EXPLANATORY STATEMENT
Select Legislative Instrument 2012 No. 306
Subject Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003
Offshore Petroleum and Greenhouse Gas Storage Act 2006
Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment Regulation 2012 (No. 1)
Section 11 of the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003 (the Regulatory Levies Act) provides that the Governor-General may make regulations for the purposes of a number of sections of the Regulatory Levies Act, including sections 7 and 8 which impose safety case levies in Commonwealth waters and designated costal waters. Safety case levies are annual levies imposed in relation to facilities located or proposed to be located in the Commonwealth waters.
The Offshore Petroleum and Greenhouse Gas Storage Act 2006 (the OPGGS Act) provides the legal framework for the exploration and recovery of petroleum and for the injection and storage of greenhouse gas substances in offshore areas. This Act is administered jointly by the Commonwealth Government and the state and Northern Territory governments and provides for a range of administrative decisions to be made in relation to petroleum and greenhouse gas titles.
The Regulatory Levies Act, amongst other levies, imposes safety case levies in relation to offshore petroleum and greenhouse gas facilities. Safety case levies are collected by the regulator for occupational health and safety for the upstream petroleum and greenhouse gas storage sectors, the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA), which collects the levies in order to fund its operations on a cost-recovery basis.
The safety case levy imposed by the Regulatory Levies Act is calculated in accordance with the provisions of the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Regulations 2003 (the Principal Regulations). Among other things, the Principal Regulations set out a “unit value” and “SMS amount” (where “SMS” means “safety management system”), by reference to which a safety case levy is calculated.
In accordance with regulations 61, 62 and 63 of the Principal Regulations, NOPSEMA must undertake regular reviews of the cost recovery arrangement including a comparison of fees and levies collected with the regulatory activities undertaken in the period and meet representatives of the offshore petroleum industry to discuss the cost‑effectiveness of the operations of NOPSEMA. As part of the review in 2012, NOPSEMA consulted extensively with all companies that pay levies including the Australian Petroleum Production and Exploration Association. NOPSEMA also conducted a workshop with petroleum industry representatives at which the cost-effectiveness of its operations was presented and discussed with industry. No negative submissions were received by NOPSEMA during the review and no concerns were expressed at NOPSEMA’s presentation to industry which recommended increasing amendments to levy amounts. The operation and application of Safety Case Levies is well established and understood by the companies paying the levy.
The purpose of the Regulation is to amend the Principal Regulations to:
- increase the unit value amount from $29,000 to $31,000;
- increase the SMS amounts for facilities other than mobile facilities from $140,000 to $150,000; and
- increase the SMS amounts for mobile facilities from $90,000 to $100,000.
The levies were previously amended in 2010 (taking effect on 1 January 2011). The proposed levy increase for 2013 ensures that NOPSEMA has sufficient cash reserves to pay staff and suppliers as and when payments fall due, as well as maintain a reserve to meet any unplanned costs and asset replacements and upgrades. The amendments continue the implementation of staged increases in levies, enabling a gradual reduction to NOPSEMA’s accumulated surplus and negating the need for substantial levy increases in 2014. The increase represents a price change marginally higher than the annual increases to the Consumer Price Index over the previous two years.
The Regulation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Amendment Regulations commence on 1 January 2013.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment Regulation 2012 (No. 1)
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
The safety case levies are annual levies imposed in relation to offshore petroleum and greenhouse gas facilities located or proposed to be located in the Commonwealth waters. The safety case levy imposed by the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003 and calculated in accordance with the provisions of the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Regulations 2004 (the Principal Regulations).
The purpose of the Regulation is to amend the Principal Regulations to:
- increase the unit value amount from $29,000 to $31,000;
- increase the SMS amounts for facilities other than mobile facilities from $140,000 to $150,000; and
- increase the SMS amounts for mobile facilities from $90,000 to $100,000.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.