Summary 

On 5 August 2013 the Productivity Commission released a draft report entitled ‘Major Projects Development Assessment Processes.’ The report was commissioned in response to industry and community concerns about the efficiency of the development assessment and approvals processes for major projects in Australia. These concerns included the unnecessary regulatory burdens on proponents, lengthy delays, lack of certainty and transparency, conflicting policy objectives and inadequate stakeholder consultation. 

The Productivity Commission is accepting comments on the report until 13 September 2013 and will be holding a series of roundtable discussions with stakeholders. The final report will be forwarded to the Australian Government in December 2013. 

Key points

The Commission benchmarked the assessment and approval system in Australia against best practice in a number of other jurisdictions including the US, UK, Canada and New Zealand and found that while none of these countries performed better than Australia overall, there are numerous practices that could be replicated in Australia. 

The key recommendations put forward by the Commission include:

  • establishing a ‘one project, one assessment, one decision’ framework for environmental approvals, by increasing the use of bilateral assessment and approval agreements,
  • adopting a coordination office model, which involves the creation of a Major Projects Coordination Office which will advise proponents on statutory requirements, coordinate and facilitate the assessment and approval process and report on the process against timelines, without having a direct role in the assessment and approval process,
  • separating environmental policy from regulatory and enforcement functions,
  • setting statutory timelines for key decision points in the development assessment and approval process and clarify when regulators can ‘stop the clock’,
  • using strategic assessments where appropriate to reduce assessment costs and account for cumulative impacts, and
  • requiring approval authorities to publish reasons for their decisions and conditions for all major projects.

The draft report states that the implementation of these reforms is essential for Australia to secure the full benefits of major projects while protecting the environment, heritage and cultural assets.

Recommendation: offsets overhaul

The draft report considers the application of offsets in approval processes. The Commission notes proponents’ concern that approval conditions are becoming more prescriptive and onerous without improving environmental outcomes. Particular concerns were raised with regards to offsets imposed being disproportionate, costly, inconsistent and ineffective in achieving environmental outcomes. 

The draft report recommends that Federal, State and Territory governments review offset policies for major projects to ensure that they are consistent with statutory objectives and achieve benefits in excess of costs. The Commission was also of the view that there is considerable scope for governments to clarify the objective of offsets policies and to develop a scientifically rigorous, transparent and predictable framework for developing offset measures which are consistent with the objectives. This is intended to reduce uncertainty for proponents and avoid the imposition of offsets that are unnecessarily costly and ineffective. 

Increased use of bilateral agreements

The draft report addresses the duplication in assessment processes, particularly across levels of government, including the amount of major projects assessed at both a Commonwealth and State or Territory level. Often these assessments will cover similar (if not the same) issues and impacts. The Commission noted that duplication of environmental assessment processes lengthens assessment timeframes and contributes to the significant cost of approvals in Australia.

The draft report suggests that an increased use of bilateral assessment agreements between the Commonwealth and the States and Territories is one way to reduce this duplication. Bilateral assessment agreements have the effect of accrediting particular state and territory process for the purpose of assessment of controlled actions under the EPBC Act. 

The Commission notes that over the period extending from November 2000 to March 2013 bilateral assessments were used in approximately only one fifth of controlled action assessments. The Commission recommends that a broader range of state and territory processes should to be accredited, in particular, those that are most commonly used for major project assessments. 

Final comments

The draft report is the latest in a long line of investigations over many years by various bodies into approval processes in Australia. These investigations have resulted in reports focussed at individual states or nationally, depending on the terms of reference of the relevant body. Implementation of reforms proposed has been very patchy.

The recommendations of the Productivity Commission are consistent with the recommendations that have been put forward by stakeholders and project proponents, namely that the approval and assessment process needs to be streamlined and consistency and transparency should be paramount considerations. However, whether these recommendations are effectively implemented is a matter which remains to be determined following the submission of the final report to the post-election government.