The safety of workers and operations is of the utmost importance and it is critical that the offshore petroleum industry is supported by an effective and robust health and safety regime. Whilst the inquiry process gathered much useful information through submissions and public hearings the majority report does not adequately reflect the balance of evidence which has demonstrated the effectiveness of Australia’s existing system under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (OPGGS Act).
At the hearings some witnesses raised concerns about the effectiveness of National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) as an independent regulator, and made claims that the offshore OHS regime is inferior to the onshore WHS laws. However, a robust evidence base to support these claims or justify major changes to Australia’s existing offshore safety regime was not provided. A number of the issues identified were supported either by non-specific examples or anecdotes which could not be verified, or simply by assertion.
Consequently, in the view of Government Senators a number of the recommendations do not constitute the best policy response for ensuring the strongest possible safety outcomes for workers in the offshore petroleum industry.
Effectiveness of Australia’s safety regime
Australia’s offshore regime is highly regarded internationally and Australia’s offshore industry is one of the safest in the world with some of the lowest injury and fatality rates. This point was recognised in the 2017 Senate inquiry into oil and gas exploration in the Great Australian Bight when ALP Senators Chisholm and Urquhart stated:
The Australian offshore oil and gas industry is subject to one of the most rigorous environmental and safety regulatory regimes in the world.
In its submission to this inquiry NOPSEMA confirmed that since 2005, three fatalities have occurred in the offshore petroleum regime associated with two separate incidents, there have been no further fatalities since 2012.
Safe Work Australia’s data for industries where the WHS laws have been applied indicate that in comparison the offshore petroleum industry has very low injury rates. In 2016 there were 53 offshore petroleum injuries reported to NOPSEMA, only seven of these injuries resulted in lost time at work, and no major injuries. In 2016, Safe Work Australia statistics provide there were 3,510 injury claims made in agriculture, forestry and fishing, 12,670 in construction and 12,740 in manufacturing. In 2017, the number of injuries reported to NOPSEMA across the offshore petroleum industry represents similar numbers to 2016, the key difference being four major injuries in 2017.
The most recently available (2016) comparative data from the International Regulators’ Forum (IRF) confirms Australia’s safety record compares favourably to other jurisdictions, with the number of major injuries per million hours worked at 0.00 for Australia, NOPSEMA’s analysis of the IRF data shows all IRF nations are at 0.31 and comparable IRF nations are at 0.62.
By all measures, both domestic and internationally, NOPSEMA administers a regulatory regime that is world-class and delivers leading outcomes for safety, well integrity and environmental management.
Legislation and framework
While broadly consistent with the national WHS Act, Australia’s offshore oil and gas OHS regime has additional requirements to address the high-hazard, high-risk nature of offshore activities and it applies duties of care to a more specific set of persons and in more detail.
The regime sets out broad performance objectives with respect to the identification and management of hazards and risks. The operator must take all reasonably practicable steps to ensure the facility and its activities are safe and without risk to health.
When the Commonwealth, state and territory governments committed to the harmonisation of the WHS laws in 2008, the responsible ministers agreed that industry-specific laws, in particular for high risk industries, should continue where objectively justified.
It was determined that the offshore petroleum regime requires a more tailored form of regulation to address its high hazard work environment, characterised by low frequency, yet potentially catastrophic consequence, accident events. For this reason, the OPGGS was maintained as specific health and safety legislation for the offshore petroleum industry.
Other high risk sectors with industry-specific health and safety legislation include the aviation, agricultural and veterinary chemicals, and radiation and nuclear industries.
Testimony by Safe Work Australia at the inquiry hearings in Melbourne on 11 July 2018 indicated that it has not identified issues associated with the OPGGS Act through the implementation of their program. Further, Safe Work Australia’s work program as an agency is set by its members comprising representatives from the Commonwealth, the states and territories, two from the ACTU and two employer representatives and an independent chair.
Overall the OPGGS Act has comparable provisions to the key elements of the WHS laws. The similarities include provisions for a duty of care regime, a risk management framework, workplace-based consultation, participation and representation, provisions for enforcement and compliance, regulation-making powers, and a defined role of the OHS regulatory agency. The OPGGS Act is also reinforced by the OPGGS Safety Regulations that provide in detail the obligations, systems and workplace arrangements for a robust safety regulatory framework.
Key differences are that the application of the OPGGS Act is specific to offshore petroleum activities—its objects are more narrowly defined, and its duties are expressed to apply to specific classes of persons, taking into account the specific roles of these persons in the offshore petroleum industry, rather than being grounded in one overarching duty of care.
The OPGGS regime also establishes a single independent offshore regulator, through NOPSEMA, to regulate health and safety, well integrity and environmental management, and apply a consistent approach to the regulation of all petroleum activities.
NOPSEMA’s independence and effectiveness
During the hearings some witnesses raised concerns about the effectiveness of NOPSEMA as an independent regulator. This is not supported by independent evidence. Since 2005, the National Offshore Petroleum Safety Authority and later NOPSEMA have been subject to three independent statutory operational reviews, plus reviews by the Productivity Commission and the Australian National Audit Office (ANAO), along with scrutiny by various state government reviews.
The 2011 independent statutory operational review of NOPSA’s performance found that, “NOPSA has firmly established itself as a respected and competent safety regulator among stakeholders and peers in both the domestic and international offshore petroleum and gas industry”.
In 2014, the ANAO conducted an independent review on the establishment and administration of NOPSEMA and established that NOPSEMA “has appropriately integrated administrative arrangements for the new function of environmental management and has established a sound framework for the regulation of the offshore petroleum industry”.
The 2015 independent statutory operational review of NOPSEMA's performance concluded that NOPSEMA is “an effective regulator that has made positive contributions to improving safety and well integrity, and managing Australia's offshore environment.”
The 2015 independent EPBC Act Streamlining Review found that “Program commitments have been met”, and “the required processes and procedures are in place for the Program commitments to continue to be met in the future”.
The 2016 Australia State of the Environment Report, by the Department of the Environment and Energy found that, “with the implementation of NOPSEMA, there has been an increased level of scrutiny of offshore petroleum environmental management through assessment processes and compliance inspections. Investigation and enforcement powers for environmental management have also been strengthened, which has resulted in better understanding of the impacts of activities, greater focus on industry compliance and better preparedness for unplanned events.”
Workforce participation
Evidence presented by NOPSEMA to the inquiry demonstrates that NOPSEMA promotes communication with the workforce and provides advice and guidance through various mechanisms. Examples of such mechanisms include:
(a)
a dedicated website pages covering the OHS regime and specific pages for HSRs; each page containing a number of resources for the workforce on safety guidance and advice.
(b)
a dedicated NOPSEMA inspector that acts as a focal point for each facility. That focal point contacts the HSR and makes themselves known and supports HSR contact at any time. Conversations are confidential.
(c)
a dedicated hotline number that can be used by any member of the workforce, this is in addition to our own direct phone numbers given out by NOPSEMA inspectors.
Compliance and penalties
The Victorian Government claimed it their submission to the inquiry that the penalty provisions under the OPGGS regime are significantly lower than under the model WHS and Victorian OHS regimes.
Under the OPGGS regime, a graduated range of enforcement tools are available to the Regulator, to encourage and support improved compliance with the regime. Prosecution is not the only enforcement mechanism at the top of the enforcement pyramid. There is also provision for NOPSEMA to withdraw acceptance of a permissioning document (which means that the titleholder/operator cannot legally continue to undertake operations), or for the Joint Authority to decide not to renew or to cancel a title. Arguably, these would result in a much higher financial loss and reputational damage for a company.
While the regime provides for a hierarchy of sanctions and regulatory strategies, the way in which the regulator moves within these hierarchies is determined by NOPSEMA. The OPGGS penalties are framed in accordance with the Attorney-General’s Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers. The OPGGS regime's penalty units for a breach of primary WHS duties, with a fault element of recklessness or negligence, are higher than both the model WHS laws and the Victorian OHS Act.
The penalty for recklessness is over double the amount under the OPGGS regime compared to the model WHS and Victorian OHS laws, with the exception of the penalty for a body corporate under the model WHS Act (compared to which the penalty in the OPGGS regime is still higher).
Conclusion
The inquiry has not established a compelling case for substantial change to Australia’s regime for worker safety in the offshore petroleum industry.
However, the inquiry process has generated substantial useful input through the submissions and public hearing and the Committee Secretariat are to be commended for their efforts in supporting the inquiry. We note that the Department of Industry, Innovation and Science (DIIS) is reviewing the regulatory regime for the OHS of offshore workers ahead of the relevant regulations sunsetting in 2020 to ensure it remains contemporary, fit for purpose and represents leading international practice. Relevant material from this inquiry should feed into this process.
Comments on recommendations
Recommendation 1
This recommendation is not supported. As discussed above, Australia’s offshore safety regime is tailored to a high hazard operating environment and is working well. Based on the evidence collected during the course of the inquiry no case for a change of this significance has been made. Harmonisation simply for the sake of consistency with model laws is not supported. We note that a comprehensive review of offshore safety regulations is being undertaken by the DIIS which will assess these issues further.
Recommendation 2
This recommendation is supported in principle, subject to the findings of the current DIIS review not identifying any substantial impediments to its adoption.
Recommendation 3
Noted. Evidence presented to the inquiry did not provide a robust case supporting the need for legislative amendments to the OPGGS Act provisions relating to review of the safety case. The evidence provided to the committee gives confidence in the consultation processes in place in the existing arrangements as well as processes for review and assessment of safety case over time.
The current object in the OPGGS Act “to foster a consultative relationship between all relevant persons concerning the health, safety and welfare of members of the workforce at those facilities”, provides for tripartite engagement as unions and employer organisations are recognised as “relevant persons”.
The OPGGS regulatory regime provides for extensive workforce engagement. This includes involvement in the development and access to safety cases and procedural documentation, the ability to appoint people to represent their interests, protection of the workforce against threats and the ability to participate in governance arrangements and forums on health and safety issues. Some of these are explicit in the legislation (like worker involvement in safety cases and appointment of HSRs), while those at the strategic level are not (such as Schedule 3 object (e) to “foster consultative relationship between all relevant persons”, and NOPSEMA Board membership).
However, HSRs can play an important role in assisting with worker safety and providing input to safety cases. There is merit in the DIIS examining whether there are improvements that could be made as part of its review of safety regulations.
Recommendation 4
This recommendation is not supported. Australia’s safety regime is tailored to the high hazard operating arrangements of the industry which requires a special regime and arrangements to best manage the risks. While recognising the positive role unions can play in entering a workplace to inquire into safety issues and take a constructive role in promoting OHS improvements, it is noted however, that there are ongoing concerns about union entry rights being used for other purposes, including industrial purposes. This is also evidenced by documented Federal Court decisions and Royal Commissions.
While the OPGGS regime does not currently provide for unions’ right of entry, it does allow an HSR to receive assistance from a consultant, who could be a union official. Subject to approval from the operator or NOPSEMA, the consultant can assist an HSR, be provided with information and attend any health and safety-related interview with the HSR.
Recommendation 5
This is unnecessary. In relation to permitting work, under the OPGGS regime the safety case must provide for the operator to establish and maintain a documented system for coordinating and controlling the safe performance of all work activities of members of the workforce i.e. a ‘Permit to Work’ system. The PTW system must identify the persons having the responsibility to authorise and supervise work and describe how the operator will ensure members of the workforce are competent in the application of the PTW system.
This system places the onus on industry to ensure competency of their employees undertaking high-risk work, and must be assessed and accepted by NOPSEMA through the safety case.
The differing system does not imply that the training and qualifications required of offshore workers is inferior to a formal licensing system.
In regards to determining whether the onshore licensing system could be applied offshore, relevant consideration would need to be made on whether the underlying courses are relevant to and appropriate for the offshore sector. This would require careful evaluation of the course and assessment material, and relevant VET providers. This system can be examined further as part of the DIIS Safety review.
Recommendation 6
This recommendation is not supported as it misunderstands the role of the NOPSEMA Board, which is advisory and does not make policy decisions. As a legislated statutory advisory board, members are selected for appointment by the COAG Energy Council prior to being formally appointed by the responsible Commonwealth Minister. The Board is skills based and members are not there as representatives for different groups. Members are selected on the basis of the skills they bring and anyone can be appointed regardless of affiliation, if they have the requisite skills needed by the Board. Candidates must prove they can suitably contribute to the legislated functions of the Board, which includes providing advice on policy or strategic matters relating to OHS. There is nothing in the legislation that precludes workforce representatives or representatives of employer organisations from being considered for nomination so long as they can demonstrate they are suitably qualified.
Recommendation 7
Noted. NOPSEMA already carries out inspections both unannounced and announced as part of its monitoring and inspection regime. However, NOPSEMA’s evidence to the inquiry makes clear that it does not possess or have access to the helicopters required to undertake unannounced inspections of offshore facilities. However, NOPSEMA’s evidence demonstrated that operators do not have advance warning of all matters under inspection, with 86% of all inspections undertaken in 2017 having inspection scope items added following issuance of the inspection brief to the operator, with the additional inspection items not being advised to the operator prior to arrival.
The risks of carrying out unannounced inspections to offshore facilities can be expected to outweigh the benefits. Given the practical and logistical difficulties associated with offshore facilities, unannounced inspections may pose a barrier to effective regulatory inspections and also create inadvertent safety risks to workers at or near the facility.
Process safety hazards, those that can cause potentially catastrophic incidents, typically have controls that cannot be seen (as opposed to personal safety hazards). Hence, examination of management plans, documents, technical data, as well interviews with workers are an important part of inspections. These cannot be arranged with no or little notice. Nor is it feasible that a duty holder can ‘cover up or hide’ process safety related issues in a relatively short time (2 weeks’ notice or less).
Site visits and inspections should be structured and planned in a way that allows information and intelligence from multiple sources to be accessed and applied by NOPSEMA inspectors. Unannounced inspections do not allow for this.
Recommendation 8
This recommendation is supported in part. The OPGGS Act provides numerous protections to HSRs and provides HSRs with the authority to accompany a NOPSEMA inspector during any inspection. In addition, HSRs have the authority to be present at interviews between NOPSEMA inspectors and group members. HSRs may also engage external consultants to assist them on any OHS matters, without prejudice. Under the OPGGS Act there are protections for the offshore workforce if they make a complaint about a matter concerning OHS.
If HSRs are present on a facility during a NOPSEMA inspection, the operator is advised by the NOPSEMA inspector to invite HSRs to inspection meetings. NOPSEMA inspectors will also independently seek opportunities to speak with HSRs. Further, in recognition of the role that unions play initiates bilateral meetings with union representative bodies on OHS matters in addition to and similar engagement with employer organisations.
While mandating HSRs to accompany NOPSEMA inspectors on their inspections is an overly prescriptive approach there may be merit in the recommendation for requiring NOPSEMA inspectors to meet separately and privately with HSRs during inspections and should be tested further with all relevant stakeholders during the Departmental review of safety regulations.
Recommendation 9
Noted. Australia’s OPGGS regime is compliant with all Commonwealth regimes and has stronger penalties than in some other regimes.
In 2013, the OPGGS Act was strengthened to ensure the compliance, monitoring, investigation and enforcement powers of the regulator and enforcement measures for contraventions of the Act are appropriate in the context of a high-hazard industry. Specifically, this: introduced a civil penalty regime; increased criminal penalty levels under the Act, consistent with major hazard industry legislation; and harmonised, or made greater, the penalties, including custodial penalties, for OHS offences under the Act with the WHS Act to reflect the greater consequences in a major hazard industry.
The criminal penalty increases were determined following careful consideration of the penalties that apply under comparable legislation, including the WHS Act and the Environment Protection and Biodiversity Conservation Act 1999, and were designed to ensure that the penalty applied is appropriate to reflect the potentially severe consequences of non-compliance.
Recommendations 10 and 11
These recommendations are not supported as this inquiry has not provided evidence to suggest such an approach is necessary. Best practice regulatory policy requires employing a risk based approach and toolkit with graduated enforcement responses. This is currently available to NOPSEMA under the existing regime. NOPSEMA has a range of powers to use as is required to ensure offshore worker safety and required environmental outcomes are achieved.
Recommendation 12
Noted. A comprehensive assessment of coverage of Australian safety regulations in the maritime industry requires consideration by all relevant stakeholders, including DIIS, NOPSEMA, the Australian Maritime Safety Authority (AMSA) and the Department of Jobs and Small Business and the Department of Infrastructure, Regional Development and Cities. This would include clarifying touch points between the OPGGS regime, the Navigation Act and the OHS (MI) Act—or WHS Act following passing of current 2016 Bill (refer Seafarers and Other Legislation Amendment Bill).
Recommendation 13
This is appropriately an issue for NOPSEMA and AMSA to address as and when required. Best practice regulatory practices require that agencies working in related and potentially overlapping or adjoining fields of regulation need to ensure clarity on common areas and interactions between agencies on an ongoing basis as required.
Senator Lucy GichuhiSenator James Paterson
Deputy ChairMember