into parliament on 28 March 2018 but lapsed when parliament was prorogued for the 2019 federal election. On 28 June 2018, the Senate referred the provisions of the bill to the Senate Economics Legislation Committee for inquiry and report. In its report, the committee recommended that a two-year review period for enforceable undertakings be inserted into the bill to ascertain if enforceable undertakings are the most suitable way of ensuring compliance with the act.

The bill has not been amended to provide a two-year review period specifically to consider the effectiveness of enforceable undertakings. However, the government will ensure that this matter is considered within a suitable period after the commencement of the relevant provisions of this bill.

The bill also amends the act to retrospectively designate particular areas as 'frontier areas' for the purposes of the designated frontier area tax incentive, to correct a recently discovered historical administrative oversight.

The DFA tax incentive was designed to encourage petroleum exploration in Australia's remote offshore areas. It was active between 2004 and 2009. Under the scheme, the resources minister could designate up to 20 per cent of each year's offshore petroleum acreage release areas as 'frontier areas'. Where a permit was awarded over an area designated as a frontier area, the registered holder or holders of the permit could claim up to 150 per cent of exploration expenditure as a deduction for the petroleum resource rent tax, or PRRT.

Under the Petroleum Resource Rent Tax Assessment Act 1987, the resources minister was required to formally designate frontier areas in writing. Due to an administrative oversight, this requirement was not met for the 2005 acreage release. As a result, four petroleum exploration permits were awarded over areas promoted in 2005 as frontier areas which were not validly designated.

This bill will amend the act to retrospectively designate these areas as frontier areas. This will remove any doubt that the relevant titleholders are entitled to the uplifted PRRT deductions. No persons will be disadvantaged by retrospective application.

Finally, the bill makes technical amendments to the act to futureproof specific references in provisions of the act to regulations made under the act.

There are several sets of regulations made under the act dealing with separate matters, such as safety, environmental management and resource management. Each of the regulations are scheduled to sunset over the next few years. There is a risk that current references in the act to the specific titles of regulations will become ineffective when the regulations sunset and are remade with a new title. The amendments made by this bill are necessary to ensure that the act does not need to be amended each time regulations under the act sunset and are remade, with associated risks to the ongoing effective operation of the act.

Effective references to regulations are critical to the operation of a number of provisions of the act, including provisions which set out regulations subject to monitoring and investigation under the Regulatory Powers (Standard Provisions) Act 2014, and polluter pays and financial assurance obligations.

The amendments will enable the titles of the regulations, or provisions of regulations, relevant to each affected provision of the act to be prescribed by regulation. When the title of a set of regulations changes as a result of remaking those regulations, the reference can be updated by regulatory amendment.

Overall, this bill underscores this government's ongoing commitment to the maintenance and continuous improvement of a strong and effective regulatory framework for offshore petroleum and greenhouse gas storage. Further, it ensures the framework's currency and alignment with international best practice.

I commend this bill to the chamber.

Debate adjourned.