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Economics Legislation Committee
National Offshore Petroleum Safety and Environmental Management Authority

National Offshore Petroleum Safety and Environmental Management Authority

CHAIR: I welcome back the minister and the officers. We now move to the National Offshore Petroleum Safety and Environmental Management Authority: welcome, Mr Smith and Mr Grebe. Mr Smith, would you like to make an opening statement before I throw to Senator Ketter?

Mr Smith : No, I am happy to go straight into questions, thank you, Chair.

Senator KETTER: My first series of questions is in relation to the issue of conferral of state powers. I understand that there is a process going on in which some of the states and territories are conferring powers on your organisation in the areas of health and safety, well integrity, and environmental management in Commonwealth waters. Could you give us an update on that, and on which states and territories have conferred powers at this point in time?

Mr Smith : At the moment, Victoria has conferred its health and safety powers to NOPSEMA. I had a meeting with the Victorian minister in recent weeks, since the election, just to confirm that Victoria is still comfortable with those arrangements. And as far as I am aware, they continue and will continue. We are also interested in Victoria conferring its environmental powers on NOPSEMA. I spoke to the South Australian minister very recently and, in terms of health and safety, they appear keen on conferring the powers on NOPSEMA. They are also considering environmental powers, so we are in discussions with the South Australians regarding that possibility. It is a very similar story in the Northern Territory: they recognise the merit in conferring powers and so they are in active discussions with a view to—in the case of both South Australia and the Northern Territory, I would like to think that within the next 12 months conferral will have occurred. I am keen to see that because I think it actually leads to better outcomes from both the safety and environmental perspectives.

The Queensland government—I have had discussions with the officials there; their position is that, whilst they are interested in the possibility of conferral, at this point it is not a high priority for them. I fully appreciate their position, given the lack of oil and gas activity off their coast. When the opportunity arises, they will pursue conferral, I would like to think. I am catching up with the New South Wales government in the coming weeks. Western Australia I speak to very regularly: their position is that at the moment they do not support conferral and they are not pursuing it at this time. However, they do support aligning their procedures with NOPSEMA's and with the regulatory regime—and not only have they said that, they have actually followed through with real action. So as recently as two weeks ago we were in discussions with them about some legislative changes in Western Australia to try and bring some of their definitions into line with ours. And I see those sorts of activities as ensuring that, at some point—I believe—Western Australia will also consider the possibility of conferral. I would like to think that the actions that are being pursued now will ensure that when that time comes, the transition from Western Australia—from the Department of Mines and Petroleum, in the case of health and safety responsibilities—to NOPSEMA will be a very smooth one. And they seem to be pursuing conferral, or at least alignment, from that same perspective. So I am encouraged in all jurisdictions.

We have not had discussions with the Tasmanian government because conferral is being pursued largely through the COAG process, and they are not taking an active role in the COAG process for offshore oil and gas at this time. Having said that, I am not aware of any concerns they would have with the possibility of NOPSEMA administering health and safety or environmental functions within their waters.

Senator KETTER: Thank you. Could you tell us something about the process for conferring powers on the Commonwealth? How is it formalised?

Mr Smith : Typically, if a state or territory chooses to confer its powers that would be a matter that would need to be considered by the cabinet and signed off by the cabinet. There are a number of ways in which conferral can occur: for instance, the relevant jurisdiction could adopt the Commonwealth legislation; they could adopt mirroring legislation; or they could look at NOPSEMA being their agent and us administering their laws on the basis that their laws have substantive equivalence with the Commonwealth regime. In terms of conferral, when it takes place NOPSEMA becomes the agent for that particular state. It is significant that we are—the 'N' at the start of NOPSEMA—the national regulator—rather than a federal government body alone, it would become the state regulator or the territory regulator as well. As I speak to the ministers from different jurisdictions, I point out to them that I become the accountable authority within their jurisdiction and they become my minister, in the same way that Ian Macfarlane is my minister in regard to safety and health.

Senator KETTER: Can you tell us whether you would require any extra staffing or resources in relation to the conferred powers?

Mr Smith : It depends a lot on which jurisdiction we are talking about. I would expect in some jurisdictions, if there is significant activity, we would probably look to increase our staffing. And in fact, if there is an increase in responsibilities and activity, we will attract additional levy income anyway which would cover those costs. If it is a jurisdiction where there is very little activity, it may be that we can accommodate the additional responsibilities within existing resourcing.

In any event, I suspect that any jurisdiction that wants to confer powers on NOPSEMA would have an expectation that NOPSEMA would have a presence within their jurisdiction. That is certainly in line with the discussions I have had with those jurisdictions that are going down that path already. The nature of that presence would vary but I would imagine we would have probably two or three staff, at least, in the jurisdictions. We would continue to use Perth as the head office with the base of expertise, but there may be specialist expertise required in some of the regional offices. We have an office in Victoria already, in Melbourne, and we have about 10 staff there, recognising the significant assets in Bass Strait.

Senator KETTER: In terms of the ongoing conferral of powers—and I know you have run through each of the jurisdictions in quite a comprehensive fashion—could you just quickly give us a time line as to when you might expect any of the other jurisdictions to confer, or harmonise in the case of WA?

Mr Smith : You will appreciate we have very little control over the time; it is really a matter for each jurisdiction to decide. At this point, I am hopeful that we would have conferral from at least one of South Australia and Northern Territory within the next 12 months. I would like to think that both jurisdictions would have conferred their powers within that time—that may be ambitious, but nonetheless.

My expectation is that other jurisdictions—notably Queensland and New South Wales—would probably follow within a few years of that, although, as I mentioned in the case of Queensland, for instance, it is not a high priority in the absence of oil and gas facilities. So it is really going to come down to the political will. Western Australia is a bit more of a wild card, given their current position is that they are not pursuing conferral. We will be in a position to receive conferral from them and to assist them should they choose to go down that path within the next 12 months. We could accept conferral now, I would like to think. So it is really a matter for Western Australia as to when they choose to even consider that possibility. But, when they make that decision, we will be there and ready.

Senator KETTER: Can you talk us through the process of what you go through to encourage states or territories to confer their powers? Does that involve correspondence at a departmental level, or is the minister involved?

Mr Smith : The department has a role to play; in fact, it is really the lead agency on the issue of conferral. So it is probably a question better directed to them. The minister, I suspect, also has discussions on occasions and certainly does through the COAG process. I attended the most recent COAG meeting where they discussed conferral, and Minister MacFarlane was active in that meeting and got a lot of support from the jurisdictions. I know the department has been meeting with relevant jurisdictions to discuss how conferral would work. We have attended some of those meetings as well, and it has been very cooperative. We also participate directly in discussions with each jurisdiction, and I have mentioned how I have met some of the ministers independently from the COAG process. I have been to the states and met with them. I have also met with officials in those jurisdictions specifically to discuss conferral.

Whilst we are not responsible for the policy, I want to reassure them that, if they choose to confer, NOPSEMA will be ready to support them and what level of support they can expect. For instance, we often discuss things in those meetings along the lines of how involved NOPSEMA would get in stakeholder engagement—and I will talk about how we already participate in public forums in relevant jurisdictions if there are issues in Commonwealth waters off their state or territory. We would expect to continue that and probably increase that sort of activity. We see it as important that we engage with local communities—not just big multinationals or the NGOs but also local communities, and that can mean being on the ground.

Senator KETTER: My next question is probably directed more at the department. Would you be able to tell me how many times and what dates has the minister written to his state and territory counterparts regarding this issue?

Ms Beauchamp : I would have to take the exact details on notice. But I would just say that, from a departmental perspective, we are looking at streamlining processes and making it a lot easier for industry through NOPSEMA to undertake their regulatory activities. But I will take that on notice.

Senator KETTER: Thank you very much. Mr Smith, what is the impact of not having conferrals in place?

Senator Ronaldson: It is a bit hypothetical because they are not in place at the moment, so I think it is pretty hard to answer that question.

Senator KETTER: Perhaps I could better phrase the question.

Senator Ronaldson: Yes, if you would not mind.

Senator KETTER: What are the advantages when a conferral takes place?

Mr Smith : I believe conferral is in the best interests of the country, because I believe the regulatory regime we have is the one most likely to lead to safe and environmentally responsible outcomes. I believe that is the key benefit from conferral. You will have one regulator—so you are removing a level of duplication—and you are getting some savings but you are also getting certainty from that. Also, you are getting a regulatory regime that is the best in the country. Some of the states and territories are already applying a very similar regime and we are working with them. Having just one regulator administering everything means that you are more likely to get a safe outcome and an environmentally responsible one.

Senator KETTER: Have you done any work on what extra staffing or resources you would require if all the states and territories conferred their powers?

Mr Smith : Nothing in detail—very preliminary things like estimating what sorts of costs there would be if we had several staff in each jurisdiction. Anybody can do that maths. You add up the number of states by two or three staff and what the average salaries are for our staff and come up with a number. But it is very rudimentary. We would base our decisions on the needs of each jurisdiction and the activity in those jurisdictions.

Senator Ronaldson: Minus the increased levies, so it would be X minus Y.

Mr Smith : Correct. If there is significant activity in a jurisdiction, we would recover additional levies to our existing revenue.

Senator KETTER: My next series of questions relates to the offshore performance report. I note that there were zero fatalities in 2014 but there was an increase in the number of injuries on mobile offshore drilling units. Did you investigations point to any particular issues that may impact on safety on these types of facilities as opposed to other facilities?

Senator Ronaldson: If these matters are before courts or are subject to other proceedings, we would need to be a bit careful, I suspect. Perhaps, bearing that in mind, Mr Smith can tailor his evidence accordingly.

Mr Smith : We do have several matters before the courts at the moment. Where we have an upturn in incidents—whether in relation to matters such as drilling rigs or the other issue you will find in that report is an upturn in hydrocarbon releases—we tend to place a particular focus on that in our inspections and assessment. We also typically engage in discussions directly with the operators where the incidents are occurring or where we think there might be increased susceptibility to those things. So that is happening at the moment.

Senator KETTER: What recommendations have you made in response to that issue of the uncontrolled hydrocarbon releases?

Mr Smith : When you say 'recommendations', I am not quite sure what you mean.

Senator KETTER: What is your response in addressing that issue of increased hydrocarbon releases?

Mr Smith : In terms of hydrocarbon releases, we have had an upturn for the last two years. That is certainly of concern. We have highlighted that with the industry and, this year, because of the upturn last year, it has been one of our specific areas of focus for inspections. I have also been in the media talking about this issue and speaking directly with the companies—as recently as yesterday. We have a focus, for instance, on the maintenance programs for the companies. That is partly because of the hydrocarbon releases but it is also due to another issue that we have been highlighting with the industry, and that is the falling oil prices—wanting to make sure that we do not see any drop-off in maintenance performance. That has been the case overseas in the past—not in Australia.

The increased hydrocarbon releases in Australia are actually consistent with the experience overseas, where you have ageing facilities. In our report, for instance, there is a comparison with countries like Norway and the Uniting Kingdom. In recent years they have had upturn in hydrocarbon releases. So we are also working at an international level to see what sort of action regulators should be taking and applying here. The North Sea has more ageing facilities and older facilities. So there are lessons from them that we can apply in Australia, and we have commenced those discussions with our international counterparts.

Senator KETTER: Can you tell us how many operators in 2014 fell under NOPSEMA's jurisdiction?

Mr Smith : I think we have those numbers here. Perhaps if you would like to go onto the next question, Mr Grebe can look up those numbers while we are answering questions.

Senator Ronaldson: Or we could just take it on notice.

Mr Smith : Or I could take it on notice.

Senator KETTER: Yes, you can take it on notice. There are a couple of other questions related to that. Two prosecutions have been prepared by NOPSEMA. Can you provide details about what the incidents were in these briefs?

Mr Smith : I can tell you what the two matters are, but I cannot go into detail, because both of them are before the courts at the moment.

Senator KETTER: Yes, fair enough.

Mr Smith : The first one relates to the Stena Clyde, where there were two fatalities at a drilling operation. That matter is before the court and was the subject of a hearing yesterday. The other matter is in regard to a company called Hammelmann. In that particular instance, we pursued a matter where a worker had been engaging in some diving activities and suffered a serious injury to his arm. We are pursuing Hammelmann, the manufacturer of that equipment.

Senator KETTER: You touched on the possible impact of reduced oil price, and I understand you made some comments on the sidelines of the APPEA conference, and this was reported in The West Australian. You made some comments about the possible impact of the reduced oil prices on companies' health and safety standards and said that inspectors are on high alert. Can you talk us through what that means.

Mr Smith : I can, yes. During the APPEA conference, I conducted a media conference, releasing the annual operating report. During that conference, I talked to a range of journalists about our concerns to ensure that the falling oil and gas price in Australia and overseas does not result in any deterioration in performance of the industry. The reason I raised that during that media conference and on previous occasions is that the experience of some of our inspectors who have worked overseas has been that, approximately four to six months after a significant fall in oil price, there have been occasions where there has been a fall-off in maintenance performance, which has led to some increased risks for safety. We have already gone back through the data in Australia that we have to see if that pattern has been replicated in Australia, and I am pleased that it has not. The evidence suggests we have not seen that in Australia, but I have been raising this through the media and directly with the industry on the basis that we need to be vigilant. The fact that we have not seen that in the past does not mean that we are not going to be paying special attention to that now. So I have been raising it in any public forum that I come across. In fact, my own view is that the fact that oil price has fallen and companies have had to reduce costs does not mean that the industry should be looking to just maintain safety standards. I can see an argument where in fact the falling oil price may actually lead to improved safety performance.

Senator KETTER: You mentioned improved vigilance. Does that mean that you are seeking to have more inspectors, or does the frequency of inspections of facilities need to increase?

Mr Smith : We have a policy on the number of inspections that we conduct. For instance, we will conduct two inspections each year for manned facilities and one each year for unmanned facilities. So, unless there is a heightened risk at a particular facility, that is the number of inspections that we will conduct. It is not so much the number; it is more the focus of those inspections. As I have mentioned, the maintenance performance is an area that we are placing particular attention on. For those two inspections per year, we have a five-year program where there are 10 issues we look at, plus additional ones. So in each inspection we will typically have a focus on particular areas. During individual years—like this one—we also add in one or two additional matters that we will focus on, and maintenance performance is one of those this year.

Senator KETTER: I take it you are not looking for extra inspectors.

Mr Smith : No, we are actually pretty comfortable with the number of inspectors we have, given the level of activity and facilities that are there.

Senator KETTER: Thank you very much. My next series of questions relate to floating LNG. I understand that NOPSEMA participated in the WA parliamentary inquiry into FLNG safety. Can you provide a brief overview of that inquiry and NOPSEMA's involvement.

Mr Smith : Yes. The most recent parliamentary inquiry in Western Australia into floating LNG commenced, I think, around the middle of last year. It was before I started, which was late September last year. We appeared twice before that committee. I appeared on one of those occasions. Mr Grebe appeared as well, and the head of our Safety Division, Gavin Guyan. He appeared more than once, along with another of our inspectors. We also responded to a series of questions from the inquiry and provided every assistance that we could to it.

The report itself has been released. We are happy with that report. There are some findings in there which we have found useful. I have had some discussions with industry players about that report. I understand there are several recommendations—in fact, there are several recommendations for the WA government. I do not think they have been considered within the WA parliament yet, so that is really a matter for that jurisdiction. The recommendations relate to things that the WA government may choose to bring to COAG.

Senator KETTER: Does the current regulatory framework cover the introduction of floating LNG technology into Australia?

Mr Smith : Yes, we believe it does and we are comfortable that it is adequate to manage that.

Senator KETTER: So you do not think there are any legislative or regulatory changes needed to ensure that it is appropriately regulated?

Mr Smith : That is correct. We think the current regulatory regime is adequate to consider those issues.

Senator KETTER: Has the safety case for Shell's Prelude project been submitted to NOPSEMA?

Mr Smith : Yes and no, in the sense that they have submitted safety cases for some of the preliminary parts of the activity. So the process we are going through is that they submit a safety case, we provide them with a series of questions and we work through those. In this case we have proved that particular safety case, but it is really only part of the story because the full safety case is yet to be submitted.

The facility is still in construction. There are further parts that will need to be approved and be subject to a safety case before we get to the point where they are actually able to engage in activities in Australian waters. We are not yet at the position where we have approved a safety case that would allow them to operate in Australian waters.

Senator KETTER: What was different from the NOPSEMA perspective about assessing the floating LNG safety case, as opposed to other cases?

Mr Smith : There are a number of different aspects for a floating LNG facility as opposed to a land based facility. There are things like, for example, the handling of cryogenic fluid. There are also the issues that come from having the facility directly above. A normal LNG facility is land-based; you are going to have a pipeline which may run for hundreds of kilometres. You can imagine in those instances that if there is an issue at the wellhead, by the time that issue reaches the LNG facility you probably have had several hours to deal with that, whereas on a floating LNG facility it may be that you are dealing with minutes rather than hours. That is a factor that we need to take into account.

Another difference is the temperature. If the gas is travelling along a pipeline for hundreds of kilometres, by the time it reaches the LNG facility you have a relatively uniform temperature that is coming out. But if it is travelling a short distance up to a facility which is sitting above the field, that is a much shorter time and therefore the likelihood of temperature variations is much greater.

Senator KETTER: Were there any additional resources or different skill sets that were required in conducting the assessment and approval?

Mr Smith : We were satisfied that we had sufficient expertise within NOPSEMA, and we have used that expertise. A lot of it is drawn from our experience with LNG facilities and floating offshore facilities anyway, but we have also gone to experts beyond NOPSEMA. We believe we have the expertise to recognise what the issues are and to tap into other expertise. For instance, we talk to our international colleagues if there are any lessons from overseas. We draw from those. That is the case for floating LNG as well, although in this particular instance Australia will be one of the leaders.

Senator KETTER: I noticed that in the committee's inquiry there was some concern expressed about the evacuation of staff from a floating LNG facility during a cyclone. Can you tell me if there is anything different about this issue of floating LNG as opposed to existing offshore operations?

Mr Smith : Not especially different, in that different facilities have different plans for evacuating staff or leaving them on board. In the case of the Prelude project, the Shell project for floating LNG that we have been considering, their intention is to leave the staff on board in the event of a cyclone. They are putting forward their arguments from a safety perspective. Those arguments seem quite sound, recognising both the nature of the facility that we are dealing with and the risks involved with de-manning a facility. That is the reason some existing facilities choose to leave staff on board. In some instances it is safer to leave people on board the facilities, depending on their design. The floating LNG facility is being designed for staff to stay on board throughout things like category 5 cyclones.

Senator KETTER: Have you looked at the feasibility of holding an emergency-response exercise?

Mr Smith : For floating LNG or other exercises?

Senator KETTER: Yes.

Mr Smith : We participate in quite a range of exercises and we had a major exercise, just last week, here in Canberra and in Perth. We had a large proportion of NOPSEMA participating in that. It was not specifically about floating LNG but it did relate to oil-spill simulations. We are likely to do different simulations—probably, some of those will include floating LNG—before or soon after we give approval. It depends on what we identify as the risks.

Senator KETTER: Are there any proposals for floating LNG, in non-Commonwealth waters, that NOPSEMA is aware of?

Mr Smith : Any other proposals?

Senator KETTER: Yes.

Mr Smith : Not that we are considering, at the moment, but I am certainly aware of discussion within industry about the possibility of other floating LNG facilities. It is largely speculation at this point, so it is not appropriate to comment.

Senator Ronaldson: We are not going to speculate, no.

Senator KETTER: Are you able to say whether the Browse facility would be regulated by NOPSEMA or the WA government?

Mr Smith : If it is in Commonwealth waters it would be administered by us. If it were in state waters it would be administered by the Department of Mines and Petroleum. In either case, I would expect we would work with the Department of Mines and Petroleum, as we do for issues relating to the Prelude project. We are working very cooperatively, and I think that is in the best interests of everybody.

Senator KETTER: Do you believe that the conferral of state powers would provide any greater clarity around the regulatory framework for floating LNG?

Mr Smith : My personal view is that conferral will reduce duplication, and just having one regulator to deal with means that the scope for misunderstanding or complexity is reduced. Therefore, I think it is a better outcome.

Senator KETTER: My next series of questions is in relation to the enterprise bargaining that is going on within NOPSEMA.

Mr Smith : Can I just respond to that? We are not actually participating in enterprise bargaining, at the moment. All of the staff in NOPSEMA are under common-law contracts, so we are not participating in an enterprise-bargaining process.

Senator KETTER: Okay.

Senator Ronaldson: I guess that does that series of questions, Senator.

Senator KETTER: Can you confirm what the employment arrangements are for NOPSEMA's employees?

Mr Smith : All of our staff are employees under common-law contracts.

Senator KETTER: Is NOPSEMA subject to the Australian Government Public Sector Workplace Bargaining Policy?

Mr Smith : To the extent that we have regard to it in terms of the common-law contracts, yes.

Senator KETTER: Do you believe your current arrangements are having an impact on morale?

Senator Ronaldson: Which current—

Senator KETTER: Your common-law contract arrangements.

Senator Ronaldson: It was having a bad impact on morale with people on enterprise agreements, and now you are saying it is having—you cannot have it both ways.

Senator KETTER: It depends what is in the contract, these contracts of employment.

Senator Ronaldson: With these questions, if the question is, 'Has it been put to you that there is a staff and morale issue in the agency?' I think that is one question. But the pursuit of the assumption, 'You have a staff and morale issue and you'd better explain what it is,' as opposed to the question, 'Have you been advised of a morale issue within the staff?' becomes a bit self-serving, I think, depending on how it is put.

Senator KETTER: Have there been any attempts to initiate enterprise bargaining within NOPSEMA?

Mr Smith : No. Our staff seem satisfied with common-law contracts as the way to sort out their remuneration.

Senator KETTER: Do you have an exemption from the APS workplace bargaining framework?

Mr Smith : I am not entirely sure of the background to the common-law contract, so can I take that one on notice.

Senator KETTER: Okay. Just in following up on that, if that is the case, could you advise when the exemption was applied for, what date it was provided and who provides the exemption. Thank you. My final series of questions relate to the staffing profile and staffing arrangements within NOPSEMA. Can you give us an overview of the staffing profile of NOPSEMA?

Mr Smith : Do you mean the number of staff and their backgrounds?

Senator KETTER: Yes, and—

Senator Ronaldson: Can you clarify what it is that you want, Senator.

Senator KETTER: in terms of a rough overview of the functions and classifications. I think that would be useful.

Mr Smith : The details of that are contained in our annual report. We are just looking for that at the moment. In terms of numbers, we have in the order of 128 staff, primarily in Perth—around 10 of them in Melbourne. The staff are employed typically in our environment division, which Mr Grebe heads up, or our safety division and are supported by some corporate services staff and regulatory support staff. In the environment, safety and integrity divisions, the staff there tend to be experts in their field. Typically, they will have worked in the industry on the safety side in an area like well integrity—highly specialised. Typically, they will have had 20 years or more expertise within the industry. On the environment side there is a similar sort of pattern. They will have worked within industry. They may have some government expertise. You will find they typically have higher education qualifications. We have, I think, in the order of eight doctorates as well as 10 masters—the same sort of thing on both sides. They are highly expert in their field. We are a competency based regulator and we see that level of expertise as crucial to our role.

Senator KETTER: How many graduate positions were offered in 2015?

Mr Smith : We did not offer any graduate positions.

Senator KETTER: How does this compare with the past three years?

Mr Smith : I am not aware of us offering any graduate positions. Whilst I would like to encourage graduates, typically the nature of our work means that our staff have to have considerable experience before they are likely to be suitable to be inspectors, whether it be environment or safety inspectors, so graduates do not typically fit that bill. Whilst there are some roles that graduates could perform, the sort of graduates that would be interested in coming to us are interested in careers in safety and environment. We are interested in them, but probably after they have got experience with industry for an extended period of time.

Senator KETTER: So you will not be offering any in 2016?

Mr Smith : No, we do not have any plans at this stage.

Senator KETTER: Can you talk me through how the cost recovery model works with NOPSEMA.

Mr Smith : Yes. Industry is subject to levies based on activity and facilities that are there. Those levies are applied. We collect them and then administer our activities in accordance with our budget. Each year I meet with industry and provide them with a briefing on both the revenue and expenditure by NOPSEMA. If there are any plans to change things, or special issues coming up, I will inform them of that.

Senator KETTER: Can you confirm that 100 per cent of the levies that are collected are returned to NOPSEMA?

Mr Smith : Yes.

Senator KETTER: Can you talk us through the process of updating the cost recovery impact statement.

Senator Ronaldson: Is there such a thing?

Mr Smith : I am not sure what you mean by 'updating' it.

Mr Grebe : The cost recovery impact statement is the process by which we establish the rate that levies should be set. It draws upon our expected forecast of activity levels—from an occupational health and safety perspective, the number of facilities that are expected to be in the regime, for example; and, on the environment side, the number of petroleum activities which titleholders submit environment plans for. There are a range of different mechanisms under the regulations for how levies are calculated, and there are also a range of different activities that we are expected to implement on each of the regulated entities. That all needs to be considered. Obviously, this is something which has a range of different inputs, some of which are well known in terms of staff numbers existing, but certainly based on forward estimates of industry activity level. The cost recovery impact statement process is moving towards a live maintaining system, so that there are annual adjustments based on the real experience level of industry activities which generate the revenue, and also the reflection of the actual costs of carrying out those regulatory activities that the levies are collected for.

Senator KETTER: I note that your current corporate plan expires at the end of this month.

Mr Smith : Yes.

Senator KETTER: Is a new corporate plan being finalised?

Mr Smith : Yes. It is well advanced. We distributed a draft to our advisory board just last week. They were comfortable with it. We are just ensuring that it aligns with the regulatory performance framework that the government has implemented. We expect to be ready to go on 1 July with the new corporate plan.

Senator KETTER: What changes are we likely to see in the new corporate plan?

Mr Smith : The new corporate plan is largely following the same direction. We have amended some of the KPIs to make sure that it is in line with the regulatory performance framework, but I do not think there will be any surprises there for industry or stakeholders. When you are a regulator looking after things like safety you do not want surprises, anyway.

CHAIR: Mr Smith, welcome back after a 10-year absence. I must say that you have made a very good impression on all of the senators present. You have done a very good job.

Senator Ronaldson: Chair, I might say that both Mr Grebe and Mr Smith have come from Perth, so we are doubly indebted to them, and it is with deep sorrow that we throw them back out there.

CHAIR: Mr Grebe, next time you might want to have an arrangement with Mr Smith about what questions you get to answer, because he is very good at answering all of those. Thank you for your full answers, too.