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Wednesday, 25 May 2011
Page: 4492

Mr MARTIN FERGUSON (BatmanMinister for Resources and Energy and Minister for Tourism) (09:13): I move:

That this bill be now read a second time.

This bill amends the Offshore Petroleum and Greenhouse Gas Storage Act 2006 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 the Upstream Petroleum (Oil and Gas) Sector, which I will be tabling with the government's final response to the report on the Montara commission of inquiry later today. The Productivity Commission's principal recommendation to reduce unnecessary burden on the industry was the establishment of a national offshore petroleum regulator. It found the existing system was burdensome, slow and lacked consistency across jurisdictions.

The report of the Montara commission of inquiry of June 2010 recommended that, at a minimum, the proposal to establish a national offshore petroleum regulator should be pursued. The Montara commission specifically recommended the establishment of a single independent regulatory body looking after safety as a primary objective but adding well integrity and environmental management.

The 2008 Varanus Island pipeline explosion and the 2009 Montara oil and gas blow-out 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.

Currently the Commonwealth has legislative responsibility for petroleum operation in Australia's offshore areas beyond three nautical miles. However, day-to-day regulation is undertaken by the designated authority in each state and in the Northern Territory.

This system, which requires seven separate designated authority regulators for Commonwealth borders around Australia, made sense when established, particularly bearing in mind that at that time the two key jurisdictions, Victoria and Western Australia, both had well-established regulators more familiar with day-to-day offshore petroleum operations than was the Commonwealth.

As Commonwealth expertise and involvement in regulating offshore operations has developed, in particular following the establishment of NOPSA, the inefficiencies and limitations inherent in the DA model has become more apparent.

These shortcomings have been highlighted by the Montara incidence.

The proposals that I am now putting to the parliament bring the legislative framework governing offshore petroleum operations into line with the Commonwealth's administrative capacities in order to ensure that day-to-day administration of our highly regarded regulatory regime can truly be said to be world's best practice.

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 and the new national offshore petroleum titles administrator 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 territory 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 continue 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 ministers view will prevail in the event of a disagreement. The Commonwealth minister will also remain the decision maker for greenhouse gas storage titles. States and territories will have an option to confer their administrative powers in their coastal waters on NOPTA.

The existing National Offshore Petroleum Safety Authority functions are to be increased to complement their expanded responsibility for well integrity regulation, which the 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 and 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 Environment Management Authority.

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 to regulatory burden to industry.

These cost-recovery arrangements will be reviewed regularly in consultation with the industry.

The establishment cost of NOPTA and NOPSEMA will also be cost recovered through the existing registration fees paid by the industry on transfers and dealings with 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 Government's 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, we 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 continuing competitive advantage for the necessary investment in Australia's offshore oil and gas industry to develop our resources for all Australians.

I commend the bill to the House.

Debate adjourned.