Senator David Pocock's dissenting report

Introduction

1.1Schedule 1 and Schedule 2, Part 1 of the Bill go to improving safety outcomes for Australia’s offshore resources sector workforce. I am supportive of the changes contained in those sections of the bill.

1.2Schedule 2, Part 2 of the Bill does not relate to worker safety. That part creates a carve-out of the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) for offshore oil and gas projects, and should be deleted from the Bill.

Unacceptable legislative process

1.3This Bill is the most recent in a worrying series of ‘omnibus bills’, which bury controversial reforms with sensible and uncontroversial policy improvements. At the date of this report, the Committee is also conducting an inquiry into the Treasury Laws Amendment (Tax Accountability and Fairness) Bill 2023, which makes positive changes in response to the PWC tax leak scandal, including important improvements to whistleblower protections. Regrettably, included in that Bill are the weak changes to the Petroleum Resource Rent Tax (PRRT), which are woefully inadequate and lock in a bad deal for Australian taxpayers.

1.4The ‘bundling’ of bills in this way is cynical and undemocratic from the government. The Parliament should have the opportunity to consider controversial legislative changes on their merits, independent of reform that enjoys broad support from across the Parliament.

1.5Equally concerning, this Bill is being rushed through the Parliament. It was introduced to the House on 15 February 2024, it was referred to this Committee on 29 February and it will report on 22 March after just a single half-day public hearing. This equates to a single month for stakeholders to become aware of the Bill, to analyse the details, to confer with experts and to write submissions to this inquiry. The speed by which this Bill has moved through the Parliament betrays the disingenuous motives behind it.

1.6Many submitters raised these concerns. The Biodiversity Council commented:

Finally, the Part is objectionable in its legislative form, not only because it deems a discretionary power to be exercised in advance, but because it buries a de facto ‘carving out’ of the OPGGS environmental management regime from the EPBC Act, in an obtusely-worded provision that is located outside the EPBC Act, which will make the law difficult to find.Amendments that fundamentally impact the operation of national environmental law should be borne out through reforming that legislation. In this case, if the government seeks to implement forms of industry ‘carve outs’ from environmental laws, or reduce oversight of accredited arrangements, they should be transparent as to their policy intent to enable full and informed debate.[1]

1.7The Australian Conservation Foundation stated:

The circumstances suggest the only reason for including Part 2 of Schedule 2 in this Bill is to facilitate weakening of current obligations for offshore oil and gas proponents to consult with interested community and First Nations representatives.The Albanese government should provide the details of these changes to consultation requirements and allow them to be scrutinised before considering whether any legislative amendments to the OPGGS Act and EPBC Act are required and their form.[2]

1.8Dr Megan Evans captured the sentiment of many submissions:

To be clear-the proposed amendment would render completely pointless any improvements made to environmental laws, since it carves out a loophole for just one regulated industry, which just happens to contribute disproportionate environmental harm.

This proposed amendment communicates very clearly that the federal government is not serious about environmental law reform, its commitment to "nature positive" is for marketing only, and it is happy for biodiversity loss and climate change to worsen despite all available scientific evidence, community sentiment, and the efforts of other regulated industries to address nature-related risks as part of their business models.[3]

Policy reforms pre-empted

1.9The amendment pre-empts two critical policy reform agendas:

Implementation of the Government’s Nature Positive Plan (NPP) reforms, addressing the 2020 Samuel Review of the EPBC Act; and

the review of the OPGGS Environment Regulations announced by the Government in May 2023.

1.10The NPP reforms go to the core of environmental protection in Australia and include critical elements which should have direct bearing on the OPGGS Environment Regulations. These elements comprise an independent Environment Protection Agency, formulation of National Environmental Standards (including a standard for First Nations engagement and participation in decision-making, and a Standard for Community engagement and consultation), and accreditation arrangements for third party administration of the National Environment Standards.[4]

1.11Commenting on the contradiction between the proposed Schedule 2, Part 2 and the NPP reforms currently on foot, The Wilderness Society stated:

Such a change would subvert not only the EPBC Act currently in operation, but also the suite of proposed reforms to the Act currently being undertaken as part of the Commonwealth Government’s nature positive reforms. In doing so it would undermine oversight and scrutiny, create challenging inconsistencies, and further erode public trust and confidence in environmental decision-making.[5]

1.12The Biodiversity Council commented in similar terms:

Exempting the OPGGS environment management regime from current accreditation requirements is inconsistent, not only with the existing EPBC Act but with government policy for the future accreditation, which emphasises not only compliance with Standards set by the Environment Minister, but ongoing oversight from within the environment portfolio.

Moreover, the EPBC Deeming Part is so wide as to amount to a complete ‘carve out’ of offshore petroleum activities from the EPBC Act. In relation to another ‘carve out’, which applies to Regional Forest Agreements (RFAs), Government policy is to extend the new National Environmental Standards to RFA forests and to strengthen environmental protection (page 18). In other words, the government’s policy direction in relation to ‘carve outs’ is to strengthen the role of the Environment Minister, not exclude it.[6]

1.13The significance of the proposed Schedule 2, Part 2 in subverting the Government’s Nature Positive Plan reforms, before they are even finalised, and for the purposes of streamlining approvals for an industry that poses significant risk to the environment, was the subject of many submissions to the Committee.

1.14So too was the significance of Schedule 2, Part 2 in pre-empting the Department of Industry Science and Resources (DISR) review of the OPGGS Environment Regulations. The Climate Council observed:

There has been no clear explanation provided on the necessity of proceeding with this bill now, or with such a degree of urgency. As of early March, the Government is still in the process of consulting on whether changes are warranted to aspects of the OPGGS regime relating to community consultation and engagement. It has not yet announced the outcomes of this consultation or any intended policy and legislative reform directions arising from it. Introducing and seeking passage of this bill before this consultation process has concluded is very poor public policy practice, and leads to the unavoidable conclusion that the Government is simply engaging in performative consultation designed to reach a foregone conclusion.[7]

1.15For its part, the Humane Society International Australia noted that the Schedule 2, Part 2 conspicuously omits the non-regression language used by the Minister and her Department in their statements on Schedule 2, Part 2:

The provisions do not limit changes to those that would “strengthen” or “improve” and, if enacted, future changes could just as easily be made to weaken components of the accredited program.[8]

Schedule 2, Part 2 is included in response to requests from the gas industry

1.16Neither the Minister’s second reading speech nor the Department’s submission suggest the actual drivers for Schedule 2, Part 2.Ms Samantha McCulloch, CEO of Australian Energy Producers (formerly known as the Australian Petroleum Production & Exploration Association), was more forthcoming in her testimony to the Committee:

A number of court decisions over the past 15 months have highlighted ambiguities in the Offshore Petroleum and Greenhouse Gas Storage (Environment) regulations that have led to a significant increase in the consultation required and the time taken by NOPSEMA in its assessment of environmental plans…This has delayed gas supply to contracted customers here in Australia and in Asia and impacted decommissioning and carbon capture and storage projects.[9]

1.17Ms McCulloch’s comments echo the concerns of the Treasurer expressed in his speech of 11 March 2024 to the Australian Financial Review Summit, as quoted in the submission of the Australian Marine Conservation Society:

Dr Chalmers stated that the government is “looking to improve and streamline a range of approvals and regulatory processes as well, including through reforms to streamline the Environmental Protection and Biodiversity Conservation process and make sensible changes to the Petroleum Resource Rent Tax…We agree there is a need to update Australia’s offshore regulatory gas arrangements and broader environmental approval processes... This will accelerate approvals through better use of data– meaning better, faster decision making and clear priorities without cutting corners on environmental protection - resulting in faster yeses and faster nos.”[10]

1.18Ms McCulloch’s comments also reflect the reported remarks of Mr Takayuki Ueda, CEO of Japanese oil and gas exploration and production company Inpex, in an address to a private function at Parliament House in March 2023, as reported in the submission of the Wide Bay Burnett Environment Council:

Mr Ueda is reported to have described the regulatory regime around Australian gas exploration and production as tantamount to “quiet quitting”. Mr Ueda reportedly went on to remind his audience that if Australia does not accelerate its gas production in order to meet Japanese demand for LNG (“liquefied natural gas”) then Japan will have little choice other than to source its LNG from Iran, Russia or China.[11]

1.19Schedule 2, Part 2 is included in this Bill at the urging of the gas industry to reduce the requirements on prospective gas projects for consultation and compliance with environmental regulation. It is another example of the significant and insidious influence of the secretive gas industry in Parliament House.

1.20During the hearing, I asked Ms Tracey Winters, Santos Chief Strategy Officer and Chief of Staff, which parliamentarian sponsors her parliamentary pass. Despite evidence that the bill is, at least in part, a response to lobbying from the gas industry, Ms Winters claimed that this question was “not remotely relevant to the bill” and said further “I don't even know the answer to the question.” This is despite the fact that sponsored passes have to be applied for with the signature of a parliamentarian.

1.21I am concerned that this is the latest in a series of bills brought by the government at the urging of the gas industry, and in particular Santos, who seek to develop gas projects off the coast of the Northern Territory. In late 2023, we saw the Environment Protection (Sea Dumping) Amendment (Using New Technologies to Fight Climate Change) Bill 2023 passed. Now we are seeing further legislative change in order to enable further destructive gas projects.

Deficient consultation

1.22The inference can be drawn that underlying the concerns of industry and the Treasurer are the two Federal Court cases Santos NA Barossa Pty Ltd v Tipakalippa[12] and Cooper v National Offshore Petroleum Safety and Environmental Management Authority (No. 2)[13], with Woodside being the title holder in the latter case. Both cases concerned deficiencies in how the industry had consulted Indigenous stakeholders.

1.23The background of the Tipakalippa case was usefully summarised in the opening statement of the Environment Centre of the Northern Territory (ECNT):

While profound in its impacts, it is important to remember that Tipakalippa only held Santos to the standard already set by the law. That is that relevant persons, with functions, interests and activities that may be affected by a project should be consulted about that project. The decision recognises that:

First Nations communities have traditional cultural connections with the sea; a reliance upon and relationship to marine life and environments;

Offshore oil and gas projects can pose significant risks to those communities and marine life and environments;

First Nations communities put at risk by oil and gas projects must be consulted about those projects.[14]

1.24The statement goes on to outline the impact of the verdict:

The Tiwi verdict means that:

Oil and gas companies must design a consultation process with First Nations communities, so communities can be consulted in a way that prioritises their understanding and their needs – not those of oil and gas companies;

Consultation must be genuine and occur in a reasonable timeline that does not rush First Nations people and their understanding of a project;

Oil and gas companies must genuinely consider the impact their projects have on the culture and lives of First Nations people.[15]

1.25The Australasian Centre for Corporate Responsibility (ACCR) expanded on this to observe that:

[I]n both the Tipakalippa and Cooper verdicts, it was inadequate consultation by Santos and Woodside at the correct stages of the process that led to successful legal challenges by Traditional Owners. These two cases reveal a functioning system, not a broken one. In both cases, the judges clearly stated that the regulations are workable, and it is the companies and the regulator who did not comply with the law…[16]

Following the Tipakalippa ruling, the regulator (NOPSEMA) rapidly updated the guidelines in close collaboration with industry to “ensure the information provided is clear and consistent with the regulations and case law”. The regulator also returned all Environment Plans to titleholders to check their consultations were complete. This has created a temporary backlog of approvals while companies and the regulator assess progress.[17]

This is the legal and regulatory system working properly to ensure consultation is undertaken in accordance with the law, while providing clarity and certainty to companies and affected communities. Successful legal challenges to offshore oil and gas projects have been very rare in Australia. It is not evidence of a “broken system” or one “under extreme stress.”[18]

1.26The Maritime Union of Australia was more pointed in assessing the deficiency in consultations:

Industry is reeling from the prospect of actually doing the required work to consult relevant persons, such as unions and First Nations people, intensely pitching the issue as a “broken framework” and inferring Traditional Owners’ heritage claims are unfounded or fraudulent.[19]

1.27I am concerned that the government is attempting to legislate around the Tipakalippa judgement from the Full Federal Court. As ECNT pointed out, “The Tipakalippa judgement merely interpreted the existing law”.[20] The gas industry does not like the interpretation of the Full Federal Court, and now the government is trying to legislate to effectively overrule the court.

Environment portfolio responsibilities usurped

1.28The amendment would unequivocally grant the Resources Minister precedence over the Environment Minister in regulating the environmental impacts of the offshore petroleum and gas industries. The Department of Industry, Science and Resources (DISR) stated in its submission that:

Consistent with section 17 of the Legislation Act 2003, the Minister for the Environment and the Department of Climate Change, Energy, the Environment and Water would need to be consulted on any proposed amendments to the prescribes regulations before they are made.[21]

1.29The obligation imposed by section 17 is to consult. The section carries no implication that the consulted Minister may, or must certify or annul legislative instruments proposed by the proponent Minister. Section 19 clarifies that ‘a failure to undertake consultation does not affect the validity or enforceability of a legislative instrument.However, an explanation why no consultation was undertaken must be documented in the explanatory statement’.[22] In simple terms, the Minister for Resources is obliged to consult with the Minister for the Environment, but carries no obligation to comply with, or obtain certification from, that Minister, and the obligation is unenforceable.

1.30Of further concern is the absence of environmental objectives in the OPGGS Act.Environmental Justice Australia commented that:

The only requirement for regulations made under the OPGGS Act is that they are required or permitted to be prescribed by the Act, or necessary or convenient to be prescribed for carrying out or giving effect to the Act (OPGGS Act, s 781). The object of the OPGGS Act is merely to provide an ‘effective regulatory framework for petroleum exploration and recovery and the injection and storage of greenhouse gas substances in offshore areas’ (s 3). There is no mention of the protection of the environment, or any reference to the principles of ecologically sustainable development set out in the EPBC Act.[23]

and

Because of the lack of safeguards or limits on this provision, NOPSEMA’s processes for assessing the impacts of offshore oil and gas activities could be fundamentally changed – to the point they no longer even refer to matters protected under the EPBC Act.

Critically, if this amendment has the intended effect ……. it could mean that far lower environmental protections and safeguards are in place for marine environments in Commonwealth waters – yet these lesser protections still act as a substitute assessment and approval under the EPBC Act.[24]

1.31The Biodiversity Council commented in similar terms:

If enacted, the EPBC Deeming Part would permanently override an important protection for both biodiversity and the environment more generally. The EPBC Act allows the Environment Minister to ‘switch off’ the requirement for environmental approvals by endorsing another environmental approval regime, but only after the regime concerned is assessed and the minister is satisfied, in effect, that it will deliver environmental outcomes equivalent to that provided by the EPBC Act. The effect of the EPBC Deeming Part, by implication, is to declare that the Environment Minister is satisfied, in advance and without assessment, that any environmental approval regime put in place under the OPGGS Act, whether pursuant to the current review or in future, delivers protection equivalent to that provided by the EPBC Act, provided it is within the scope of the original accreditation. This is obviously a complete fiction and is in effect a blank cheque, one that would enable a Resources Minister, current or future, to water down protections enacted by Parliament, if so minded.[25]

Conclusions

1.32The proposed Schedule 2 Part 2 would subvert the Government’s Nature Positive Plan for environmental reform. It would subvert the tenet of independence in environmental policy and regulation.And it would mock the review, still on foot, of the OPGGS Environment Regulations.The amendment, and the Ministerial and Departmental statements in support of it, fail to disguise a naked appropriation of environmental powers to the line portfolio responsible for the extraction of fossil fuels.It must be said, too, that in explicitly targeting consultations with Indigenous communities, the amendment mocks the findings of the full Federal Court in the Tipakalippa case, as well as the Government’s declared support for an Indigenous voice to Parliament.

1.33There may well be cause to refine the settings for consultations with Indigenous communities for the benefit of those communities and the industry alike. If that be the case, this can be done without subverting the responsibilities of the Environment Minister, without subverting the Nature Positive Plan before it is born, and with restraint which would see the outcomes of the current review of the OPGGS Environment Regulations considered in full sunlight before granting extraordinary legislative powers to the Resources Minister.

1.34That Schedule 2 Part 2 of the bill be deleted.

Senator David Pocock

Participating Member

Independent Senator for the ACT

Footnotes

[1]Biodiversity Council, Submission 11, p. 4.

[2]Australian Conservation Foundation, Submission 16, p. 4.

[3]Dr Megan Evans, Submission 26, p. 2.

[4]Department of Climate Change, Energy, the Environment and Water (DCCEEW), Nature Positive Plan: better for the environment, better for business, December 2022, pp. 1, 3.

[5]Wilderness Society, Submission 9, [p. 2].

[6]Biodiversity Council, Submission 11, p. 4.

[7]Climate Council of Australia, Submission 1, [p. 3].

[8]Humane Society International Australia, Submission 7, p. 3.

[9]Ms Samantha McCulloch, Chief Executive Officer, Australian Energy Producers, Committee Hansard, 14 March 2024, p. 1.

[10]Australian Marine Conservation Society, Submission 22, p. 3.

[11]Wide Bay Burnett Environment Council, Submission 4, p. 3.

[12][2022] FCA 1121.

[13][2023] FCA 1158.

[14]Environment Centre Northern Territory, Tabled Documents from Environment Centre Northern Territory presented at Public Hearing on 14 March 2024 in Parliament House, Committee Room 2S1, p. 2.

[15]Environment Centre Northern Territory, Tabled Documents from Environment Centre Northern Territory presented at Public Hearing on 14 March 2024 in Parliament House, Committee Room 2S1, p. 3.

[16]Australasian Centre for Corporate Responsibility (ACCR), Submission 25, p. 2.

[17]ACCR, Submission 25, Appendix A, p. 7

[18]ACCR, Submission 25, Appendix A, p. 7

[19]Maritime Union of Australia, Submission 10, p. 14.

[20]Environment Centre Northern Territory, Tabled Documents from Environment Centre Northern Territory presented at Public Hearing on 14 March 2024 in Parliament House, Committee Room 2S1, p. 3.

[21]Department of Industry, Science and Resource (DISR), Submission 15, p. 5.

[22]House of Representatives, Legislative Instrument Bill 2003, Explanatory Memorandum, Clause 19.

[23]Environmental Justice Australia, Submission 23, [p. 4].

[24]Environmental Justice Australia, Submission 23, [p. 5].

[25]Biodiversity Council, Submission 11, pp. 3-4.