10 March 2016


The Hon. ADAM SEARLE (Leader of the Opposition) [10.17 a.m.], by leave: I move notices of motion Nos 1 and 2 on today’s Notice Paper in globo:

  1. That, under section 41 of the Interpretation Act 1987, this House disallows the following lines within item [21] of Schedule 2 of the Mining Legislation Amendment (Harmonisation) Regulation 2016, published on the NSW Legislation website on 26 February 2016:

(a)      Section 12 (4) and (6)                                                                 750                  —

(b)      Section 12B                                                                               2,500               —

(c)      Section 175A                                                                             1,250               2,500

(d)      Section 235C (3)                                                                        750                  1,500

(e)      Section 248S (1) (in relation to failure to comply           1,250               2,500

          with requirement under section 248E (2) (i))

(f)      Section 248S (1) (in relation to failure to comply              500                  —

          with requirement under section 248N)

(g)      Section 248S (3)                                                                        2,500               5,000

(h)      Section 291 (1A)                                                                        2,500               5,000

(i)       Section 292C (3)                                                                        500                  1,000

(j)       Section 365                                                                               750                  —

(k)      Section 378C                                                                             1,250               2,500

(l)       Section 378ZFE                                                                         2,500               5,000

(m)     Clause 12 (1) or (2)                                                                     750                  1,500

(n)      Clause 37(8)                                                                               750                  1,500

(o)      Clause 38                                                                                  750                  1,500

(p)      Clause 45 (7)                                                                              750                  1,500

(q)      Clause 52 (7)                                                                              750                  1,500

(r)       Clause 64                                                                                  750                  1,500

(s)      Clause 78                                                                                  750                  1,500

  1. That, under section 41 of the Interpretation Act 1987, this House disallows the following lines within item [22] of Schedule 2 of the Petroleum (Onshore) Legislation Amendment (Harmonisation) Regulation 2016, published on the NSW Legislation website on 26 February 2016:

(a)      Section 7 (1)                                                                              2,500               5,000

(b)     Section 78A                                                                               2,500               5,000

(c)      Section 91 (1A)                                                                          2,500               5,000

(d)      Section 94C                                                                               500                  1,000

(e)      Section 97C                                                                               1,250               2,500

(f)      Section 104O (1) (in relation to an failure to                   1,250               2,500

          comply with a requirement under section 101, 104, 104C or 104F)

(g)      Section 104O (1) (in relation to failure to comply          500                  —

          with a requirement under section 104H (1))

(h)      Section 104O (3)                                                                        1,250               2,500

(i)       Section 125C                                                                             250                  —

(j)       Section 125D                                                                             1,250               2,500

(k)      Section 125ZM                                                                           1,250               2,500

These new regulations made on and from 29 February as published in the Government Gazette on 26 February do a number of things. They emerge from the cluster of mining bills passed by this House towards the end of last year that had as their principal object not only to modernise and update the laws that regulate mining licenses and the like in this State but to harmonise, and I use the Government’s terminology, the regulation of all extractive industries in the State, whether it is petroleum—gas, that is—or other resources under a common legislative regime rather than the patchwork of laws that we had previously.

These regulations provide many of the moving parts of that new legislative regime. In many respects these regulations remade a number of existing regulations. The disallowances relate to the penalty notice offences under both the mining regulation and the petroleum offshore regulation. The Opposition does not in principle have a difficulty with a system of penalty notices. We understand that the maximum penalties provided for offences under law are quite high. It makes administrative sense, and provides convenience and a great deal of expedition to have a regime of penalty offences where inspectors can issue on-the-spot fines and the like for less serious offences against the legislation and regulations.

We have no problem in principle with that approach. In moving these disallowances we have not sought to disallow the entirety of the penalty notices regime. If those matters were disallowed there would not on this occasion be a legislative void; instead, the previous regulations would be revived. Much of the vices that we see in the penalty notice regime that we seek to disallow existed with the previous regulations. We do not seek simply to throw our hands in the air and say it is all bad, and throw it out. What we have attempted to do in relation to both is to identify where the regulations are new and where they provide for a penalty that we think, having regard to the maximum available under law, is too low.

These regulations form much of the moving parts of this new legislative regime. They are very important, they are very detailed, but I do not know that they were the subject of extensive public consultation. I would hope that the Government at least consulted the stakeholders most directly affected, the Minerals Council of Australia and its constituent members. Equally, because of the wider public importance I would have thought it behoved the Government to have at least published draft regulations for the purposes of public consultation and feedback before making them. I do not believe that occurred.

What we have here is a series of remade regulations and new regulations that set money penalties by way of penalty notice that we think are too low having regard to the maximum. For example, in schedule 11 the penalty available for an offence under section 5 of the Mining Act—prospecting without an authority—previously the penalty available was $1,250 for an individual. That has been increased in this regulation to $2,500. The previous penalty for a corporation was $2,500. That has been increased to $5,000. There has been an increase in what was the case. We do not seek to disallow that. We note that is too low but we know the effect of disallowing that would be to go back to the even lower penalty.

Similarly, with penalty notices able to be given in relation to breaches of section 6—unauthorised carrying out of a mining purpose—the penalty there for both individuals and corporations is the same as it was; they have essentially been remade. We do not seek to disturb that, not because we agree with it but because we think all that would happen is the previous regulation would be revived. There is a series of breaches of orders made by the Minister, such as obstruction, where what is happening is simply that the regulations have been remade.

There are new matters that are being regulated for the first time. Having regard to the maximum penalties available at law, those money penalties are simply too low. This creates a problem with administration and undermining the integrity of the regime. When we look at the petroleum onshore regulations, previously the regulations dealt only with breach of mining titles. We seek to disallow all the new regulation, but for breaches of section 125E (1)—a contravention of a condition of petroleum title—because if the penalties against an individual for that breach of $2,500 and $5,000 for a corporation were repealed all that would do is return to the penalties under the previous regulation of $1,250 for an individual or $2,500 for a corporation if it related to environmental management.

A breach of section 7 concerns prospecting without authority, which was an existing provision before the mining bills were passed. For a natural person fines are up to $110,000 or $11,000 per day; for a corporation it is $555,000 or $55,000 a day. For the first time this regulation introduces the ability to have a penalty notice. This offence has been in place for a long time under the petroleum (onshore) legislation and never before have breaches of that section been able to be dealt with by way of a penalty notice. Previously matters would have gone to court. Relatively minor infringements would go to the lower court, which has a smaller jurisdiction, and more serious offences would go to the higher courts. That is the appropriate course for those serious breaches of this provision. The Government has introduced the ability for inspectors to issue administrative fines, which is unwarranted given the high penalty available under law for such a serious offence. If the Government was planning to introduce a series of money penalties for such a matter, they should have been the subject of more public consultation and discussion, and a better and more appropriate penalty reached.

A breach of section 78A of the petroleum (onshore) legislation, which is a new provision in the mining bills that were passed, concerns a failure to comply with a directional notice issue. The maximum penalty for an individual is $220,000 or $22,000 a day and $1.1 million for a corporation or $110,000 a day. The regulations introduce a penalty infringement option of $2,500 against a natural person or $5,000 against a corporation. A similar regime is put in place for breach of the new section 91A, which is a failure to pay a royalty. There is a series of new provisions, including 104O, which is a failure to provide information and records to an inspector, a failure to provide an inspector with reasonable assistance and facilities as specified in the notice, and a failure to answer questions put by an inspector, or to attend at a specified place and time to answer questions. There are similar provisions in relation to a failure to provide inspectors with a full name and residential address and impersonating an inspector, or a breach of 125C, which is obstruction of the holder of a petroleum licence, or 125D, which is providing false or misleading information. These are new provisions that were enacted with the passage of the cluster of mining bills last year. They are new matters in law and contain significant updates.

Apart from dealing with infringements by way of going to the appropriate court, depending on the level of seriousness, the Government has introduced penalty notices. The Opposition does not have a problem with the penalty notices in principle, but given that the maximum penalty under law is up to $1.1 million for corporations for serious breaches, the $5,000 penalty by way of a penalty notice presents a range of problems. First, it introduces a risk of corruption in the system. There is also an administrative burden. Government departments and agencies have been cut back and so there is increasing pressure on inspectors charged with enforcing the law to not undertake difficult investigations or prosecutions, particularly of important, powerful companies. It will be much easier to proceed by way of a relatively small on-the-spot fine.

Whether we are dealing with companies engaging in coal seam gas [CSG] exploration or extraction or mining exploration and extraction generally, we are talking about heavily capitalised companies with massive turnovers. In the scheme of things, a penalty of up to $5,000 is nothing. It is no deterrent to a breach of the law. The administrative convenience of issuing a fine as opposed to undertaking time-consuming, difficult and expensive investigations that may not proceed to court presents a significant risk of undermining the good intentions that were achieved by enacting those laws last year. Whether we are talking about CSG or other forms of mining, those laws set up an important new regime to regulate and enforce standards in the mining industry.

We think there is a risk of corruption, where officials of departmental agencies effectively will be directly or indirectly leaned on. Even if officials are not directly leaned on there will be pressure to go down the path of least resistance, the path of administrative convenience, to issue the much smaller on-the-spot fines as opposed to prosecuting in a court of law. Certainly, the pressure to do that would be too great over time. These regulations come at a time when the Government seeks to introduce measures to crack down on those engaging—

[Business interrupted.]

[Business resumed.]

The Hon. ADAM SEARLE: As I indicated earlier, Labor does not oppose an administrative regime of penalty notices. We have moved these targeted disallowances to the regulations because there was not adequate public consultation about the appropriate level for each set of money fines. In relation to the most serious offences, the gap between the minimum and maximum in money penalties able to be applied administratively is too great. The gap is so great that it would create a corruption risk or certainly an administrative inconvenience risk to the point where, along the path of least resistance, enforcement will occur mainly at the lower end.

These regulations are being introduced at the same time as the Government is moving to promulgate laws to crack down on legitimate and peaceful protests. There is a risk of giving the community the impression that the Government is the political arm of the mining and the coal seam gas industries. On the one hand, it is cracking down on inconvenient public protests; on the other hand, it is going easy on the enforcement of law in relation to the mining industry. It would be most outrageous if the Government were perceived as the political wing of the mining and CSG industries. I certainly hope that is not the intention, but that is the impression this Government is giving through its collective actions.

To assist the Government out of its difficulties and to restore public confidence in government and the administration of justice in this State, Labor has sought to introduce these targeted disallowances. If these disallowance motions succeed, the Government can go back to the drawing board and consult widely, not only with industry stakeholders but also with the broader community about the content of an appropriate penalty notice regime for all extractive industries in this State, including mining and coal seam gas. We earnestly ask all members to vote for these disallowance motions.