The Queensland resources sector is set to face one of the largest legislative reforms in its history.
Driven by the streamlining approvals project and an election undertaking to reduce red tape by 20%, the Queensland Government has proposed to reform its legislative framework for the resources sector by consolidating five resources Acts into one, the ‘Common Resources Act’.
In consultations with industry and key stakeholders, including a briefing to Norton Rose clients on 16 April, the Queensland Department of Natural Resources and Mines (Department) has proposed a staged reform process to take place over the next few years. This update discusses the legislative reforms proposed by the Queensland Government and some of the preliminary concerns raised by the industry. While there is cautious support from industry for the reform, it is conditional upon the Government adhering to the following key principles:
- there must be no diminution of existing rights;
- the fundamental principles of the existing legislation should be maintained; and
- the reform should be consistent, transparent and encourage investment.
In November 2012, the Queensland Government released a discussion paper entitled Modernising Queensland’s resource tenure legislation (Industry Discussion Paper), which outlines: the Queensland Government’s vision of modernising resources tenure legislation by 2016 to replace the five separate legislative frameworks and subordinate regulations; and the Queensland Government’s proposal to incrementally and collaboratively deliver legislative reform over the next three to four years.
The Acts to be consolidated include the Mineral Resources Act 1989 (Qld),the Petroleum Act 1923 (Qld), the Petroleum and Gas (Production and Safety) Act 2004 (Qld), the Greenhouse Gas Storage Act 2009 (Qld), and the Geothermal Energy Act 2010 (Qld)(Resources Acts).
The key drivers of the reform are the Queensland Government’s Streamlining Approvals Project: Mining and Petroleum Tenure Approval Process released in November 2009 and the Newman Government’s electoral pledge to reduce red tape by 20%.
The host of recent legislative amendments as a result of the Mines Legislation (Streamlining) Amendment Act 2012 (Qld) (Streamlining Act) and the Environmental Protection (Greentape Reduction) and Other Legislation Amendment Act 2012 (Qld) are designed to implement part of the Streamlining Approvals Project. In particular, the Streamlining Act provided the legislative framework for an online service delivery model. The Streamlining Act also provided amendments to establish common structure, terminology and assessment processes for resource activities required under the Resources Acts.
In this regard the Streamlining Act sets the foundation for a Common Resources Act; however the Queensland Government has stated that there is still a need for wider and more ambitious reform that will:
- remove the complexity from the existing legislation to create process certainty;
- drive the modernisation of Queensland’s resources tenure administration, facilitating enhanced and faster online service delivery;
- examine ways to reduce the administrative and regulatory burden on industry across all resource sectors, including compliance costs and processing times; and
- increase Queensland’s attractiveness as an investment destination.
Legislative reform proposal
The Department is proposing a staged legislative reform package over several years. It is anticipated that each stage will take approximately one year to complete and involve a rolling process of consultation, bill development and engagement for the next stage.
It is envisioned the principal mechanism to achieve this reform would be the creation of an Act into which harmonised legislation would be transferred over several years (the “Common Provisions Act”).It is intended at the end of stage three the Common Provisions Act will be renamed the Common Resources Act.
During stage one, all existing common elements from the existing legislation would be transferred to a shell Common Provisions Act. The Common Provisions Act would:
- develop common objectives;
- define a common relationship with the existing legislation;
- transfer the existing definitions of minerals and petroleum;
- establish the Crown’s property in minerals and petroleum; and
- establish a common royalties section, dealings, land access, security, registers, common native title provisions and a common dictionary and endnotes section.
All ‘post-grant’ related provisions would be reviewed with the aim of achieving commonality and transferring them to the Common Provisions Act. For example, the following provisions have been proposed to be consolidated:
- negotiation and dispute resolution;
- overlapping tenures;
- records and samples;
- measurement; and
- reviews and appeals.
Stage three / Stage four
While originally proposed to be two separate phases, the government has recently suggested that the last two phases would be combined into one stage in order to achieve implementation by 2016.
In the original “stage three”, a common set of tenure types would be established in the Common Sections Act (including the harmonisation of grant and renewal provisions), with transitional provisions for the automatic conversion of existing tenures to the new types. This would address the fact that currently petroleum and gas, as well as coal, are released through the controlled release of land (tenders), while exploration permits of minerals are provided by over-the-counter applications. In the original “stage four” the remaining resource-specific provisions of the existing legislation would be dealt with, either by new resource-specific sections created in the Common Sections Act or by resource-specific regulations.
In addition, the remaining shells of the existing legislation would be collapsed and the Common Sections Act would be renamed. Recent commentary by the government has also suggested that the Petroleum Act 1923 would not be repealed in order to protect the rights of pre-1996 ATP holders who have rights to the grant of a petroleum lease upon satisfaction of certain criteria.
Outcomes of consultation
Following the initial proposal, industry and stakeholder feedback from the Industry Discussion Paper indicates broad, but cautious support for the Queensland Government’s vision and legislative reform proposal, largely conditional on the Common Resources Act retaining the three fundamental principles of reform:
- phased and engaged reform to deliver consistency and transparency, encourage investment and align with ‘best practice regulation’;
- retention of the underlying fundamental principles of the existing legislation, (for example, state ownership of resources, extracted by entities in return for rent and royalty and based on a system of land tenures and permits); and
- no diminution of existing rights unless agreed by industry.
Some key comments and concerns regarding the risk associated with consolidating diverse legislative rights across the existing legislation into a single Common Resources Act include:
- there is no universal acceptance of the concept that a single Act is the sole means of achieving simplification and consistency (a key example is the greater flexibility under the Mineral Resources Act 1989 (Qld) compared with the Petroleum and Gas (Production and Safety) Act 2004 (Qld));
- reduction in legislative page count should not be an indication of success (risk of certainty being sacrificed for brevity);
- the potential complexity of transitional arrangements;
- there is a risk that harmonisation may lead to diminution of existing rights;
- the importance of ensuring the protection of existing entitlements under existing legislation (for example, rights to produce water as a by-product of gas production for the petroleum industry);
- the need for clarity and transparency from the Queensland Government about the impact of legislative change/transitional provisions on existing projects;
- the Queensland Government must ensure existing exemptions in other legislation are clearly drafted in the Common Resources Act, including exemptions from the Vegetation Management Act 1999 (Qld), Nature Conservation Act 1992 (Qld) and the Sustainable Planning Act 2009 (Qld);
- the Queensland Government should consider the adoption of a principle-based approach to the Common Resources Act, as opposed to a heavily prescriptive approach; andthe need for continued incremental amendments to address known and current issues.
As a result, the Queensland Government has identified the following as priority considerations:
- taking a customer/tenure holder centric approach to policy development;
- developing principle based vs. prescriptive legislation;
- making the business process suit the business;
- adhering to the underlying fundamental principles of the existing legislation and avoiding ‘regulatory creep’;
- taking a cautionary approach with transitional arrangements;
- keeping stakeholders informed and engaged;
- creating a framework that can accommodate new and emerging resource industries; and
- considering Native Title implications.
Given the size and scale of the proposed reforms, most resources stakeholders in Queensland are likely to be affected by the proposal.
The Queensland Government has proposed to establish a joint industry and government reference panel (the ‘Joint Reference Group’) to develop the phased program of reform for each stage of the reform process, and interested parties should make themselves known.