A fresh look at Australia’s environmental regulation

Following the Council of Australian Governments’ (COAG) decision in December 2013 to streamline and refocus its Council system, environment ministers agreed to give priority to reviewing environmental regulation. The Australian Government, on behalf of the Commonwealth, state and territory environmental ministers published the National Review of Environmental Regulation Interim Report (report). The report details the current and proposed reform efforts of the states and territories.

The purpose of the report is to identify unworkable, contradictory or incompatible regulation, and identify opportunities to harmonise and simplify the existing regulatory framework. There are significant time and cost savings that could be achieved by the successful implementation of simplified environmental policies.1

However, the sensitive nature of environmental issues can often divide the views of political parties. This newsletter canvasses the topics covered in the report and considers whether the political landscape could act as an impediment to any meaningful reform.

The report focuses on four key areas of reform.

Risk-based regulation and proportionate interventions

This strategy involves regulation commensurate with the level of risk associated with a particular activity. Where an activity poses little risk to the environment, it may not require any monitoring or reporting. These policies are also intended to provide an incentive for businesses to develop environmentally friendly practices so as to avoid any unnecessary and costly regulation.

Harmonisation and removal of duplication

Perhaps the most comprehensive and persistent effort to harmonise environmental regulation comes from the Australian Government’s ‘One Stop Shop’ policy which aims to eliminate, where possible, the requirement to get environmental approvals from both state and federal levels of government. Federal Environmental Minister, the Honourable Greg Hunt, believes that removing regulatory duplication between jurisdictions will save business over $420 million in compliance costs per year.2

Currently, the Environmental Protection and Biodiversity Conservation Act 1999 (Cth) allows for bilateral agreements to be made between the Commonwealth and the states which accredits the state’s processes for approving environmentally sensitive projects and disposes of the need for Commonwealth approval.

A number of bilateral agreements currently operate in all jurisdictions with the exception of the Northern Territory and Victoria.3 Bilateral agreements can cover a wide range of subject matters. There is however, no current power for the Minister to make bilateral agreements pertaining to approval processes for coal seam gas developments and large coal mining developments that would significantly impact water resources.

Strategic and landscape scale approaches

Strategic and landscape scale assessments are review processes that consider a number of potential developments over a large area or region at once. Strategic and landscape scale approaches promote efficiency by allowing the cumulative impacts from multiple development proposals to be considered together.

The report suggests that the availability of strategic environmental assessments has potential time and resource cost savings for those businesses which choose to utilise strategic assessments, rather than completing their own individual project assessments.

A further proposed benefit to these approaches is the commercial certainty afforded from knowing which developments are permissible in particular strategic assessment areas.

Market based instruments and other innovative approaches

Market based instruments draw upon economic market principles and can be used to drive behavioural change to achieve environmental outcomes.

The report notes that the NSW Government is currently reviewing a scheme which provides financial incentives for businesses to go beyond simply complying with licence conditions, and seeks to encourage the adoption of the best pollution reducing practices.

A number of the other state and territory governments are moving towards commercial and market-based incentives to promote biodiversity conservation and sustainability.

Further harmonisation efforts

The Environment Protection and Biodiversity Conservation Amendment (Bilateral Agreement Implementation) Bill 2014 (Cth) (Bill) currently before the senate seeks to remove the limitation on the Minister’s bilateral agreement making power and allow the states and territories to approve coal seam gas developments and large coal mining developments that would significantly impact water resources.

A number of environmental groups have been critical of the Bill, with the Wilderness Society describing the proposal as ‘not only a broken promise but also a potential disaster’,4 and the Lock the Gate Alliance remarking that ‘to actually hand that [the ability to approve these large scale coal and coal seam gas projects] back to the states just does not make any sense, given the reason it was put in place three years back was exactly because of concerns that states cannot handle these matters adequately’.5

The Australian Labor Party also objects to the introduction of the Bill. Federal Labor Shadow Minister Mark Butler’s second reading speech6 on the Bill highlights Labor’s belief that matters of national environmental significance must remain the province of a national government. The Labor Party contends that its position is not politically focused and that regardless of whether the state or federal governments are Labor or Coalition, this is not an appropriate power to delegate to the states.7

Perhaps the strongest dissenting voice is that of the Greens, who are of the belief that handing over the power to approve these types of projects to the states would wind environmental regulation in Australia back by 30 years.8

The Greens argue that:

  • the states cannot be trusted with such decision making power;
  • the authorisation processes in subordinate instruments is not as adequate as how it currently stands in the Commonwealth Acts;
  • state and territory processes and regulatory capacity are inadequate;
  • there are potential conflicts of interest;
  • local governments are wholly unsuitable; and
  • there is a lack of evidence to justify handing off environmental powers.

In substantiating the allegation that the states cannot be trusted with such a power, the Greens point to projects previously put forward by the states which were ultimately rejected by the Commonwealth, such as the proposal to graze cattle in the Alpine National Park of Victoria, and the proposed gas hub at Western Australia’s James Price Point.9

Will it work?

Harmonising environmental regulation is of importance to businesses operating within the environmental landscape. Although the expansion of the government’s ‘One Stop Shop’ policy may have the potential to save businesses time and money, the requisite support from the other political parties is lacking, and may ultimately cripple the initiative moving further forward.

The current senate composition means that if they were to stick to their current position, the Greens and Labor have the ability to block the Bill’s successful passage through the senate.

Even if the Bill is successful there still lies a myriad of state legislation which may need to be complied with, depending on the project. Accordingly, the reform contemplated in the report, further to the Bill, is required.

Moving away from complex, convoluted and costly environmental regulation and towards an efficient streamlined model provides a positive climate for foreign investment, and will likely encourage productive developments. Although there is merit in the initiatives being pursued by the state and Commonwealth governments, any significant uniform solution will only succeed if the political parties clear the air and collaborate to produce significant and workable reform policies.

Where to from here?

As at time of this publication, there has been no official indication of when the final report will be completed and released. Although the report suggests that viable reform opportunities emerging from the review may be considered by environmental ministers in the future, it is imperative that political disagreements be addressed so that a positive outcome can be achieved.