MEDIA RELEASE The Hon Anthony Albanese MP Minister for Infrastructure, Transport, Regional Development and Local Government 20 March 2008 AA023/2008

BIG RISE IN COMPENSATION FOR THE VICTIMS OF OIL SPILLS The Rudd Labor Government will make sure oil and shipping companies responsible for oil spills within Australian waters are held financially accountable for the damage caused to our coastal ecosystems and communities. After years of inaction by the previous government, we are moving quickly to ratify two major international maritime treaties by introducing into the Parliament today the Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Bill 2008 and foreshadowing further legislative action in the upcoming winter session. Every year some 3,500 cargo vessels as well as more than 200 oil tankers and chemical carriers navigate through Australian waters, including near environmental icons such as Queensland's Great Barrier Reef and Western Australia's Ningaloo Reef. The Government must and will do more to protect our nation's fragile environmental assets for current and future generations. Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Bill 2008 This legislation will place into Australian law the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 - a multilateral agreement requiring ship owners to take out insurance to cover their liabilities in the event their vessels spill fuel (bunker) oil. Bunker oil is used to drive ships' engines and has been historically the most persistent form of oil pollution. It is very difficult to clean up and can have a potentially devastating impact on coastal communities and livelihoods as well as marine and coastal wildlife. While Australia legislated in 2001 to require ships entering Australian ports to have documentation on board demonstrating they have insurance coverage, they can only be held accountable for spills IF the shipowner is found to be at fault. If our new legislation isn't passed by the Parliament then clean up and compensation costs will continue, in most cases, to be borne by the Australian taxpayer. Ratification of the Convention will help strengthen the Government's approach to marine pollution within a consistent framework of strict liability and compulsory insurance. This legislation will mean that ships entering Australian waters will be strictly liable for bunker oil spills and will have to carry compulsory insurance to cover any pollution damage, including the cost of clean-up and the economic losses incurred by innocent third parties. In addition, the ship's insurer will be liable if there is any difficulty in recovering damages from the ship owner. The maximum amount of compensation available depends on the size of the ship involved. For example, for a typical container ship with a gross tonnage of 35,000, the maximum compensation payable for one particular incident is about $24 million. This Convention will allow governments to go further in cost recovery and compensation payments than is normally allowed in domestic legislation. Protection of the Sea Legislation Amendment Bill 2008 In addition to the legislation being introduced today, the Rudd Labor Government also intends to introduce further legislation in the forthcoming winter sittings of Parliament to strengthen the existing compensation regime that applies to oil spills from oil tankers. The legislation will increase the existing maximum compensation level from approximately $360 million to about $1.33 billion. This will ensure that should a major oil spill occur on the Australian coastline, the organisations responsible will provide appropriate levels of compensation. These two pieces of legislation will strengthen Australia's maritime environment protection framework and align it with international best practice. Media Contacts Jeff Singleton ( Mr Albanese's Office ) 0410 476 890 What does the Bunkers legislation do that existing legislation does not do? Existing legislation Bunkers legislation Shipowners liable to pay compensation for pollution damage resulting from a spill of bunker oil ONLY if the owner is at fault. Shipowners strictly liable to pay compensation for pollution damage resulting from a spill of bunker oil Claimants are ONLY able to claim from the shipowner who, in some cases, may have no assets. Claimants may claim compensation directly from the owner's insurer if the ship owner is unable to pay. What is the history of the Bunkers Convention? The House of Representatives Standing Committee on Transport, Communications and Infrastructure, under the chairmanship of the Hon Peter Morris, released its landmark report "Ships of Shame" in December 1992. One of the recommendations of the report was that ships entering Australian ports should be required to have adequate insurance cover. Domestic legislation to meet this requirement was introduced and passed by the Australian Parliament in 2000. The Bunkers Convention was adopted by the International Maritime Organization (IMO) in March 2001 which extends the insurance requirement to all countries to which it applies: the Australian delegation took the lead at IMO in the development of the Bunkers Convention that work began in IMO in about 1995. Following the adoption of the Bunkers Convention in 2001, Australia signed it subject to ratification, on 23 September 2002: signature subject to ratification does not mean that Australia is bound by the terms of the Convention; rather it means that Australia is bound not to do anything that would be contrary to the objects of the Bunkers Convention. The Bunkers Convention was tabled in both Houses of Parliament on 28 March 2006. Following a subsequent hearing, the Joint Standing Committee on Treaties recommended that "Australia take binding treaty action": the passage of implementing legislation is a necessary pre-cursor to the taking of binding treaty action. To what countries does the Bunker Oil Convention currently apply? The Bunker Oil Convention currently does not apply to any countries as it has not yet entered into force it will enter into force on 21 November 2008. The entry into force requirement is that it will enter into force 12 months after 18 countries become Party to it: the 18th country became a Party on 21 November 2007. As at 29 February 2008, the following 20 countries had lodged relevant instruments with the Secretary-General of the International Maritime Organization. The Convention will apply to those countries from 21 November 2008 and to any other countries which lodge an instrument on or before 21 August 2008: Bahamas Bulgaria Croatia Cyprus Estonia Germany Grenada Greece Iceland Jamaica Latvia Lithuania Luxembourg Poland Samoa Singapore Slovenia Spain Tonga United Kingdom For countries which lodge an instrument of accession or ratification with IMO after 21 August 2008, the Bunkers Convention will enter into force three months after the date of lodgement. Have there been any recent incidents of bunker oil spills? Yes, in Gladstone. The most recent significant bunker oil spill in Australia occurred just before midnight on 24 January 2006 when approximately 25 tonnes of bunker oil was spilt from the bulk carrier Global Peace while it was approaching its berth at the coal loading facility at Gladstone in Queensland. The spill occurred as a result of a collision between the Global Peace and one of its attending tugs after the tug suffered an engine failure as a result of the engine failure, the tug swung sharply to port and penetrated one of the Global Peaces bunker tanks. While the clean-up involved over 100 personnel, there was no significant damage resulting from this incident there was an impact on several mangrove areas and one beach was closed for a time due to heavy oiling. Eleven birds were reportedly oiled, with one bird dying. If there had been significant pollution damage, the Bunkers Convention, if it had been in force, would have provided a more effective compensation mechanism than currently available where claimants may need to prove fault. What will the Protection of the Sea Legislation Amendment Bill (in relation to implementing the Supplementary Fund Protocol) do that existing legislation does not do? In brief, the maximum amount available to pay compensation for pollution damage following an oil spill from an oil tanker will increase from about $360 million to about $1,330 million. Currently there is a two tier scheme to provide compensation for pollution damage following a spill of oil (carried as cargo or as fuel) from an oil tanker Under the first tier, the tanker owner is liable to pay an amount that depends on the size of the tanker. For the largest of tankers, an owner's maximum liability is about $160 million The second tier applies if the amount available from the tanker owner is insufficient to pay full compensation costs. Under the first and second tier combined, the maximum amount of compensation available for a single incident is about $360 million compensation under the second tier is payable by the International Oil Pollution Compensation Fund (IOPC Fund), an intergovernmental organisation based in London the IOPC Fund is financed by levies on "receivers" (mainly importers) of crude oil and heavy fuel oil for ships Australian contributors in 2006-2007 were Alcan Gove, BHP Billiton, BHP Billiton Transport, BP Australia, Caltex Australia, Mobil Oil Australia, Queensland Nickel and Shell Company of Australia. The legislation will establish a third tier which will pay compensation where the compensation costs exceed the amount available from the tanker owner and the IOPC Fund this will be payable by the Supplementary Fund which operates in exactly the same manner as the IOPC Fund it is administered by the same people in London and is financed in exactly the same way the Supplementary Fund will pay compensation so that the maximum amount payable from the shipowner, the IOPC Fund and the Supplementary Fund does not exceed about $1,330 million.   URL: http://www.minister.infrastructure.gov.au/aa/releases/2008/March/AA023_2008.htm