Bills Digest No. 50 2003-04
Offshore Petroleum (Safety Levies) Bill
2003
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Offshore Petroleum (Safety Levies) Bill
2003
Date
Introduced: 17 September 2003
House: Representatives
Portfolio: Industry, Tourism and
Resources
Commencement: Sections 1 and 2 and unless otherwise specified for
other sections: the day on which this Act receives Royal Assent.
Sections 3 to 11, on 1 January
2005.
The Commonwealth, the States and the Northern
Territory have, by agreement, decided to create the National
Offshore Petroleum Safety Authority ( NOPSA ) for the purposes of
regulating, in a nationally consistent manner, safety in the
offshore petroleum industry. NOPSA is the subject of a separate
Bill currently before the House the Petroleum (Submerged Lands)
Amendment Bill 2003. This Bill gives effect to the agreement
to create NOPSA as a full cost recovery agency.
Cost recovery pursuant to this Bill will be by
industry levies the level of which will be set by regulation before
the NOPSA commences activities in 2005.
Background
In 1979 the Commonwealth and the States agreed
to a division of offshore powers and responsibilities known
collectively as the Offshore Constitutional Settlement ( OCS
).(1) A major consequence of the OCS was that, as States
and the Northern Territory retained responsibility for coastal
waters up to three nautical miles from the low water mark, the
Occupational Health and Safety ( OH & S ) legislation of those
States and the Northern Territory applied to activities of the
petroleum industry in those waters. This has resulted in
significant costs and inefficiencies for companies that operate in
more than one State and / or the Northern Territory.
These inefficiencies have been more pronounced
since the industry has adopted the safety case regime for risk
management in the industry. This regime had its origins in the
response to the 1988 Piper Alpha disaster in the North Sea, and
places responsibility for safety on the operators not the
regulator. A safety case regime , once developed, is approved by
the regulator and establishes the basic standard upon which a
facility is assessed for the effectiveness of its safety management
systems. The safety case regime sits alongside the States and
Northern Territory OH & S legislation.
The Government has announced a formal cost
recovery policy with the aim of heightening the transparency,
consistency and accountability of cost recovery by government
agencies.(2) This Bill is consistent with that policy
which reflects the Government s response to the Productivity
Commission Report no. 15 Cost Recovery by Government
Agencies.
State and Northern Territory Governments have
supported the formation of NOPSA and that the agency will operate
on a full cost recovery basis.(3)
The formation of a single independent national
agency to regulate and oversee safety in the offshore petroleum
industry is the preferred outcome of the industry peak body, APPEA,
and the International Association of Drilling
Contractors.(4)
As noted in the Regulation Impact Statement,
the ACTU in their written response to the Issues
Paper(5) supports the formation of such an agency as the
best means of giving the workforce confidence that decisions
affecting their health and safety are not unduly impacted by
industry or government perspectives.(6)
Neither the industry employers nor employee
representatives have registered disagreement with the principle of
NOPSA operating on a full cost recovery basis.
Should the Bill not be passed the NOPSA will
not be able to function which will negate the purpose of the
Petroleum (Submerged Lands) Amendment Bill 2003. Should
the NOPSA not be established and made functional the current
identified inefficiencies and concomitant risks associated with
existing OH & S regimes will continue, to the detriment of the
industry and those working in it.
The Bill contains no provisions with respect
to reviewing the operations of the levy process and how it is
administered.
Part 2 deals with the safety
investigation levy, Part 3 the safety case levy
and Part 4 the pipeline safety management plan
levy. The safety case levy is projected to meet the bulk of the
NOPSA operating costs,(7) projected at $6.1 million for
the first year of operation.(8)
For each of the three types of levies, the
amount of the relevant levy is to be specified in, or worked out
under, regulations. Regulations may also provide that the amount of
the relevant levy varies according to the particular circumstances
of the accident, facility or pipeline. This capacity to vary the
amount of levy is designed to ensure equity as between industry
participants.
Each of the levies may be imposed in relation
to accidents, facilities or pipelines in Commonwealth waters or
State / Territory coastal waters.
The various levies are imposed when the
conditions set out in the new subsection (1) of
each of the new sections 5 to 10 occur. Note that
in the case of the safety investigation levy, some of these
conditions are still to be specified in regulations: new
paragraphs 5(1)(c) and 6(1)(c).
The effectiveness of this Bill relies on
continuing the process of consultation already commenced with the
industry. Without such consultation with and input from the
industry, the regulations yet to be drafted pertaining to
identifying levy triggering events will not be sufficiently
targeted to maximise the benefits to be achieved by a single,
national regulator. Continued effective consultation will also be
required to ensure that the quantum of levies is set equitably.
-
Petroleum (Submerged Lands) Amendment Bill 2003, Explanatory
Memorandum, p. 3.
-
Media Release: Senator Nick
Minchin, Commonwealth Cost Recovery Policy
44/2002 4 December 2002. See also the Guidelines for
Commonwealth Agencies at: http://www.finance.gov.au/finframework/cost%5Frecovery.html
-
Media Release: Hon Ian
Macfarlane, Minister for Industry, Tourism and
Resources, New Authority to Improve Petroleum Industry Safety
03/181, 17 September 2003.
-
Regulation Impact Statement: Formation of a National
Statutory Authority to Regulate Safety in the Offshore Petroleum
Industry, paragraph 99.
-
Refer to Australian Offshore Petroleum Safety Case Review
Report of the Independent Review Team which can be located at:
http://www.industry.gov.au/content/controlfiles/display_details.cfm?ObjectID=3203C03E-CD21-4829-A6CA882FA73F4CD0
-
Regulation Impact Statement: Formation of a National
Statutory Authority to Regulate Safety in the Offshore Petroleum
Industry, paragraph 102.
-
Offshore Petroleum (Safety Levies) Bill 2003 Second Reading
Speech, House Hansard 17 September 2003 p. 19499 the Hon
Mr Entsch, Parliamentary Secretary to the Minister for Industry,
Tourism and Resources.
-
Media Release: Hon Ian
Macfarlane, Minister for Industry, Tourism and
Resources, op. cit.
David Walsh
10 October 2003
Bills Digest Service
Information and Research Services
This paper has been prepared for general distribution to
Senators and Members of the Australian Parliament. While great care
is taken to ensure that the paper is accurate and balanced, the
paper is written using information publicly available at the time
of production. The views expressed are those of the author and
should not be attributed to the Information and Research Services
(IRS). Advice on legislation or legal policy issues contained in
this paper is provided for use in parliamentary debate and for
related parliamentary purposes. This paper is not professional
legal opinion. Readers are reminded that the paper is not an
official parliamentary or Australian government document.
IRS staff are available to discuss the paper's
contents with Senators and Members and their staff but not with
members of the public.
ISSN 1328-8091
© Commonwealth of Australia 2003
Except to the extent of the uses permitted under the
Copyright Act 1968, no part of this publication may be
reproduced or transmitted in any form or by any means, including
information storage and retrieval systems, without the prior
written consent of the Parliamentary Library, other than by Members
of the Australian Parliament in the course of their official
duties.
Published by the Department of the Parliamentary Library,
2003.
Back to top