1.1
On 27 October 2022, the Senate referred the provisions of the Offshore Electricity Infrastructure Legislation Amendment Bill 2022 (the bill) to the Environment and Communications Legislation Committee (the committee) for inquiry and report by 17 November 2022.
Conduct of the inquiry
1.2
Details of the inquiry were advertised on the committee’s website, including a call for submissions by 2 November 2022. The committee also wrote to various stakeholders directly, inviting them to make submissions.
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The committee received five submissions. These are listed at Appendix 1 of this report, and are available in full on the committee’s website. The committee agreed to conduct the inquiry on the evidence received in written submissions and additional information provided by the Department of Climate Change, Energy, the Environment and Water (DCCEEW or the department).
Acknowledgements
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The committee thanks the organisations that provided submissions, particularly noting the short timeframe for this inquiry.
Background and purpose of the bill
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The Offshore Electricity Infrastructure Act 2021 (OEI Act) entered into force on 2 June 2022. It established a legal framework for the ‘construction, installation, commissioning, operation, maintenance, and decommissioning’ of offshore electricity infrastructure (OEI) in the Commonwealth’s offshore area.
1.6
The bill would make amendments to Commonwealth legislation to facilitate the implementation of the OEI Act, including:
the Customs Act 1901 (Customs Act) in order to effectively manage border security and customs risks, as well as anti-dumping and countervailing measures related to OEI;
the OEI Act to appoint an appropriate Registrar for licensing OEI participants; and
making a number of minor amendments to the OEI Act for other matters that have become apparent since the Act commenced.
Human rights and financial implications of the bill
1.7
The Explanatory Memorandum states that the bill is compatible with three engaged human rights (freedom of movement, right to liberty from arbitrary detention, and right to privacy) because any limitations are ‘reasonable, necessary and proportionate’. The Parliamentary Joint Committee on Human Rights raised no concerns about the bill.
1.8
The Explanatory Memorandum notes that no financial impacts of the bill are expected.
Provisions of the bill and matters raised in submissions
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The bill comprises two schedules, which this section discusses in turn. As well as setting out the provisions of the bill, this section outlines relevant matters expressed by submitters.
1.10
The committee notes that submissions were broadly supportive of the OEI Act, as well as the amendments made by the bill to support its implementation.
Schedule 1—amendment of the Customs Act
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The Explanatory Memorandum states that bill would amend the Customs Act to ensure that:
…goods and vessels that enter or exit areas off the coast of Australia in relation to offshore electricity infrastructure (OEI) are appropriately regulated.
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In effect, the bill would close a regulatory gap in which ‘OEI are not currently considered part of Australia for customs legislation’.
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The bill would extend existing Commonwealth customs and border security arrangements for sea and resources installations (for instance, oil and natural gas platforms) to OEI. The Explanatory Memorandum explains these arrangements as follows:
The Bill will allow the Australian Border Force (ABF) to treat OEI on the same basis as sea and resources installations for customs purposes, and for the Anti-Dumping Commission (ADC) to treat OEI on the same basis as for the purposes of anti-dumping and countervailing matters. This will ensure that the ABF and the ADC can continue to secure the border using existing controls that are currently administered in the offshore environment.
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The department commented that this was not only necessary to maintain the integrity of Australian border security, but also to:
…achieve regulatory neutrality between renewable and non-renewable energy sectors, by ensuring impartial treatment in the offshore activities of these sectors, regardless of whether they are conducted through an OEI, sea installation or resource installation.
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The Australian National Centre for Ocean Resources and Security, University of Wollongong (ANCORS) submitted that the bill could more clearly delineate the interaction of the OEI Act and the Customs Act in two respects. Firstly, ANCORS observed that:
…it appears that a licence to install offshore energy infrastructure could be granted by the Minister under the OEI Act, but that permission to install an offshore energy installation could be refused by the Comptroller-General under the Customs Act. The Committee may wish to consider whether the Comptroller-General’s consent could be better sequenced or integrated with the OEI Act process, particularly noting that the issues to be considered by the Comptroller-General include biosecurity risks, which should presumably be considered as part of the management plan and environmental assessment under the OEI Act.
1.16
In response to ANCORS’ suggestion, the department explained that the OEI framework is intended to work alongside existing regulatory arrangements:
The OEI framework has been purposely designed to have a small legislative footprint and to operate in conjunction with existing frameworks, with the goal always being to work alongside, rather than replace, other regulatory schemes. This is necessary because of the complex nature of OEI projects and the range of overlapping regimes that will also apply. While the OEI Act creates a licensing scheme for OEI activities, developers will also need to meet legislative obligations and obtain the necessary approvals under other frameworks, including in relation to work health and safety, environmental management, electricity generation, and planning and development.
For this reason it is appropriate that developers obtain both the customs approvals required by the bill and the existing approvals as required under the OEI Act, and that these are distinct approvals under different regimes. Approval under one regime does not guarantee approval under another.
1.17
The department confirmed that relevant decision makers would be able to ‘share information and cooperate in relation to the performance of their statutory functions to assist with the consideration and timely determination of relevant issues.’
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Secondly, ANCORS suggested that the bill could more clearly delineate some jurisdictional issues. These relate to the provisions that would include OEI in existing Customs Act prohibitions on foreign ships transferring goods within 500 meters of an installation, without permission:
The Explanatory Memorandum states that this prohibition is necessary ‘to ensure border security risks may be managed’. However, there is no specific power for coastal States to restrict the navigational activities of foreign ships in the [exclusive economic zone] on the basis of border security risks. It may be intended to be based on the right of a coastal State to establish a 500-metre safety zone around installations and structures under Article 60(5) of the [United Nations Law of the Sea Convention (LOSC)], in which case such zones should be clearly established and due notice of them given in accordance with the LOSC. This also raises questions about how such zones will apply in the context of offshore wind installations which, unlike oil and gas platforms, are generally clustered in groups. If this restriction were to apply to all the installations making up an offshore wind farm, it could result in foreign vessels having to travel a significant distance in order to transfer goods to another ship. In any case, since this prohibition already applies to the owner or master of the relevant coastal ship (for which Australia has a sound jurisdictional basis) pursuant to Section 175(2) [of the Customs Act], it might not be necessary to apply a separate prohibition to the master of a foreign ship.
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The department responded that the bill would implement safety measures around OEI installations by amending the Customs Act, to give:
…effect to Australia's right to establish safety zones around offshore installations under Article 60 of the [LOSC]. Article 60(4) of the [LOSC} allows a coastal state to establish reasonable safety zones around an installation, and to take such appropriate measures to ensure the safety both of navigation and of the installation.
The proposed amendment to paragraph 175(3B)(d) [of the Customs Act] is a legislative measure that invokes Australia's rights under Article 60(4) of [LSOC]. Paragraph 175(3B)(d) prohibits conduct which poses risks to the safety of navigation around an installation or to the installation itself.
Schedule 2—amendment of the Offshore Electricity Infrastructure Act
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The Explanatory Memorandum states that the bill would amend the OEI Act:
…primarily to accommodate a recent change to the Administrative Arrangement Orders (AAOs), which might otherwise impact the powers and identity of the Offshore Infrastructure Registrar...
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The Explanatory Memorandum sets out the three principal oversight mechanisms for the OEI framework:
The Offshore Infrastructure Registrar (the Registrar), responsible for licensing OEI participants;
The Offshore Infrastructure Regulator (the Regulator), responsible for ensuring participants comply with the OEI framework (specified as the National Offshore Petroleum Safety and Environmental Management Authority [NOPSEMA] by section 153 of the OEI Act); and
The department, responsible for policy oversight and supporting the Minister in determining specified areas in the Commonwealth offshore area for the purposes of the OEI Act.
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When the original OEI bill was drafted, as the Explanatory Memorandum explains, it was with the expectation that the National Offshore Petroleum Titles Administrator (NOPTA) would be appointed as Registrar, and that supporting staff would be drawn from that agency.
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However, following the recent amendment of Administrative Arrangement Orders:
…the NOPTA is no longer an SES employee of DCCEEW, but is instead an SES employee of another Commonwealth Department; likewise, the staff supporting the NOPTA are also employees of that other Department. This means that the relevant Secretary cannot currently choose to appoint the NOPTA as the Registrar and the Registrar cannot be assisted by staff supporting the NOPTA in the Department the NOPTA is in.
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According to the Explanatory Memorandum, the bill:
…corrects this misalignment by permitting the relevant Secretary to appoint an SES employee of any Commonwealth Department as the Registrar and for any Secretary to make certain employees from their Department available to assist the Registrar, and makes further amendments as necessary to facilitate this correction throughout the OEI Act.
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The department submitted that this amendment was ‘not Department-specific, [and so is] designed to future-proof the office against any further [machinery-of-government] changes that might take place’.
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NOPSEMA also submitted that it supported the proposed administrative amendments as they will:
…enable staff from the National Offshore Petroleum Titles Administrator to assist the Registrar in delivering their functions. This amendment will provide for existing skills, processes, systems and expertise relevant to licence administration to be leveraged resulting in cost and time savings for government and industry.
Financial security arrangements
1.27
The OEI Act allows certain financial security matters to be set out in regulations, and for these to be administered by the Regulator. The department submitted that this includes arrangements for license holders to provide financial security to the Commonwealth before commencing OEI projects:
…to ensure that, should a licence holder later run into difficulty and be unable to continue their project, there is a pre-existing financial reserve available to the Government to fund the decommissioning and removal of infrastructure and remediation of the licence area. The Government may also be able to use financial securities to recover unpaid debts or other expenses incurred in relation to licence holders. In the absence of financial security, taxpayers might end up having to foot the bill for these expenses.
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Under this framework, the Regulator is currently responsible for certain matters, which would transfer to the Minister, should the bill pass, including:
determining what forms of financial security are acceptable;
deciding when financial security is no longer required; and
deciding whether to accept a reduced amount of financial security.
1.29
No Turbine Action Group Tasmania (NTAG) raised a number of issues on these proposed amendments, including that:
Increased Ministerial powers may be a disincentive for investors, as ‘Regulator control is more predictable than a Minister's intervention’;
Communities may have more confidence in a Regulator than a Minister administering aspects of the OEI Act;
‘There is no case for big business, such as multinational foreign investors, to [be given] a reduction in any financial security requirement at the direction of the Minister’, as they should be able to ‘afford the known costs’;
‘An upfront bond to cover the cost of rehabilitation is required for both offshore and onshore wind farms and should not be at the discretion of a Minister. Companies go broke; and leave both financial and environmental costs that are borne by the community’; and
The bill could ‘reduce openness and transparency’, which are essential to gain the social license needed by wind generation projects.
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The department explained the rationale for these proposed changes as follows:
It is more appropriate that the Minister has the power to make these decisions, as the financial security under the OEI Act must be provided to, is held by, and can only be recovered by the Commonwealth. The Regulator, as NOPSEMA, is a corporate Commonwealth entity and is not formally part of the Commonwealth. It is expected that the Minister would exercise their new powers in consultation with both the Regulator and DCCEEW. The Minister would also retain the ability to delegate these powers as necessary.
Committee view
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The OEI Act entered into force on 2 June 2022. In late 2021, this committee inquired into the original bill establishing the OEI Act, and found it had broad support from industry, environmental groups, and the general public, as well as across the political spectrum.
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This bill makes a number of minor amendments to support the OEI Act, which have been identified since it commenced. The committee considers that these amendments will assist the OEI Act to operate as it was intended.
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The committee notes that ANCORS raised concerns regarding the way the bill would operate in conjunction with other legislation and regulations, as well as relating to potential jurisdictional issues. The committee considers that the department has adequately responded to these concerns in its supplementary submission.
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The committee recommends that the bill be passed.
Senator Karen Grogan
Chair