MINERALS COUNCIL OF AUSTRALIA - VICTORIAN DIVISION Submission to the Environment and Natural Resources Committee, Parliament of Victoria INQUIRY INTO THE ENVIRONMENTAL EFFECTS STATEMENT PROCESS IN VICTORIA 8 APRIL 2010 www.minerals.org.au MCAVic Submission on the EES Process in Victoria 8 April 2010 INQUIRY INTO THE ENVIRONMENTAL EFFECTS STATEMENT PROCESS IN VICTORIA INTRODUCTION ...................................................................................................................................... 3  BACKGROUND ........................................................................................................................................ 4  History of Concern ............................................................................................................................ 4  Scorecard ......................................................................................................................................... 4  Nationally Consistent Project Approvals ........................................................................................... 6  MINING PROJECT APPROVALS PROCESS ......................................................................................... 6  VCEC RECOMMENDATIONS, GOVERNMENT RESPONSE AND INDUSTRY POSITION ................. 10  EES Process Efficiency .................................................................................................................. 10  Projects of State Significance ......................................................................................................... 10  Strategic Assessments ................................................................................................................... 11  EPBC ACT APPROVALS BILATERAL ................................................................................................. 11  CONCLUSION ........................................................................................................................................ 12    Minerals Council of Australia | 2 MCAVic Submission on the EES Process in Victoria 8 April 2010 INTRODUCTION The Minerals Council of Australia (MCA) welcomes the opportunity to submit to the Environment and Natural Resources Committee Inquiry into the Environmental Effects Statement (EES) Process in Victoria. The MCA represents Australia’s exploration, mining and minerals processing industry, nationally and internationally, in its contribution to sustainable development and society. MCA member companies produce more than 85 per cent of Australia’s annual mineral output. The MCA’s strategic objective is to advocate public policy and operational practice for a world-class industry that is safe, profitable, innovative, environmentally responsible and attuned to community needs and expectations. The Victorian Division of the MCA represents the interests of member companies operating, exploring and providing services to the industry in Victoria. The regulatory framework which controls the Victorian minerals industry, and in particular the EES project approvals process, is a critical ingredient for the prosperity of regional and rural Victoria. It is therefore important that regulation is balanced between the sometimes competing interests of promoting investment, good environmental practice and the expectations of the community. The MCA strongly advocates the principle of minimum effective regulation – that the development of good regulatory process should be informed by the following principles: • regulatory approaches are not used unless a clear case for action exists, including an evaluation that explains why existing measures are not sufficient to deal with the issue; • a range of policy options (including co-regulatory approaches) have been assessed and found wanting; • the regulation represents the greatest net benefit to the community; • the regulation developed is the most efficient means of achieving the desired outcome at least cost to industry; • effective guidance is provided for both regulators and stakeholders to ensure that the regulations are correctly implemented and monitored; • mechanisms such as sunset clauses or periodic reviews are built into the legislation to ensure that the regulations remain relevant over time; and • there is effective consultation with stakeholders at key stages of the development and implementation of the regulation. Environmental regulations represent a substantial proportion (in terms of approvals) of minerals industry regulation, both State and Commonwealth regulations. It is therefore critical that the EES approval process for the assessment and impacts of projects is applied in the most economically efficient manner to achieve identifiable outcomes without inhibiting innovation and improved practices by businesses. This Inquiry is extremely timely in the face of not only a plethora of both State and Commonwealth Inquiries on various aspects of regulatory systems that could be classified as ‘environmental regulation’, but several Senate Reviews and an Independent Review of the Commonwealth’s Environment Protection and Biodiversity Conservation Act 1999. Victoria’s project approvals process under the Environment Effects Act 1978 (EEA) is by no means leading practice. This Inquiry provides a unique opportunity for Victoria to significantly streamline its approval process without reducing environmental outcomes, and to make Victoria the showcase for responsible environmental management with real outcomes. Victoria faces a range of special issues when compared to the other mainland jurisdictions of Australia. Two in particular - a small land mass with the 2nd largest population in the country; this same land being well endowed with economically recoverable mineral resources and an abundance of brown coal. Land use conflicts and controlled or restricted access to Crown land for exploration is a significant barrier for the minerals industry. For Victoria’s economic and social prosperity, these critical areas need to be managed to ensure the continued viability of mineral resources operations in a responsible way. The minerals industry has and continues to be an eager participant in environmental management in the State. Partnerships with government and non-governmental organisations have lead to leading practise in environmental Minerals Council of Australia | 3 MCAVic Submission on the EES Process in Victoria 8 April 2010 management. The industry is well aware that good environmental practice contributes largely to its ‘social licence to operate’. The MCA does not advocate a reduction in environmental outcomes. We do however; seek greater efficiency, effectiveness and consistency. We see the resources and competency of the industry regulators as a critical area for attention. We also seek a whole-of-government approach to project approvals so as to avoid the need to satisfy the often personal view of every relevant (and often not so relevant) individual in every approvals or referal agency. BACKGROUND History of Concern The ever growing complexity of the EES process, its ever growing cost of compliance and ever growing timeframes to achieve an outcome have plagued the minerals industry in Victoria for almost the past 20 years from when the MR(SD)A was first introduced. Whilst the industry welcomed the opportunity to gain planning approval for mining projects through the EES process, the MCA has consistantly sought improved efficiency and effectiveness. Unfortunately, we continue to see reduced efficiency and less effectiveness. Nevertheless we continue to appreciate that the EES process has many advantages for large, complex projects compared to the planning permit route. MCA has been a consistent advocate for improved efficiency through the numerous reviews of the Environment Effects Act 1978 and its implementation through the EES process. Scorecard In 2006 the MCA assessed the regulations in all Australian jurisdictions for exploration and mining project approvals and released the resulting audit1 and scorecard2 report. These are available at www.minerals.org.au. The audit of project approval procedures: > found that over time, long-standing areas of regulation, such as mining tenement administration, have been refined to the point where systems work efficiently and well. Although systems may differ between jurisdictions, they are broadly similar and well understood by industry and agency staff; and > confirmed the significant burden on business caused by inefficient and ineffective project approval procedures: − problems tend to arise in the design of relatively new areas of regulation, such as environmental management, cultural heritage and access to land; and − poor administration and implementation of regulation imposes unnecessary burdens on business. Regulations governing project approvals for exploration and mining projects are cumbersome, complex, inconsistent and undermine smooth and speedy project development. In addition there are significant inconsistencies between state/territory planning process requirements. For some time, various jurisdictions have been seeking to improve their project development requirements and to develop better strategic approaches to infrastructure planning and investment licensing. These range from detailed approaches involving Major Project Facilitators and the use of one-stop-shops to none at all. MCA research suggests there are useful learnings available across jurisdictions that could inform better practice. For example, in South Australia the Minerals and Energy Resources Division of Primary Industries and Resources South Australia plays a coordinating function in the regulation of the various activities requiring approval under their EIS process. A recent Parliamentary report recommends a broader government one-stop-shop be established to promote improved exploration and minerals development3. 1 URS Australia, National Audit of Regulations Influencing Mining Exploration and Project Approval Processes, Prepared for MCA, February 2006. 2 URS, Enesar Consulting, GHD, Sinclair Knight Mertz and Environment Action, Scorecard of Mining Project Approval Processes, Prepared for MCA, May 2006. 3 Parliament of SA, Natural Resources Committee Mineral Resource Development in South Australia, 8th Report, 5 September 2006. Minerals Council of Australia | 4 MCAVic Submission on the EES Process in Victoria 8 April 2010 Four lead consultant companies engaged in mining project approval processes (URS, GHD, SKM, and Enesar) prepared the scorecard. The consultants collectively agreed a ‘scorecard’ for the purpose of assessing and comparing approval processes in each jurisdiction. This scorecard was directed at criteria in two key areas, specifically: A. How well the policy and regulations are designed in each jurisdiction: scored against the criteria including: institutional framework, clarity of policy objectives, stakeholder input & appeals, opportunity and efficiency of chosen regulatory measures in achieving policy outcomes. B. How well these policies and arrangements are administered in each jurisdiction: scored against the following criteria: clarity of process; timeliness; compliance cost; government agency capacity; predictability and certainty; and effectiveness in achieving policy outcomes. The criteria were assessed against 17 key project approval issues. The 17 issues were those considered most important to both effecting and affecting investment in a mining project and categorised under four headings - Environmental issues, Mining specific issues, Land access issues, and Other issues. The EES process sits under the Environmental issues category. The individual criteria of each issue were given a score on a scale of 1 (poor) to 5 (very effective) relative to their perceived ability to meet the MCA goal of nationally consistent project approval processes that are efficient, effective, transparent and non-prescriptive and based on common standards and codes of practice. Processes, such as the EES process, generally scored higher in their design than in their administration. This reflects a common observation by the consultants that there is a major problem with the skills and resources available in government agencies and with the co-operation displayed between agencies involved in the approvals processes. Table 1 below details the aggregate score for each jurisdiction. Victoria scored slightly above average for both regulation design and regulation administration. Average score - Design Average score - Average score criteria Administration criteria NSW 3.9 3.4 3.6 Vic 4.0 3.4 3.6 Qld 3.9 3.1 3.4 W.A 3.9 3.2 3.5 S.A 3.9 3.7 3.8 Tas 3.9 3.6 3.7 NT 3.6 3.3 3.4 Commonwealth Env 2.9 2.6 2.5 Average - all jurisdictions 3.8 3.3 3.5 The Environmental impact assessment process scored highly in NSW and poorly in the Commonwealth, with Victoria languishing in between. Table 2 details the range of aggregate scores across all criteria. Range in scores Australian Lowest Highest average scoring scoring jurisdiction jurisdiction Criteria Lowest Highest Institutional Framework 3 .6 5 . 4 .2 NT Comth env Clarity of policy objectives 3 .0 4 .3 4 .0 Comth env Qld Stakeholder Input & Appeals 1 .0 4 .1 3 .3 Comth env VIC Efficiency of chosen measure 2 .7 4 .0 3 .6 Comth env Tas Clarity of Process 3 .3 4 .1 3 .7 NT Tas Timeliness 2 .9 4 .0 3 .4 WA Comth env Compliance cost 3 .0 3 .6 3 .3 Qld SA/Tas Government Agency Capacity 1 .0 3 .7 2 .9 Comth env SA Predictability and certainty 2 .0 3 .9 3 .2 Comth env S Effectiveness 1 .0 3 .7 3 .2 Comth env SA Total 2 .5 3 .8 3 .5 Comth env SA Minerals Council of Australia | 5 MCAVic Submission on the EES Process in Victoria 8 April 2010 Nationally Consistent Project Approvals In mid 2007 the MCA, on behalf of the minerals industry Regulatory Efficiency Dialogue (made up of all State/Territory Minerals Councils/Chambers), engaged PricewaterhouseCoopers to undertake a review of regulatory reform processes to achieve national harmonisation of mining project approval regulations. The review report4 was published in 2007 and is available on the MCA website www.minerals.org.au. The review examined three particular areas of project approval regulation (native vegetation, air quality, and water discharge) to determine if nationally consistent, efficient and effective regulation was achievable and if it were then what it might look like and how it may best be achieved. Whilst the findings of the review were rather inconclusive, it was determined that for the three areas of regulation examined the regulatory design was reasonably consistent across the jurisdictions with variation primarily caused by differences in the interpretation and application of the regulations by the State based regulatory agencies. It was suggested that harmonisation might best be achieved by pursuing improved capacity and competence of the regulators and then advocating national consistency in application and interpretation of the regulations. The report also confirmed that regulatory reform to reduce the regulatory burden was best achieved through the COAG review of regulatory hot spots, which was reconfirmed by the Rudd Government in March 2008. Through the Regulatory Efficiency Dialogue, the MCA in conjunction with its related State representative organizations developed a set of principles that underpin a preferred framework for improved project approvals processes, specifically: > national consistency - in procedures, regulations and administration/interpretation; > co-regulation – minimum effective regulation and industry voluntary initiatives (guidelines, protocols, codes); > continuous improvement – beyond regulatory compliance (minimum standards) including conformance with industry voluntary initiatives (leading practice, eg. Enduring Value); > regulatory capacity – accountable (clearly defined role), competent, resourced regulators; > sustainable development assessment criteria – regulations and determinations to be constructed on the integration of the three pillars of sustainable development; > single instrument of approval – single agency with responsibility for coordinating whole-of-Government process and determining whole-of-Government position; > risk management – regulations characterised in risk assessment and management (for environmental and social impact assessment and management plans). The regulatory framework established by the MCA’s Regulatory Efficiency Dialogue for nationally consistent project approval processes identified the need for efficiency, effectiveness and certainty that does not reduce standards and that encourages continuous improvement in environmental and social outcomes. In many ways Victoria’s EES process meets, but does not excel, when compared to the national principles defined by the Australian minerals industry. MINING PROJECT APPROVALS PROCESS The mining industry is one of the most heavily regulated industries. Whilst primarily regulated under the MR(SD)A, gaining project approval requires a complex interaction between various other State and Commonwealth legislation. Following the granting of a Mining Licence, a proponent must undertake a series of steps prior to commencement of work which includes the gaining of planning approval. Under the MR(SD)A planning approval can be gained through the EES process. The Minister for Planning may determine that an EES is an appropriate assessment process for a proposed mining project. If an EES is to occur, it is the decision of the applicant to determine if the EES is commenced prior to the grant of the Mining Licence, and if so, the applicant must notify DPI as soon as the EES process is commenced. 4 PricewaterhouseCoopers, Review of Regulatory Reform Processes: National Harmonisation of Mining Project Approval Regulations, Final Report to Minerals Council of Australia, October 2007. Minerals Council of Australia | 6 MCAVic Submission on the EES Process in Victoria 8 April 2010 Below is the approvals process5 described by the Department of Primary Industries (DPI). EES interaction 5 http://new.dpi.vic.gov.au/earth-resources/earth-resources-industries/minerals/mineral-exploration--and--mining-requirements/mining-licence- application-kit Minerals Council of Australia | 7 MCAVic Submission on the EES Process in Victoria 8 April 2010 EES Approvals Process The EES process places an emphasis on identifying and avoiding or managing all possible environmental and social impacts of the proposed project. The process is cumbersome, very time consuming and very costly. For example, the recently completed Donald Mineral Sands EES commenced in December 2005. The final draft EES documents were presented to government in December 2007 and the Planning Minister finally handed down his recommendations in November 2008. The EES process cost the company $2.3 million. A pictorial representation of some of the final draft reports for the study follows: Iluka Resources’ EES experiences in Victoria tells a chilling tale of inefficiency through a simple comparison with approvals in South Australia. The Iluka Murray Basin Stage 2 Project near Ouyen process commenced in January 2004. Serious discussion to progress the approvals commenced in March/April 2007, the same time that the company commenced discussions with the South Australian government to progress approvals for the Jacinth- Ambrosia mine near Ceduna. The South Australian project had ancillary works underway by October 2008 whereas the Victorian project had just received the Planning Ministers Assessment of the EES in November 2008. The Victorian project still has a great deal of work to be done to gain the subsequent approvals including the authority to commence work under the mining licence. The experience in the Victorian Goldfields is similar, the Bendigo Mining supplementary EES completed in 2004 took two years to prepared and gain the approvals, it cost the company $2 million. The EES process resulted in 234 individual regulatory approvals for the project. Minerals Council of Australia | 8 MCAVic Submission on the EES Process in Victoria 8 April 2010 And in the Victorian Coalfields the International Power project to develop the West Field of the Hazelwood Mine (stage 2), which included the relocation of the Morwell River and a State Highway commenced with an EES request in December 2002. The EES Panel commenced public hearings in July 2004 and in September 2005 the Planning Ministers Assessment was handed down. However, it was not until October 2006 that the last of the critical subsequent approvals were granted. The EES and associated approvals cost the company $4.5 million and generated approximately 14.5 shelf metres of documents and a total of 442 specific regulatory obligations that the company must comply with. The EES process is the largest regulatory hurdle all moderate and large mining projects are required to pass. It is generally done in conjunction with the project design and feasibility study. It is the minerals industry’s experience that regulators place considerably more effort into ensuring that the project approval is covered than they do in ongoing monitoring and compliance. The EES process invariably results in changes to the project design and operation (which is invariably a good environmental outcome) and comprehensive licence or work plan conditions that must be implemented at either startup or implemented throughout the life of the project. For example, the project approval process for the Hazelwood mine west field development resulted in over 400 separate regulatory instruments that must be managed by the company throughout the life of the project. The company had to develop a comprehensive database simply to track these instruments. Apart from the resource intensive, time consuming and cost of undertaking an EES there are several aspects that frustrate proponents. These include: a) The failure of regulatory agencies to adequately specify the issues and standards that must be achieved at the scoping stage. b) The failure of regulatory agencies to provide consistent representation of officers able to make decisions at the Technical Reference Group. c) The failure of government to ensure whole-of-government decisions, so much so that on occasions different sections of the same Department put forward differing arguments to the Independent Panel reviewing the EES. d) The difficulty in enlisting suitably qualified people to sit on the Independent Panels. Below is an example of a large minerals development project that was referred to the Planning Minister for a determination on whether an Environmental Effects Statement (EES) needed to be prepared. As detailed the Planning Minister took 92 days to make a decision. The decision was that while an EES was not required an environmental report was requested. For a project of this scale, complexity and capital investment, an EES or environmental report is normal. We don’t believe that it should take three months for this decision to be made. Nor do we accept that it is good practice for the whole approval process to take 15 months.   New Mining Project 1 - Planning Permit Project Start Days Start Complete Project referral to Planning 0 92 16/01/2008 17/04/2008 Minister 2 34 18/01/2008 21/02/2008 Project referral to DEWHA 93 32 18/04/2008 20/05/2008 Scope Environmental report 126 111 21/05/2008 9/09/2008 Environmental studies Endorsement of draft report by 238 78 10/09/2008 27/11/2008 Govt 317 42 28/11/2008 9/01/2009 Public exhibition 362 4 12/01/2009 16/01/2009 Respond to public comments 243 93 15/09/2008 17/12/2008 Mining Licence (DPI) 182 162 16/07/2008 25/12/2008 Mining Work Plan (DPI) 324 88 5/12/2008 3/03/2009 Planning Permit 415 4 6/03/2009 10/03/2009 Work Authority (DPI)   Minerals Council of Australia | 9 MCAVic Submission on the EES Process in Victoria 8 April 2010 VCEC RECOMMENDATIONS, GOVERNMENT RESPONSE AND INDUSTRY POSITION In August 2008, the Victorian Competition and Efficiency Commission (VCEC) was asked to investigate the benefits and costs of Victoria’s current environmental regulation, and report on opportunities to reduce the burden on business of these regulations. They were also asked to report on improving institutional arrangements, applying alternative regulatory models, and the capacity of the regulatory system to respond to sustainability challenges. The MCA provided comprehensive submissions to VCEC, provided additional advice and participated in a number of roundtables focused on key themes identified for VCEC’s report. The MCA submissions to the Inquiry focused on two specific areas of interest regarding environmental regulatory reform: • to ensure regulation of the overall economy achieves desired outcomes efficiently with minimum necessary direct control of economic agents by government authorities; and • to ensure that necessary environmental regulation of the minerals industry is applied in the most economically efficient manner to achieve identifiable outcomes without inhibiting innovation and improved practices by businesses. The MCA supports the recommendations in VCEC’s Final Report and looks forward to their rapid implementation. MCA makes the following comments on particular recommendations relevant to the EES process. EES Process Efficiency Recommendation 5.1 goes directly to improving the efficiency of the EES process. The Recommendation has a number of components to it, from legislative amendments to guidance and specified time limits. The MCA supports the recommendation in its entirety, and notes that the Government only supports the recommendation ‘in part’, believing that the review undertaken in mid-2006 brought significant improvements to the process. Clearly more is required. Projects of State Significance Recommendation 5.2 highlights the need for legislation covering State Significant Projects (both public and private) which would provide a more consolidated process than those provided for by the amendments to the existing EES framework. The MCA has been advocating for a process to facilitate State significant projects for a number of years. New minerals developments and many expansion projects are clearly of State Significance representing substantial regional investment, job creation, State productivity and economic development. According to the Ministerial Powers of Intervention in Planning and Heritage Matters (DSE, 2004) it is MCA’s view that the majority of minerals development proposals should be considered to be of State significance. However in practice this does not occur. The MCA supports the recommendation and made the following comment: The setting of a threshold for nomination of projects as strategically significant projects is required to ensure that the Government does not just use this option for its own public works. A threshold of $100 million capital investment in rural and regional Victoria would bring this option into line with other States intent on encouraging private sector investment in the minerals industry. A higher threshold may apply in metropolitan Melbourne. The Government supports ‘in part’ Recommendation 5.2, but rather than establishing a separate legislative instrument akin to the Major Transport Project Facilitation Act 2009, the Government indicated it will implement an assessment and approvals pathway under the Planning and Environment Act 1987, for projects declared by the Minister for Planning to be of State significance. The Government believes that this approach to planning approvals is consistent with VCEC's recommendation. This new planning pathway, in addition to the Integrated Management of Major Projects administrative process to coordinate planning and other statutory procedures, is expected to “provide an efficient and readily implemented approach for the majority of projects of State.” The MCA considers a separate legal instrument that specifically has a head of power to enable a project to be declared State significant is essential. A single Act that enables the declaration for any major project is required. The Act would also simply describe the approvals process and which sections of related Acts apply. Minerals Council of Australia | 10