Commonwealth Numbered Regulations - Explanatory Statements

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OFFSHORE MINERALS (EXPLORATION LICENCE FEES) REGULATIONS 2018 (F2018L01242)

EXPLANATORY STATEMENT

Issued by the Authority of the Minister for Resources and Northern Australia,
Senator the Hon Matt Canavan

Offshore Minerals (Exploration Licence Fees) Act 1981

Offshore Minerals (Exploration Licence Fees) Regulations 2018

Purpose and Operation

The Offshore Minerals (Exploration Licence Fees) Act 1981 (the Act) imposes annual fees in respect of exploration licences granted under the Offshore Minerals Act 1994 (the OM Act). The purpose of the fee is to compensate the Designated Authorities (state and Northern Territory governments) for the costs of day-to-day administration of the Offshore Minerals legislation on behalf of the Commonwealth.

Section 7 of the Act provides that the Governor-General may make regulations prescribing matters either required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

Subsection 4(1) of the Act provides that an exploration licence holder must pay a fee to the Designated Authority in respect of each year of the term of the licence. Subsection 4(2) provides that the amount of the fee is to be calculated in accordance with the regulations. Subsection 4(3) provides that the amount of the fee is not to exceed whichever is the greater of $2,000, or $100 for each block covered by the licence at the beginning of the year.

The Offshore Minerals (Exploration Licence Fees) Regulations (the sunsetting Regulations), which are due to sunset on 1 October 2018, prescribe an annual fee of $600, or $20 for each block covered by the licence, whichever is the greater at the beginning of the year.

The Department of Industry, Innovation and Science (the department) has conducted a review of the sunsetting Regulations and determined that they should be remade without substantive change. To date, only a few licences have been granted under the OM Act. It is not proposed to increase the exploration licence fees as the states and the Northern Territory currently incur negligible costs in administering mining activities in Commonwealth offshore areas.

A review of the current fee has determined that a lower amount would not be sufficient to appropriately compensate the Designated Authorities for their activities in the event that an exploration licence is granted in future, noting that the fee would need to cover ongoing regulatory activities in relation to the licence, such as monitoring and enforcement. At the same time, the amount is considered not to be onerous for exploration licence holders in the context of overall costs incurred in offshore mineral exploration activities, and noting that the Act enables a fee of up to $2,000 or $100 for each block covered by the licence to be charged.

The purpose of the Offshore Minerals (Exploration Licence Fees) Regulations 2018 (the 2018 Regulations) is to remake the sunsetting Regulations in substantially the same form with amendments to ensure consistency with current drafting practices, including simplifying language and correcting references where necessary.

Subsection 33(3) of the Acts Interpretation Act 1901 relevantly provides that where an Act confers a power to make an instrument of a legislative character (including regulations), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions to repeal, rescind, revoke, amend, or vary any such instrument. The 2018 Regulations also repeal the sunsetting Regulations.

A provision-by-provision description of the 2018 Regulations is set out at Attachment A.

Consultation

State and Northern Territory governments were consulted during the drafting of the 2018 Regulations. Jurisdictions were advised of the proposal to remake the sunsetting Regulations with no substantive change at the March 2018 meeting of the Upstream Petroleum Resources Working Group of the Council of Australian Governments' Energy Council, with comments sought by 11 April 2018. No comments were received.  

The offshore minerals industry in Australia is relatively small. In order to consult with the industry, and ensure broader awareness of the proposal to remake the sunsetting Regulations, information about the proposal and an invitation to comment were published on the department's Consultation Hub. Interested stakeholders were also advised through an issue of Australian Petroleum News. Comments in relation to the proposal were sought by 13 April 2018. One submission was received; however, the content of the submission related to matters outside the scope of the sunsetting Regulations.

Regulatory Impact

The Office of Best Practice Regulation (OBPR) has confirmed that a Regulation Impact Statement is not required for the 2018 Regulations. The OBPR reference is ID 22729.

Statement of Compatibility with Human Rights

Subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011 requires the rule-maker of a legislative instrument to which section 42 (disallowance) of the Legislation Act 2003 applies to cause a statement of compatibility to be prepared in respect of that legislative instrument. A Statement of Compatibility with Human Rights has been prepared to meet that requirement and is set out at Attachment B.