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Wednesday, 14 September 2011
Page: 6041

Senator CASH (Western Australia) (12:27): I too rise to speak on the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011. This bill is part of a package of five bills about the administration and regulation of petroleum and greenhouse gas storage oper­ations in Commonwealth waters. It is import­ant to remember that these bills have a very long history and to understand how these bills have come before the Senate today in their present form. As a senator for Western Australia, I have had concerns for some time about the package of the bills, in particular as they appeared in their original form.

Let us not forget that the Commonwealth of Australia is a body established as a federation of the states and is just one element of the ongoing federation. As a committed federalist, I have been particular­ly concerned about the introduction of a national offshore petroleum regulator, as I do not believe that a reasonable case for change from the existing joint system has been made. Western Australia stands to be the state most affected by this legislation. We are the most active petroleum jurisdiction in Australia with an estimated 60 per cent of offshore activity being conducted off our coast. There are currently five LNG develop­ments with onshore LNG processing plants at various stages of development. These major resource developments underline the fact that Western Australia stands as the state that is most affected by the proposed legis­lation. This was also illustrated by the evidence given to the Senate Economics Legislation Committee inquiry into the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011 and the related bills.

It is a proven fact that Western Australia has a significantly better understanding of its own territorial waters than Canberra based Commonwealth bureaucrats, particularly as a large proportion of current and potential offshore gas fields are off the Western Australian coast. It was made clear in the submission from the Western Australian Department of Mines and Petroleum to the Senate Economics Legislation Committee inquiry into these bills that there was no support in Western Australia for the removal of its role as the regulator of offshore petroleum. Mr Sellers, who is the Director General of the WA Department of Mines and Petroleum, gave evidence to the committee confirming the position of the Western Australian government, which believes that there was no need to change the system, on the basis that the current joint system works adequately and encourages consultation between both the state and the Common­wealth governments.

As stated in the explanatory memoran­dum, the Offshore Petroleum and Green­house Gas Storage Amendment (National Regulator) Bill 2011 will amend the Offshore Petroleum and Greenhouse Gas Storage Act 2006. It will establish two new regulatory bodies to administer and regulate petroleum and greenhouse gas storage operations in Commonwealth waters in the Australian offshore area. The new bodies will replace the designated authorities, who are the state and Northern Territory ministers, who, through their departments, have to date performed and exercised powers conferred directly on them by the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and its predecessor act, the Petroleum (Submerged Lands) Act 1967. The proposed establishment of the national offshore-petro­leum regulator is not supported by all the states and territories and is recognised as a grab by the Commonwealth for greater control of the resources industry.

Western Australia has a significant resource base. The responsibility for the management of these resources is a major task of the WA state government. The efficiency, effectiveness and success of the resource industry in WA are directly attributable to the dedicated manner in which the WA state government has approached this task for more than 100 years. In WA the mining and resources industry underpins our state economy, and the benefits of our resources industry have significant flow-on effects to the rest of Australia. There is no doubt that the success of the industry—because it is an export based industry—means that flow-on effects have benefited the wider Australian community more than with any other Australian industry in recent years. It is estimated that, of Australia's oil and gas reserves, about 78 per cent of crude oil and 92 per cent of natural gas are located off the coast of Western Australia.

Senators will be aware of the history of the joint agreement between the Common­wealth and the states that was concluded at the Premiers Conference on 29 June 1979 and became known as the Offshore Constit­utional Settlement. The Offshore Constituti­onal Settlement was instigated to determine the question of how to divide management of resources and responsibilities in the territo­rial sea between the Commonwealth and the states. This arrangement followed a decision of the High Court in 1975 which, as a conse­quence of the seas and submerged lands case, determined that the Commonwealth had sovereignty over the territorial sea, incl­uding the seabed beneath the three nautical miles of waters now called coastal waters.

Since the Offshore Constitutional Settle­ment in 1979, the agreed structure between the Commonwealth and the states for the management of offshore petroleum and gas developments is carried out through a joint authority, which comprises the rele­vant state minister and the relevant federal minister acting in concert, and it is important to recognise that the operative words to the joint authority are 'working in concert'. That is what the joint authority is all about—the state and Commonwealth governments wor­king together in concert. The joint authority for each state and the Northern Territory comprises the responsible Commonwealth minister and the relevant state or Northern Territory minister. The joint authorities make the major decisions under the act concerning the granting of petroleum titles, the imposi­tion of title conditions and the cancelling of titles, as well as core decisions about resour­ce management and resource security. The 'designated authority', which comprises the minister from the relevant state or territory, in conjunction with the relevant state or territory department in which the profession­al expertise lies—and, again, that is the relevant state or territory department—has responsibility for the more day-to-day admi­nistrative aspects of managing the offshore petroleum regime in the agreed areas, such as drilling approvals and other tasks. To date the joint authority and the designated authority have worked well to the benefit of both the Commonwealth and the states.

It is certainly true to say that there has been some overlap between state and Commonwealth functions, which has delayed the capacity of the states to efficiently and effectively manage some of the aspects of the Offshore Constitutional Settlement areas, and these issues have been the subject of discussions by COAG.

Whilst I note that in the revised explan­atory memorandum it is stated that there will be no change to the joint authority arrange­ment with respect to petroleum titles that have been in place since 1980, I believe that, consistent with the coalition senators' dissenting comments in the Economics Legislation Committee inquiry into the national regulator bill, the importance of the 1979 constitutional settlement appears to have been overlooked with the drafting of this legislation. In that inquiry, my colleague Senator Alan Eggleston sought clarification of the issue of the 1979 constitutional settlement in the following terms:

Senator EGGLESTON: Just for the record, would you like to quickly outline the constitutional settlement, which I think was drawn up with the Fraser government.

Mr Norris: … That offshore constitutional settlement was in fact an agreement between the Commonwealth and the states to really put in place a co-operative approach to administering the offshore area and, in our view, it is an approach that has worked very well for all of those years.

Mr Norris also said:

… what is happening is that the designated authority's role is being removed and replaced by the titles administrator. That is a significant shift away from what has effectively been in place for about 30 years—put in place by the Offshore Constitutional Settlement where there was a cooperative administrative arrangement which has successfully applied for all that period of time.

For these bills to work, they require the support of not only this parliament but also the state governments. I was disappointed that these bills were introduced in the other place in July prior to any agreement being reached between the WA government and the Commonwealth government in relation to some of the outstanding issues, particular­ly between the Commonwealth and the WA government. Western Australian Minister for Mines and Petroleum Norman Moore, who is the longest serving member of parliament in Western Australia and regarded by many in the industry as the most experienced and competent minister for mining and petroleum in Australia, has for some time been actively engaged in discussions with Minister Ferg­uson in relation to the impact of these bills on the state of Western Australia. At the time of the introduction of these bills into the House, no agreement had been reached. The failure of the federal government to under­stand the potential negative impact of these bills on Western Australia was very disapp­ointing and showed continuing contempt for the Western Australian government by the federal government.

The federal government, however, has now conceded that the impact of the bills must be monitored by both state and federal parties. I note that, since the introduction of the bills in the other place, a memorandum of understanding has been reached between the federal government and the WA state gov­ernment and it was signed by the respective parties in August 2011. The memorandum of understanding is the formalisation of a commitment by the Commonwealth govern­ment to meet the Western Australian govern­ment's concerns with the national regulator bill and associated bills.

Under the MOU, the respective state and federal agencies will now develop the detail for consideration and implementation. In particular, as set out in the 'background' to the MOU, it is stated:

Minister Ferguson agreed to consult with Minister Moore on alternatives that Minister Moore may wish to propose in order to reach agreement and thereby co-operate regarding the passage of legislative reforms aimed at establishing NOPTA and NOPSEMA.

On 20 April 2011 Ministers Ferguson and Moore met and discussed the alternative arrangements proposed by Minister Moore. The Ministers reached an "in principle" agreement to co-locate NOPSEMA, NOPTA and elements of WA DMP subject to resolving operational details. This Memorandum is intended to formalise that agreement.

I would also like to read into the record the Hon. Norman Moore's letter, dated 17 August 2011, to the federal minister, the Hon. Martin Ferguson, regarding the memor­andum of understanding for the cooperative arrangements. It reads:

Dear Minister

Thank you for your letter dated 11 August 2011, formalising your commitment to meeting the Western Australian Government's concerns with the Offshore Petroleum and Greenhouse Gas Storage Amendment (National Regulator) Bill 2011 and associated Bills, as outlined in my letter to you of 3 August 2011 and discussed at our meeting on 10 August 2011.

Your commitment to improving the relationship between the State and Commonwealth petroleum regulators is appreciated. I have signed the Memorandum of Understanding to support the proposed cooperative working arrangements and co-location of the National and State Petroleum Regulators. Attached is a copy for your records.

I look forward to our agencies now developing the detail under this agreement for our consideration and implementation.

However, I need to reiterate that the Western Australian State Government remains opposed to the Commonwealth's decision to create NOPSEMA and NOPTA.

Yours sincerely



Whilst an agreement has been signed between the government of Western Austra­lia and the Australian government by way of the memorandum of understanding, the government of Western Australia has made it very clear that it remains opposed to the establishment of NOPTA and NOPSEMA.

The establishment of these bodies will not automatically improve the areas of the regu­latory system that require reform, those being environment and native title. Similarly, there is no evidence to suggest that existing arrangements are not working. Evidence to the Senate Economics Legislation Committ­ee inquiry established this when my collea­gue Senator Eggleston challenged the federal bureaucracy in the following exchange:

Senator EGGLESTON: Would you say the Western Australian regulatory system has been deficient, in any way?

Mr Livingston: I do not believe these reforms are addressing any identified deficiency in WA regulation.

Whilst I am pleased that the Australian government has been able to formalise its commitment to the Western Australian government regarding the concerns that it has with the national regulator bill, I must say to the government that, as a Western Australian senator, I shall be watching closely to ensure that the concerns of the Western Australian government are allevia­ted throughout the implementation process.