Key issues
2.1
Submitters and witnesses told the committee that environmental
assessment and approval is over-regulated at all levels of government, with
adverse economic consequences.[1]
Governments have acknowledged the need to reduce red tape in their jurisdiction
and have implemented some red tape reduction initiatives. However, the committee
heard that further action is needed.[2]
As submitted by Roy Hill Holdings Pty Ltd (RHH):
Crucially, Australia must simplify and improve the regulatory
regime operating for the [resources] industry at all levels of government. The
RHH experience of Australia's regulatory regime is of duplication, overlap,
complexity and redundancy. While government's [sic] at all levels are making
efforts to reform their regulatory regime much more needs to be done and
greater coordination between all levels of government is required.[3]
2.2
This chapter focuses on Commonwealth, state and territory environmental regulation,
and discusses the following matters:
-
value to the Australian economy;
-
review of the Environment Protection and Biodiversity
Conservation Act 1999 (Cth) (EPBC Act);
-
reform of environmental assessment and approval processes;
-
risk-based approach to environmental regulation;
-
Commonwealth environment law; and
-
state/territory environmental assessment processes.
Value to the Australian economy
2.3
The Institute of Public Affairs (IPA) estimated that red tape reduces
Australia's economic output by $176 billion each year (11.0 per cent of Gross
Domestic Product (GDP)). Its submission argued that environmental regulation is
a significant factor in lost economic output.[4]
2.4
Other submitters and witnesses described particularly the importance of
the resources, pastoral and agricultural industries to the Australian economy, and
agreed that environmental regulation is impeding innovation, investment, growth
and productivity in these industries.[5]
These factors are discussed throughout this chapter.
2.5
Several submitters specifically commented that excessive regulation is
making Australia unattractive for capital investment. The IPA submitted, for
example:
Australia is operating in an internationally competitive
marketplace where capital is highly mobile between jurisdictions. By adding to
the cost base of operating in Australia, red tape discourages businesses
setting up projects and operations in Australia. This is a key reason why
business investment in Australia is lower today (12.2 per cent of GDP) than the
average of the economic crisis levels of the Whitlam era (13.7 per cent).[6]
2.6
RHH and the Association of Mining and Exploration Companies (AMEC) said
that investment in the exploration and mining industries is adversely affected
by over-regulation.[7]
The Chief Executive Officer of AMEC, Simon Bennison, advised that there is a
trend toward offshore investment in initial public offerings.[8]
The Minerals Council of Australia (MCA) referred to the Fraser Institute's
Annual Survey of Mining Companies,[9]
which ranked only one state (Western Australia (WA)) in the top
10 jurisdictions for policy attractiveness in 2016.[10]
2.7
In the pastoral and agricultural industries, the Kimberley Pilbara Cattlemen's
Association (KPCA) highlighted that primary producers and related businesses
also feel the impact of excessive regulation:
Our region has changed dramatically over the last five years
with a number of large corporate operators, family owned enterprises,
indigenous pastoral businesses and foreign investors seeing the growth and
development potential in our region...Several investors are actively looking at
other states and countries to invest their money. They have invested in WA in
good faith to develop our industry. They have the cash and desire to grow the region's
economy, but have found it very difficult to move forward at anything other
than snail's pace, if at all.[11]
Review of the EPBC Act
2.8
The EPBC Act was reviewed in 2008–2009 by Dr Allan Hawke AC. Dr Hawke
was guided by the Australian Government's policy objectives (term of reference
3), including the Deregulation Agenda 'to reduce and simplify the regulatory
burden on people, businesses and organisations, while maintaining appropriate
and efficient environmental standards'.[12]
2.9
Dr Hawke found that two things are necessary to achieve these objectives:
-
the regulatory environment must be reformed so that unnecessary
regulation is removed and more efficient approaches are adopted; and
-
administration must be funded so that early investments can be
made in the things that will make the regulatory system work smoothly.[13]
2.10
In this inquiry, submitters and witnesses picked up on some of the issues
considered by Dr Hawke, including the water trigger and nuclear actions
(including uranium mining) which are matters of national environmental
significance (MNES)).
Matters of national environmental significance
2.11
The EPBC Act focuses on the protection of MNES. Dr Hawke reported that
relatively few submissions to the 2008–2009 review concerned existing MNES.
Instead, many submissions called for the creation of
new MNES. Dr Hawke commented that the 'inclusion of a new matter of NES must be
justified and limited to environmental matters that are nationally significant'.[14]
The water trigger
2.12
In 2013, the EPBC Act was amended to include the ninth MNES: 'a water
resource, in relation to coal seam gas development and large coal mining
development' (the water trigger).[15]
2.13
Some submitters and witnesses questioned whether the water trigger
should be a MNES. The Institute of Public Affairs argued that the water trigger
is 'based on a political agenda with no environmental dividend'.[16]
The MCA and AMEC said that the water trigger is regulatory
duplication, as state/territory assessment and approval processes already
manage water resources.[17]
The Chief Executive of MCA, Brendan Pearson, said:
When we are doing a state level approval, impacts on water
are fully assessed and we have found in practice, since the operation of that
extra top-up regulatory hurdle, we are not identifying any new shortcomings in
state approvals processes with that extra layer. In other words, we have
completely introduced a duplicate level, which in many cases delays processes.[18]
2.14
AMEC added that, in addition to being duplicative, the
water trigger potentially applies throughout the resources industry, and
creates another level of uncertainty for investment and business
decision-making.[19]
Nuclear actions (including uranium
mining)
2.15
Dr Hawke reported that 'nuclear actions' are considered a MNES due to their
potentially significant impacts on public and environmental health, as well as community
concern. However, Dr Hawke questioned why the MNES includes uranium mining compared
to other forms of mining. He suggested that the Australian Government should
explore the scope of the 'nuclear actions' MNES.[20]
2.16
In this inquiry, some submitters and witnesses echoed Dr Hawke's
comments and told the committee that this is another example of regulatory
duplication. For example, Mr Pearson from MCA said:
...uranium mines are in most cases no different to any other
mine, but it has to go through a special number of hoops which, in our view,
are unnecessary and have proven to be unnecessary...even the recent South
Australian royal commission into nuclear matters opined on this and also
concluded that it was unnecessary.[21]
2.17
Representatives from AMEC drew attention to the consequences of this
additional burden for mining projects. Mr Bennison explained that the lead time
for uranium projects far exceeds that of a base metal or coal-type assessment.
AMEC's National Policy Manager, Graham Short, elaborated that the Commonwealth involvement
then potentially adds one to two years to the state approval process.[22]
2.18
MCA recommended:
...removing uranium mining, milling, decommissioning and
rehabilitation from the definition of nuclear actions. Where significant
environmental risks are presented, these are already addressed through
comprehensive state and territory assessment and approval processes.[23]
Australian Government's position on
the water trigger
2.19
In 2014, the Australian Government sought to amend the EPBC Act, to allow
states/territories to be accredited for water trigger approval decisions.[24]
The proposed legislation lapsed in the Senate on the prorogation of the 44th
Parliament. Subsequently, an independent review into the operation of the water
trigger legislation found:
...as a matter of principle, scope should exist within the
legislation for bilateral approval agreements between the Australian Government
and state governments to include decisions under the water trigger.[25]
Committee view
2.20
The committee understands that the Department of the Environment and
Energy is currently undertaking preliminary work for a 2019 review of the EPBC
Act.[26]
Given the number of concerns expressed throughout the inquiry, the committee
considers that this review should be expedited and brought forward to 2018.
Recommendation 1
2.21
The committee recommends that the Australian Government expedite its
review of the Environment Protection and Biodiversity Conservation Act 1999
(Cth), as required under section 522A of that Act, by bringing it forward to
2018.
2.22
The committee notes that, until introduction of the water trigger,
the Australian Government was not involved in environmental assessments
and approvals for water resources. The committee heard that state/territory processes
are well established and understood by the resources industry, and that the
Australian Government's involvement duplicates these processes. Further, the
Australian Government recently supported delegating its responsibilities under
the EPBC Act to the states/territories. With these considerations in mind, the
committee recommends that the water trigger be removed from the EPBC Act.
Recommendation 2
2.23
The committee recommends that the 'water trigger' be removed from the Environment
Protection and Biodiversity Conservation Act 1999 (Cth).
2.24
On the basis of information provided by the resources industry, and Dr Hawke's
comments, the committee considers that the inclusion of uranium mining as part
of a MNES in the EPBC Act is duplicative and unnecessary. The committee notes that
only three states/territories—Northern Territory, South Australia and
Queensland—permit uranium mining in their jurisdiction, and have
well-established assessment and approval processes to which Commonwealth
involvement adds little value, if any.
Recommendation 3
2.25
The committee recommends that uranium mining not be included as part of
the 'nuclear actions' matter of national environmental significance in the Environment Protection and Biodiversity Conservation Act 1999
(Cth).
Reform of environmental assessment and approval processes
2.26
The first review into the operation of the EPBC Act recommended that the
Commonwealth, states and territories collaborate to improve the efficiency of
the assessment regime under the EPBC Act.[27]
The committee particularly examined one suggested measure: the accreditation of
state/territory processes where they meet appropriate standards.
One Stop Shop
2.27
The Australian Government reached assessment bilateral agreements with
all jurisdictions in 2013–2014, allowing states/territories to assess project
proposals. However, the second stage of the initiative—approval bilateral
agreements—was not concluded, meaning that states/territories conduct
environmental assessments and propose conditions of approval, which must then
be approved by both the state/territory and the Commonwealth under the EPBC Act.
2.28
Submitters and witnesses expressed concern that this dual regulation perpetuates
duplication, inconsistencies, high implementation costs and extended delays.[28]
MCA reiterated that these factors have economic consequences, for example:
One of the biggest drags on the international competitiveness
of Australia's minerals industry is lengthy and costly delays in securing
project approvals.[29]
2.29
AMEC submitted that the states/territories already effectively regulate
the environment, rendering Commonwealth involvement unnecessary:
All assessment and approval processes are fully
managed and administered through robust State and Territory legislative and
regulatory regimes. This process can take several years before a decision is
made...There is no need for the Commonwealth to be duplicating existing State and
Territory Government regulatory regimes.[30]
2.30
Many submitters and witnesses argued that the states/territories should
be responsible for environmental regulation. The IPA described this as
'environmental federalism', which enables state/territory governments to test
their own regulatory systems and develop rules appropriate for their jurisdiction,
which balance economic growth and environmental conservation.[31]
Alternatively, Environmental Defenders' Offices of Australia (EDOA) submitted:
While most environmental decision-making happens at the state
level...the Australian Government must retain a leadership and approval role in
environmental assessments and approvals of matters of national environmental
significance.[32]
2.31
The committee notes that there is also some contention as to whether the
One Stop Shop would operate as an efficiency measure. For example, the Australian
Chamber of Commerce and Industry (ACCI) argued that the initiative would actually
increase the complexity of environmental regulation:
The One-stop shop agenda is actually a series of eight
'shops' with the number of approval pathways more than likely to increase and
fragment rather than simplify and converge.[33]
Committee view
2.32
The committee notes that streamlining Commonwealth, state and territory
environmental assessment and approval processes has been previously considered.
In addition to Dr Hawke's review, the Productivity Commission and the
Senate Environment and Communications Legislation Committee have supported the
establishment of a One Stop Shop.[34]
More importantly, the Australian Government agreed with these findings and proceeded
to implement 'assessment bilateral agreements' in each jurisdiction. Partial
implementation of the initiative does not fully achieve its stated objectives
and the committee therefore supports completion of the One Stop Shop initiative.
Recommendation 4
2.33
The committee recommends that the Australian, state and territory governments
re-commit to the One Stop Shop initiative.
National Offshore Petroleum Safety
and Environmental Management Authority
2.34
The National Offshore Petroleum Safety and Environmental Management
Authority (NOPSEMA) is the national regulator for safety, well integrity and
environmental management of offshore petroleum activities in Commonwealth and
some state waters. Its assessment and approval processes are accredited under
the EPBC Act.[35]
2.35
The Chief Executive Officer, Stuart Smith, told the committee that, if all
states and the Northern Territory were to confer responsibilities on NOPSEMA,
it would create a national framework for the assessment and approval of
offshore petroleum projects, with significant red tape reductions:
...the benefits would be eliminating discrepancies across
boundaries that currently exist and reducing the volume of required permission
documents that currently industry has to complete. It would improve
consistency. It would ensure the maintenance of robust environmental
outcomes and it would also expand access to world leading practices and
critical mass of regulatory experts.[36]
2.36
Mr Smith explained the practical operation of an application for
approval:
If you have an offshore oil and gas facility that might have
wells in both Commonwealth and state waters that are producing and they then
have a pipeline running to onshore, whether it be in the Northern Territory or
on state waters, for a situation like that you currently have four regulators
that would be responsible for offshore oil and gas approvals, for environmental
approvals alone. That would be the relevant state Department of Mines or
Primary Industries, the state EPA. They would also need Commonwealth Department
of Environment and Energy approval under the EPBC Act for those activities in
state waters, and we would grant approval as well. If they were to streamline
the process by conferring their environmental powers on us, industry would just
need one approval from us as the regulator for the same activity, irrespective
of whether they confer.[37]
2.37
Mr Stedman Ellis, Chief Operating Officer (WA) of the Australian
Petroleum Production and Exploration Association (APPEA), said that the NOPSEMA
model was a significant improvement for the petroleum exploration and
production industry:
APPEA strongly supports the leadership that the Commonwealth
and COAG have taken in establishing NOPSEMA as a single agency for offshore
health, safety and environmental approvals including under the EPBC Act. The
objective based regulation within which NOPSEMA operates is internationally
recognised as the most appropriate regulatory regime for dealing with
potentially high hazard industries like oil and gas activities.[38]
2.38
Mr Ellis described the model as 'very successful' and expressed the view
that conferrals by states/territories would 'further reduce duplication and
regulation of the industry'. He noted:
...the pathway to get where we have got to in regulation of the
offshore industry began, to some extent, in 2009 with the Productivity
Commission report which found that Australia was potentially losing billions of
dollars a year from its potential value of its oil and gas resources through
duplication inefficiency, ultimately leading to the Commonwealth, in 2004,
deciding to agreeing to accredit NOPSEMA and remove the Department of
Environment under the EPBC Act. A review needs to look at what is working well;
we would say NOPSEMA is a good example of something that is working well and
could be built on.[39]
Committee view
2.39
The committee accepts that state/territory governments could achieve red
tape reductions for offshore petroleum projects with a conferral of power on
NOPSEMA. In this regard, the committee notes that NOPSEMA would effectively
become an agent of the state/territory, subject to the usual rules of agency.[40]
2.40
The committee also notes that the Council of Australian Governments (COAG)
has previously agreed to examine the benefits of consolidating regulatory
functions, including through the amalgamation of regulators.[41]
However, since 2014, the COAG Energy Council does not appear to have given much
attention to environmental regulation of offshore petroleum projects.[42]
2.41
In view of NOPSEMA's evidence, the committee considers that there is
scope to adapt its model for onshore projects. The committee suggests that the
Australian Government investigate ways in which a single regulator could have
responsibility for environmental assessment and approval processes.
Recommendation 5
2.42
In the context of a One Stop Shop approach, the committee recommends
that the Australian Government investigate ways in which environmental
assessment and approval processes could be consolidated into the remit of a
single regulator.
Risk-based approach to environmental regulation
2.43
Several submitters and witnesses urged Commonwealth, state and territory
governments to adopt a risk-based approach to environmental regulation.[43]
MCA, for example, argued that governments' increasingly risk-averse
approach has resulted in unnecessary and lengthy environmental assessments,
whose information requirements have no regard to materiality or level of risk:
A large environmental impact assessment...can cost many
millions [of] dollars and take a number of years to complete. A recent draft
environmental impact statement in the Northern Territory involved the
production of over 8,500 pages of documentation, weighing 43 kilograms.[44]
2.44
Accordingly, MCA recommended that governments place greater emphasis on
risk-based approaches when determining assessment pathways and information
requirements.[45]
Similarly, RHH submitted:
Environmental approvals and reporting should reflect the risk
of the activity it seeks to monitor, rather than simply requiring routine
reporting for no material benefit to the State or agencies.[46]
2.45
The committee heard that there are areas in which governments have
adopted risk-based approaches. For example, MCA referred to the Great Barrier
Reef Marine Park Authority's Environmental Assessment and Management Risk
Management Framework,[47]
and RHH referred to the Department of Mines and Petroleum (WA).[48]
The East Kimberley Chamber of Commerce and Industry (EKCCI) said that 'there
has been movement towards outcomes-based [conditions of approval] in recent
years, which is promising'.[49]
2.46
John Wynne, Manager of Environment and Approvals at RHH, emphasised that
a standardised risk matrix would enable project proponents to manage low, medium
and high risks:
...rather than have a generalised standard condition or many
conditions over a project we would be able to assess the risk using a
standardised risk matrix of low, medium or high risks. High risks, obviously,
would account for your larger management or tighter management measures,
whereas low risk issues can be dealt with as just day-to-day issues rather than
being put down as a condition.[50]
2.47
Mr Pearson from MCA agreed:
'Let's identify what the primary risks are in various
assessments and approvals and focus on those, and focus on a less prescriptive
approach,' ...we would certainly support such an approach.[51]
2.48
David Stoate, Chairman of KPCA, said that, in the agricultural and
pastoral industries also, the environmental assessment process can be 'way out
of proportion to the potential environmental impact'.[52]
2.49
In discussions with the committee, witnesses indicated that existing
risk matrices have been developed by government/industry based on
national/international standards. Mr Wynne in particular agreed that these
matrices could be used as a template for environmental regulation.[53]
In one example, the committee noted that the matrix encompasses mandatory
statutory conditions of approval (to address general risk) and case-by-case
conditions (to address specific risks).[54]
Committee view
2.50
Although the concept of a risk-based approach to environmental
regulation is not novel, it appears to be underutilised. The committee sees
merit in the broader adoption of this approach as a means to reduce
unnecessary, expensive and burdensome red tape.
2.51
COAG has previously agreed to explore adopting trusted international
standards or risk assessment processes.[55]
It is not clear the extent to which states/territories have fulfilled this
commitment but the committee supports this approach. The committee heard that
it would be beneficial to use a risk-matrix based on international standards,
with capacity to incorporate general and specific risks
Recommendation 6
2.52
The committee recommends that, if not already implemented, the Council
of Australian Governments pursue the adoption of a risk-matrix based on
international standards, with capacity to incorporate general risks and specific
risks.
Commonwealth environment law
2.53
In 2009, Dr Hawke reported that 'many people, including professionals,
find the [EPBC] Act hard to understand and navigate'. He described the Act as
'repetitive, lengthy, unnecessarily complex, often unclear and, in some areas,
overly prescriptive'.[56]
Dr Hawke considered that the simplest solution would be to repeal and replace
the EPBC Act.[57]
2.54
In response, the Australian Government agreed to legislative amendments
to clarify, simplify and streamline provisions.[58]
However, the committee heard that Commonwealth environmental law is still too
excessive and complicated.
Volume and complexity of regulation
2.55
According to the IPA, one reason for this complexity and burden is the
significant growth in federal environmental law since 1971, together with its
associated bureaucracy. Its submission argued that these factors have
contributed to the 'red tape problem', leading to examples such as:
-
the Roy Hill iron ore project in the Pilbara requiring more than
4000 licences, approvals and permits for its pre-construction phase; and
-
the Adani coal mine in central Queensland spending seven years in
the approvals process, fighting more than 10 legal challenges and having to prepare
a 22 000 page Environmental Impact Statement.[59]
2.56
Michael Anstey, General Manager of People and Health, Safety and
Environment at RHH, told the committee that RHH has so many compliance
obligations:
...we carry a software product that enables us to track the
quite literally thousands of obligations...not all of those obligations require a
lot of effort but some do...we carry a substantial number of people in our
business whose role almost exclusively is to do compliance type work and write
reports.[60]
2.57
The committee notes that the states/territories also have a high volume
of complex environmental law.[61]
MCA provided the following example:
In New South Wales the mining industry has been subject to
109 separate policy and regulatory changes since March 2011 – a continuous
stream of changes across many portfolios, often with poor consultation and
leading to increasing compliance and regulatory costs. While not all of these
changes relate specifically to environmental assessment and approvals,
they underline the significant regulatory burden challenge that faces the
minerals industry at the state level.[62]
2.58
EDOA submitted that the large body of federal environmental law could be
better drafted.[63]
MCA agreed, adding that the 'federal government should redouble efforts to
reduce the stock and complexity of existing environmental legislation wherever
possible'.[64]
ACCI said:
The dense and complex nature of environmental legislation is
a major burden for business, particularly for small and medium sized business
who already face significant compliance costs elsewhere...it is impractical for
business to be across voluminous and complex legislation, particularly when
there are constant and continued changes to the rules.[65]
Section 487 of the EPBC Act
2.59
Section 487 in the EPBC Act extends the legal standing provided in
section 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth).
The extension enables organisations or associations to seek judicial
review of a decision made under the EPBC Act, provided they meet certain
criteria.[66]
2.60
Some submitters and witnesses argued that environmental red tape
heightens the potential for activists to challenge assessments and approvals,
thereby imposing significant burdens on project proponents.[67]
The IPA estimated that this 'ideological anti‑development activism' has
caused delay and disruption valued at more than $1.2 billion over the past 17
years. Further:
Holding projects up in court reduces profitability,
employment, investment and government revenue and royalties. Some projects
never go ahead due to heightened risk of legal challenges and consequent higher
capital costs.[68]
2.61
EDOA argued that 'there is a strong public policy rationale for
retaining broad standing provisions that allow conservation groups and
individuals ('third parties') to seek judicial review'.[69]
MCA agreed that judicial review processes are important but suggested that any deliberate
misuse of section 487 should be curtailed:
Weaknesses in the EPBC Act that allow the minister's approval
to be challenged on a technicality but not the substance of the decision can be
addressed without weakening environmental protection.[70]
2.62
Simon Breheny, Director of Policy at IPA, insisted that the 'special
legal privilege' granted by section 487 should be repealed. In addition to
existing state/territory avenues for appeal, Mr Breheny argued that the common
law test of standing would still apply and appropriately limit the right of
appeal to those with substantive grounds for challenge.[71]
Committee
view
2.63
The committee acknowledges that there is a public policy rationale for
enabling third parties to challenge decisions made under the EPBC Act. However,
the committee heard that section 487 is being misused with consequent and
unjustified effect on—among others—project proponents. Further, legislative and
judicial processes already provide an avenue for appeal at the state/territory
level. The committee considers that section 487 is duplicative and if not
for the prorogation of the 44th Parliament, the Australian
Government may have repealed that provision in the previous parliament.[72]
Recommendation 7
2.64
The committee recommends that the Australian Government re‑introduce
legislation to repeal section 487 of the Environment Protection and
Biodiversity Conservation Act 1999 (Cth).
Impact of native title
2.65
Some submitters and witnesses highlighted that it can be difficult to
undertake assessment and obtain approval for proposed projects that encompass native
title land. For example, AMEC contended that economic development on Aboriginal
land is not being achieved, as intended by Part IV of the Aboriginal Land
Rights (Northern Territory) Act 1976 (Cth):
...there is too much power held by Land Councils to simply stop
development. The power of veto for five years is considered to be too strong
and absolute. This has led to a situation where it is widely recognised that
economic development and the welfare of Aboriginal people on Aboriginal land is
in a poor state.[73]
2.66
Mr Bennison from MCA said that project proponents can spend 'an inordinate
amount of money trying to get access to those lands for exploration purposes,
let alone any further development'.[74]
Mr Short provided this illustration:
One of our members recently advised us that they were exposed
to this piece of legislation. They went through the negotiation process. They organised
a meeting. The meeting cost them $85,000. It lasted three minutes...to be told,
'We're exercising the power of veto.'[75]
2.67
Tony Seabrook, President of the Pastoralists and Graziers Association of
WA, told the committee that the agricultural industry also experiences
complications when proposing development that includes native title land, for
example:
The Harris family own Gogo Station. They have identified some
very good soil types and water there for centre-pivot irrigation and there is a
large tract of country there that could be almost dry land farmed on the basis
that if it gets wet enough it will produce a crop. This has gone through the
state parliament where the minister got to his feet about six or seven months
ago and said, 'Every obstacle that the government has in place now has been
covered. It's now yours to go ahead. There's only thing you need to do, to
negotiate an Indigenous land use agreement with the local communities.' Now, I
understand there were three communities on the property. They do not like one
another very much and this is a hurdle of such monumental proportions. The
proposal, as I understand it, was that they were asking for the freeholding of,
I believe, 10,000 hectares. One-quarter of it was to be owned by the local
communities, leased back by the consortium that was going to do the irrigation
work there and then employing local people in that process so it gave a
continuous stream of income, both from the lease and the ongoing proposal.[76]
2.68
The committee notes that, in the context of coal seam gas developments,
'coexistence is being achieved and economic benefits are being shared'.[77]
The committee also notes the evidence of Darcy Allen, Research Fellow at
IPA, that 'not everyone values environmental amenity equally, and we think
the principle should hold that those who value it more should pay for that
process'.[78]
Committee view
2.69
The committee recognises that it is more challenging to conduct
environmental assessments and obtain approvals for proposed projects that encompass
native title land. It is not clear why Land Councils have a five-year 'power of
veto' but the committee is not persuaded that, in this regard, native title
land should be treated any differently than other forms of land ownership. It
does not appear to be consistent with the economic objectives of the Aboriginal
Land Rights (Northern Territory) Act 1976 (Cth).
Recommendation 8
2.70
The committee recommends that the Australian Government amend the Aboriginal
Land Rights (Northern Territory) Act 1976 (Cth) to remove Land Councils'
ability to veto applications for exploration and/or mining licences.
2.71
The committee considers that economic development does not exclusively
benefit project proponents. However, based on evidence to the inquiry, mutual
benefit in the context of environmental assessment and approval does not appear
to be widely acknowledged or understood. Accordingly, the committee considers
that Commonwealth, state and territory governments should have guidelines to
assist with the clear identification of the costs/benefits of proposed projects
to landowners and other stakeholders.
Recommendation 9
2.72
The committee recommends that, if not already implemented, Commonwealth,
state and territory governments should develop guidelines to assist proponents
to clearly identify the costs/benefits of proposed projects, including shared
economic benefits such as royalties, to landowners and other stakeholders.
2.73
In this regard, the committee notes the evidence of Mr Ellis to the
effect that Queensland landholders have negotiated $238 million compensation as
at 30 June 2015 for land access by the onshore gas industry.[79]
The committee accepts that this demonstrates industry's ability to compromise and
co-exist with landholders. The committee suggests that there is merit in
state and territory governments considering whether a statutory right to
compensation in the form of royalties might facilitate environmental assessment
and approval.
Recommendation 10
2.74
The committee recommends that, in conducting their next review of land
access, state and territory governments consider a statutory right to royalties
for freehold landowners whose permission is sought for environmental assessment
and approval purposes.
State/territory environmental assessment processes
2.75
Commonwealth, state and territory governments are responsible for
environmental assessments and approvals. In 2015–2016, the majority of
environmental assessments were conducted by the Commonwealth (48) in accordance
with processes set out in the EPBC Act. A smaller number of assessments (19)
were made by the states/territories in accordance with assessment bilateral
agreements.[80]
2.76
Many submitters and witnesses focussed on state/territory environmental assessment
processes, telling the committee that these processes are problematic. Some of
the matters discussed in this section of the report include: timeliness; land
tenure; duplication and lack of coordination; and remote projects and staff in
regulatory departments/agencies.
Timeliness
2.77
The committee heard that delays in environmental assessment and approval
processes are having economic impacts.[81]
Some submitters referred to BAEconomics' modelling which estimated that
Australia's real GDP would increase by 1.5 per cent ($160 billion) if the
average delay in project approvals were to decrease one year by 2025.[82]
BAEconomics noted also Price Waterhouse Coopers' modelling which identified:
...a delay of 12 months as a tipping point at which up to a third
of planned mining projects would be cancelled, leading to significant reduction
in creation of jobs, investment, revenue and royalties.[83]
2.78
MCA stated that project delays and uncertainty affect Australia's
international competitiveness, as well as potentially incurring significant
costs.[84]
RHH illustrated this argument with reference to the main approvals timeline for
its Roy Hill project (Figure), which it estimated to have cost $75 million prior
to project operations.[85]
Figure: Roy Hill project, approvals timelines, 2005–2015
Source: Roy Hill Holdings Pty Ltd, Submission 6, p. 4.
2.79
Mr Wynne from RHH considered that a deemed approval process could work
to reduce timeframes, particularly if used in conjunction with a risk matrix
that enabled project proponents to understand and mitigate all risks.[86]
Another representative from RHH added that there are governance principles—including
protection of the environment—that apply to all publicly listed companies.[87]
2.80
KPCA provide the following example in relation to the agricultural
industry:
Case Study: Proposed agricultural project (WA), response
time
On the 16th
of December 2016 Kimberley Agriculture Investment (KAI) applied for a clearing
permit on Carlton Hill Plain to develop 12 000 ha of irrigated farm land, this was
declined because they must go through a referral process run by the Environment
Protection Authority that will take up to two years to complete and cost $5–$10
million to implement. This response took 177 days to be delivered and was only
delivered on the 12th of June this year.
Delays as
significant as this are fundamentally impeding employment and economic growth, negatively
impacting the people in the East Kimberley. This is exactly what prevents jobs
and growth in the regions and business growth in WA. This decision puts at risk
KAI's objective to increase from 70 to 300 employees (with a total of 700 jobs
including indirect employment) over the next 5–10 years. Instead, they are
trying to maintain the existing workforce, while desperately trying to resurrect
the project.
Source: KPCA, Submission 10, p. 8.
2.81
To address issues of timeliness, ACCI suggested:
Additional measures should be implemented to ensure greater
certainty and timeliness for decisions under the EPBC Act, including the use of
statutory timeframes, clarification regarding the application of 'stop-the-clock'
provisions and other measures to reduce the likelihood of appeals on decisions,
including vexatious appeals.[88]
2.82
A RHH representative said that legislation sometimes prescribes
timeframes but these are 'out of sync with the requirements that we have as a
business'.[89]
In addition, Julian Hill, Senior Legal Counsel and Head of External
Affairs for RHH, observed that regulatory timeframes are sequential.[90]
2.83
The Treasurer of the KPCA, Emma Salerno, suggested that a wide range of
reforms is needed, including a change of policy:
...the departments are dealing with a policy that views
themselves as having a role in sustainably managing land, so changing that
policy to effectively economically developing land, and sustainably.[91]
2.84
Representatives from IPA agreed that broad reforms are needed to
incentivise the provision of more timely assessments and approvals. One idea
proposed by Mr Allen was a change in approach to how project proposals are
assessed:
At the moment much of our environmental approvals system is
based on the idea that you should approve a project before it happens with a
number of conditions based on future potential harms that might happen. That is
only one way to achieve an environmental objective. If we agree on an
environmental objective, for instance, instead of doing this process, which is
an ex ante process that you do before approval, we would prefer to move towards
having clearly stated laws where you have the positive obligation to report the
breaches of those laws, so instead of doing these massive approvals beforehand
we would rather pursue these objectives in a different way which helps that
incentive problem.[92]
2.85
Mr Breheny said that most other areas of law employ this approach, with
a positive obligation attaching to legal or regulatory breaches. He indicated
that penalties could be determined at a level that encourages project
proponents to self‑report.[93]
Committee view
2.86
The committee accepts that delays in environmental assessment and
approval processes are having adverse economic outcomes. Further, current
measures are not sufficiently addressing the concerns of project proponents. Accordingly,
the committee urges state and territory governments to revise their current
policy to better reflect both economic and environmental objectives. Further,
the committee considers that state and territory governments should explore
alternative approaches to environmental regulation as part of their
deregulation agenda. The committee suggests that one option could be the
implementation of deemed approvals where project proponents have addressed
environmental factors in line with an agreed risk matrix based on international
standards (see Recommendation 6).
Land tenure
2.87
MCA submitted that 'mining is subject to more regulatory requirements
than most, if not all other industries in Australia', with regulation covering
all stages of mining activity.[94]
Other submitters similarly argued that the agricultural industry is
over-regulated, including at the early stage of securing land tenure. Mr Stoate
from KPCA identified leasehold title as being a key problem for project
proponents:
No-one would have leasehold if they could choose, that is for
sure. Certainly the issue of land tenure holds back the development of the
north.[95]
2.88
The President of the EKCCI, Jill Williams, explained that leasehold
title has more complicated regulatory pathways than freehold title.[96]
This was illustrated by Mr Seabrook from the Pastoralists and Graziers
Association of WA, who gave an example of a project that would not have
proceeded were it located on leasehold title:
...there is an abattoir that has just been built about an
hour's drive east of Broome. Jack Burton has constructed it and it has cost
well over $20 million to put it there. He was fortunate enough, on one of his
properties, to have a small 50-acre block of freehold and because it was
freehold he has built the abattoir. In a conversation I had with Mr Burton a
few months ago he said to me that this abattoir that is up and running,
state-of-the-art, that would benefit everybody up there, would never have
happened if he had not had that piece of freehold land to build it, so the loss
of opportunity here is just absolutely staggering.[97]
2.89
Paul Rosair from NAJA Business Consulting Services recently developed a
land tenure framework for the Kimberley Regional Group. Among his findings, Mr Rosair
concluded that the process of securing land tenure needs to be reformed:
...it is critical that pastoralists and investors alike are
able to secure appropriate land tenure via a transparent, consistent and easily
navigable process. It is also imperative that this process be relatively quick
to allow a responsive sector that can implement projects in response to
emerging market needs and availability of investors. The current eight years to
achieve freehold tenure is both unacceptable and unsustainable.[98]
2.90
In evidence, witnesses indicated that landholders would welcome the
conversion of leasehold title to freehold title. Ms Salerno said that, although
this pathway already exists, it is not widely utilised because of the time and
resources necessary to make and sustain an application.[99]
Another representative from KPCA pointed out that freehold title extinguishes
native title, so governments are reluctant to do anything which might become a
future act that triggers native title processes.[100]
Committee view
2.91
The committee understands that proponents are finding it difficult to
pursue development proposals on land held under leasehold title. The committee
acknowledges that potential native title issues might be affecting governments'
approach to security of land tenure. However, the committee agrees with
submitters and witnesses that current arrangements are not conducive to
economic and employment objectives. In the committee's view, it would be
beneficial for state/territory governments to review land access policy, legislation
and regulation, to identify opportunities to facilitate the conversion of
leasehold title to freehold title and/or to place leasehold land on the same
footing as freehold land in respect of environmental regulation.
Recommendation 11
2.92
The committee recommends that state and territory governments review land
access policy, legislation and regulation:
-
to identify opportunities to facilitate the conversion of
leasehold title to freehold title; and/or
-
to remove regulatory oversight of activities on leasehold land,
to put it on the same basis as freehold.
Duplication and lack of
coordination
2.93
Information provided to the inquiry indicated that duplication and lack
of coordination continues to contribute to over-regulation and its consequent
burdens on project proponents. For example, MCA submitted that a lack of
coordination results in inconsistent requirements and conditions, duplication,
and misaligned timeframes:
Case Study: WA Government and Australian Government,
approval process
Source: MCA, Submission 14, p. 15.
2.94
EKCCI similarly described problems with securing approvals, primarily
due to pre-conditions that depend on other approvals, which in turn are
pre-conditioned on the first approval.[101]
KPCA argued that such matters illustrate the need for more inter‑departmental
coordination and navigational assistance for project proponents:
There is little guidance for proponents to navigate the
cross-departmental pathways for progressing approvals between unrelated
agencies or regulators. This becomes a frustrating and time-consuming web, and
is the main source of frustration for proponents directly and the community
more broadly at the resultant lack of job opportunities...the approvals process
is lengthy and arduous.[102]
2.95
RHH indicated that there should be a lead department/agency in each
state/territory, with a central database that enables all regulators to access
and coordinate project information in a timely manner:
A central repository for project information would enable
approvals agencies to assess the cumulative impact of each project. The data
can also be used to inform policies on acceptable development to strategically
manage the approvals process in advance of referrals and applications being
lodged.[103]
2.96
Mr Short from AMEC said that cultural heritage clearance processes could
also be expedited with an accessible centralised database.[104]
Mr Bennison, also from AMEC, explained that state/territory regulators already
hold data in relation to sites, objects or places. However, as this is not 'transferable':
...if you want to go back over that same ground, you then have
to negotiate exactly the same heritage survey that the previous company and the
previous company before that did.[105]
2.97
The representatives argued that there should be some form of mandatory
disclosure, emphasising that the disclosure need not include sensitive
information:
We do not need to know the specifics of what it is or exactly
where it is. You can have a buffer zone around it, but disclose it so that at
least you know in a particular region it is in the top right-hand corner of the
tenement and you can work the rest of the tenement. So, work on the principle
of mandatory disclosure so that the state and territory governments can also fulfil
their requirements under their respective heritage legislation...and not only
that, developers—and we are not just talking about the mining industry but any
other development—so that they have access.[106]
Committee view
2.98
Throughout the inquiry, the committee heard that environmental
assessment and approval processes are voluminous and complex, with convoluted
pathways that are poorly understood. The Australian Government's Deregulation
Agenda is intended to rectify such matters and COAG has also agreed to 'look
closely at improving the performance of regulators'.[107]
2.99
Based on information received, and noting that there has been no
independent review of Commonwealth regulation in this area,[108]
the committee considers that there remains scope for red tape reduction in
environmental assessments and approvals.
Recommendation 12
2.100
The committee recommends that the Australian Government initiate an
independent review into the impact of the Deregulation Agenda on the Department
of the Environment and Energy.
2.101
At the state/territory level, the committee accepts that there is a
greater need for clearer regulatory pathways and enhanced levels of
coordination. If not already under consideration or implemented, the committee
urges state/territory governments to review opportunities to better coordinate
environmental regulation, including investing a lead department, agency or
similar with primary responsibility.
2.102
The committee suggests that cultural heritage clearance processes may be
one area for potential reform. Where cultural heritage has been identified and recorded,
the committee considers that persons or organisations with a legitimate
interest should have reasonable access to that information. This would promote
the protection of cultural heritage, as well as balancing the need for cultural
protection and economic development.
Recommendation 13
2.103
The committee recommends that state and territory governments explore options
for facilitating reasonable access to existing Aboriginal heritage surveys.
Remote decision-making
2.104
EKCCI and KPCA expressed concern that government and its bureaucracy can
be biased against development in its region, possibly due to a lack of understanding
about local conditions.[109]
The committee heard that this lack of understanding can also result in requirements
that are not suited to the region:
Case Study: Local and regional context, Kimberley region
(WA)
The Ord Stage 2 EMP requires detailed three-monthly
monitoring of rehabilitation sites. In the Kimberley, rainfall results in
substantial natural revegetation. Access issues such as rough terrain, and
the scale of development (and rehabilitation) are impediments to meeting
these prescribed requirements. Regular, informed observation by air and at
ground level indicates very successful natural rehabilitation, usually within
one wet season, when topsoil is re-spread. This outcomes-based approach
is more relevant at the scale of operations in this region.
Source: EKCCI, Submission 4, pp. 9–10.
2.105
Some submitters and witnesses commented that the loss of experienced and
technical staff further complicates environmental regulation. For example, the
ACT Government submitted that staff reductions at the Department of the
Environment and Energy created inconsistencies on the introduction of the One
Stop Shop.[110]
In relation to the WA Government, KPCA submitted:
Retirements or retrenchments, and lack of any related
recruitment is continuing to further erode the technical capacity of several
Departments involved in supporting environmental approvals. For example,
the [Department of Water] has lost a significant portion of their senior
staff over the last decade, with remaining junior staff having limited
experience in irrigation development, particularly in remote Australia.[111]
2.106
EKCCI emphasised that some concerns of project proponents in regional or
remote areas could be addressed:
There are many examples where regulatory staff either refuse
or are not allowed to undertake site visits...because either they do not have
budget for it, or it is considered to potentially corrupt their independence.
Whatever the reason, this attitude results in staff being asked to assess
things they have little or no idea about, and they are often dealing with
proponents with decades of on ground experience.[112]
Committee view
2.107
The committee considers that the quality of environmental assessment and
approval depends on the knowledge and expertise of regulators. For this reason,
the committee supports ongoing learning and development, including the
capacity to acquire an appreciation for the local/regional context of proposed
projects.
Recommendation 14
2.108
The committee recommends that Commonwealth, state and territory governments
review departmental policies and budgets to support the conduct of site
inspections by decision-makers during the environmental assessment process.
Recommendation 15
2.109
The committee recommends that Commonwealth, state and territory
governments investigate options for the greater utilisation of local knowledge
and experience, including through the employment of local decision-makers.
Concluding comment
2.110
The Australian Government's 2013 Deregulation Agenda aims to reduce
excessive, unnecessary and complex regulation to lift productivity and boost
growth. The committee supports this objective but has found that red tape
continues to affect environmental assessment and approvals by Commonwealth,
state and territory governments, to the detriment of Australian businesses and
the economy.
Senator David Leyonhjelm
Chair
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