Environmental regulation and the Productivity Commission

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Is ‘efficiency’ the sole solution to the challenge of ‘sustainability’?

By Peter Burnett

Last week the Australian Government announced a new inquiry by the Productivity Commission (PC) into regulation of the resources sector. While not confined to environmental regulation, in announcing the review Treasurer Josh Frydenberg made specific reference to improving the efficiency of environmental approvals to reduce the ‘regulatory burden’ on business. Frydenberg also said that the review would complement the forthcoming statutory review of national environmental protection law, the Environment Protection and Biodiversity Conservation Act. (For more on this review, see my recent blog).

In his media release, Frydenberg repeated the mantra of recent governments: that the aim was to ensure that projects were assessed efficiently while ‘upholding robust environmental standards’. This largely reflects the terms of reference of the PC inquiry, which talk of removing unnecessary costs while ‘ensuring robust protections for the environment are maintained’.

The week before the inquiry was announced, the new chair of the Minerals Council of Australia, Helen Coonan (a former Howard Government minister), identified efficient regulation as one of her top priorities. She claimed that if project approvals were sped up by one year, this would release some $160 billion and 69,000 jobs to the economy. I’m not sure where this figure came from, but it may have been based on a PC inquiry into the upstream oil and gas industry in 2009, which estimated that expediting the regulatory approval process for a major project by one year could increase its net present value by up to 18%. In any event, that’s a juicy target for efficiency savings.

The PC’s role on sustainability

On its website, the PC advertises itself as ‘providing independent research and advice to Government on economic, social and environmental issues affecting the welfare of Australians’. That’s not bad for a slogan but the substance is a little more complicated.

Under the Productivity Commission Act 1998 the substantive functions of the PC are all cast in terms of industry development and productivity. And the PC’s statutory policy guidelines, to which it must have regard, are dominated by considerations of improving economic performance through higher productivity; reducing regulation and increasing efficiency.

The statutory guidelines do, however, include considerations relevant to sustainability. Beyond a direct reference to the need ‘to ensure that industry develops in a way that is ecologically sustainable’, there are also references to other things connected to sustainability such as regional development; avoiding hardship from structural change; and meeting Australia’s international obligations. Further, one of the Commissioners must be experienced in sustainability and conservation while another must be experienced in social issues.

So, while the PC is definitely about efficiency and growth, it doesn’t have a one-track mind. Environmental and social impacts are definitely members of the cast, though in supporting roles. As we’ll see below, the problem doesn’t seem to be the PC but what the government does or doesn’t do with its recommendations.

We’ve been here before

Industry keeps complaining about inefficiency and duplication in environmental regulation, and governments keep returning to this theme, often through references to the PC. In recent years, in addition to sector-specific reports on regulation (including environmental regulation) of transport, agriculture, fisheries, water, upstream oil and gas, and mineral exploration, the PC has produced general reports on native vegetation and biodiversity regulation (2004); planning, zoning and development assessment (2011); COAG’s regulatory reform agenda including environmental regulation (2012); and major project assessment (2013).

This is in addition to the statutory review of the EPBC Act itself by Allan Hawke in 2009, which also included significant recommendations for regulatory streamlining.

The PC has also conducted other relevant review activities, such as convening a roundtable on Promoting Better Environmental Outcomes (2009).

And it looks like we’ll do it again

The terms of reference for this latest review focus on identifying practices for project approval that have led to streamlining the process without compromising environmental standards. This is rather unimaginative and I think will simply lead the PC back to places it has already gone, such as recommending increased use of regional plans and other landscape scale approaches; increased regulatory guidance; and a single national threatened species list.

In response to past recommendations, governments have done some of all these things. For example, there is a process underway to adopt a common assessment method for threatened species listings.

But governments don’t seem to tackle the issues in a fulsome and vigorous way, to deal with them once and for all. In fact, they attempt to walk on both sides of the street, pursuing reforms in an incremental way while simultaneously cutting environment department budgets. On this basis, one must even question their appetite for reform.

So much at stake

So is environmental regulation just a convenient whipping boy? There’s so much at stake that I don’t think so. Perhaps governments are wedged between their own policies and the politics: they don’t want to increase spending and can’t be seen to water down existing standards, yet remain frustrated by the processes that those standards bring with them.

If governments want real improvements to regulatory efficiency, without simply winding environmental laws back, they have to front-load the regulatory process with information and guidance and resources, ie with things that the PC and others have already recommended. These boil down pretty much to landscape-scale approaches such as regional planning (done comprehensively) supported by increased levels of regulatory service, including detailed guidance on what will and won’t be approved.

It’s not rocket science, but it will take serious money. But keep in mind that such an investment would lead to saving even more serious money.

And there’s an incidental benefit in such an approach. Proper environmental information and planning will also improve the quality of decision-making, which should improve environmental outcomes.

Image: Image by Gerd Altmann from Pixabay

An ‘environmental accounting’ primer

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What is it? (and why should we use it?)

By Peter Burnett

‘Environmental accounting’ (or ‘environmental-economic accounting’ to use its full name) is, on first blush, a dry-as-dust topic. Yet the ideas behind it and the insights it unlocks are fundamental to good environmental governance and a meaningful shift towards sustainability. That’s in part why Australia’s governments adopted a national strategy, or at least a common national approach, to environmental accounting in 2018.

Recently I attended a workshop in Brisbane on environmental accounting* hosted by state and federal governments. The workshop was lively and well-attended, with many more participants asking to be part of the discussions than had been originally invited. Clearly the value of environmental accounting is beginning to be acknowledged across multiple sectors.

But the development of environmental accounting didn’t happen overnight. Its gestation took over half a century with some of its central concepts going back centuries. What’s more, a lot more needs to happen before its full potential is realised.

Origins

Environmental accounting can be traced back to the 1970s when several countries, including Norway and France, developed what was then described as ‘natural resource accounting’, or in the case of France, ‘patrimonial accounting’, as part of their response to the emergent major environmental concerns of that era. There were also fears associated with resource scarcity arising from the oil crisis of 1973. These accounts were kept in physical terms.

At about the same time, economists William Nordhaus and James Tobin (later to be Nobel laureates) wrote a seminal paper highlighting the shortcomings of GDP as an economic indicator. They argued for a ‘Measure of Economic Welfare’ (MEW) that subtracted consumption of capital, including ‘environmental capital’, from domestic product. This is because treating consumed capital as income creates an inflated sense of well-being in the short term but is unsustainable over the longer term. Implementing a MEW would require the inclusion in national accounts of figures for the consumption of environmental or ‘natural’ capital, expressed in monetary terms.

During the 1980s the United Nations Environment Program (UNEP) and the World Bank ran workshops aimed at linking environmental accounting to the System of National Accounts (SNA), an international standard maintained by the UN. This work may have influenced another well-known UN project, the Brundtland Report of 1987, famous for proposing a global goal of ‘sustainable development’.

Brundtland placed great emphasis on policy integration as essential to achieving sustainable development. Although Brundtland did not go on to recommend environmental accounting per se, it did couch some of its arguments in economic and accounting terms, referring for example to ‘overdrawn environmental resource accounts’ and the need to maintain the stock of ‘ecological capital’. Given the implicit connections made in Brundtland, it’s probably no coincidence that Agenda 21, the action plan adopted by the subsequent Rio Earth Summit of 1992, linked accounting and sustainability directly by including a commitment to develop integrated environmental and economic accounting as ‘a first step towards the integration of sustainability into economic management’.

With Agenda 21 providing a mandate, the UN soon published a handbook on integrated environmental and economic accounting in 1993. However, it took a further 20 years to develop the handbook into a full international accounting standard and even then the scope of the standard was confined to traditional natural resources, with ecosystem accounting relegated to a supporting ‘experimental’ framework. The UN is scheduled to consider adopting a revised version of this experimental framework as a full international accounting standard in 2021. I hope this indeed occurs, but it reflects how long these processes take. The gestation period for this work is nearly 30 years!

Delay aside, a key innovation of the resulting System of Environmental-Economic Accounts (SEEA) is the concept of ‘combined presentation’, the ability to produce accounts expressed in either physical or monetary terms, or both. This allows accounts to support two streams of work: 1. the integration of environmental consumption into national accounting and
2. the use of physical accounts to inform environmental management.

Why bother?

As national accounting informs economic decision-making, the rationale for environmental accounting in monetary terms is clear. But why bother with physical accounting, other than as an intermediate step to monetary accounts? The answer lies in two developments, one in the late 1960s and the other going back to medieval times.

Concerns about the extent of environmental decline had been growing steadily through the 1960s. In 1969** two resource economists, Robert Ayers and Allen Kneese made a profound observation concerning environmental ‘externalities’ (externalities are the costs or benefits affecting persons not party to an economic transaction). Their observation was that if environmental externalities could no longer be regarded as exceptions, but were more the norm, then good economic decision-making required a ‘materials balance’; that is, a full recording and accounting for environmental impacts, in physical terms. Implicitly, Ayers and Kneese had just made the case for environmental accounts.

The other development foundational to the case for environmental accounting is the concept of the ‘double entry’, which goes back at least to the medieval ‘Venetian method’ of book-keeping. Double entry recognises that almost all transactions involve both a gain and a loss. In purchasing equipment for example, a business gains the equipment but loses the money used to pay for it, so it records both the gain and the loss in separate ledgers, one for equipment and one for cash. Moreover, accounting links the two aspects of the transaction, showing that this purchase in the equipment ledger was paid for with this payment, and correspondingly that this payment was attributable to that equipment purchase.

Stocks and flows

Environmental accounting builds on the parallels between our interactions with each other in business and our interactions with the environment. Just as business accounting tracks the stocks of business assets and liabilities, and the flows of business receipts and expenditure, recording the net change in capital at year’s end, so environmental accounting tracks the stocks of environmental assets (and liabilities, eg pollutants) and the flows of ecosystem services (and expenditure on ecosystem maintenance), recording the net change in natural capital each year.

Moreover, environmental accounts record the transaction from both society’s end and the environment’s end, making it ‘quadruple entry’. As a result, environmental accounts can show for example that this flow of ecosystem services to society came from that environmental asset, depleting it by this much, but that the depletion was offset by that degree of natural replenishment and this much environmental maintenance. This capacity to link transactions so specifically to their causes and impacts is what makes accounting a powerful tool for environmental analysis and decision-making.

What next?

Environmental accounting is starting to build significant momentum in Australia. As this work is still in its infancy, despite its long gestation, the ongoing work under way nationally and internationally to develop accounting standards and protocols remains important. More important however is the need to pay extra attention to, pardon the pun, the other side of the ledger, the application of accounts for better decision-making. I will cover this in a future article.

* The Brisbane workshop on environmental accounting brought together a number of researchers to present their work on the development or application of accounts. For example, Victoria presented their work on using accounts to identify the ecosystem services provided by forests.

**1969 is big in the news at the moment with the 50th anniversary of the Moon landing. It seems strange to me that so much attention is paid to this triumph of technology; while so little attention has been given to 1969 as the dawn of modern environmental policy. Beyond the analytical insights of Robert Ayers and Allen Kneese, 1969 also marked the passage of the world’s first comprehensive environmental law the US National Environmental Policy Act (NEPA), thanks significantly to the efforts of Professor Lynton Caldwell.

Image by Free-Photos from Pixabay

Review of ‘green tape’ for farmers throws up old conundrums – but also contains one gem

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By Peter Burnett and Philip Gibbons

Wendy Craik’s review of the impact of national environmental law on farmers (Craik Review) was released quietly late last week by new federal environment minister Sussan Ley, nine months after it was received by her predecessor, Melissa Price. (That law, of course, is the Environmental Protection and Biodiversity Conservation Act 1999, or EPBC Act. It’s up for review later this year and for many years farmers have been complaining it places an unfair burden on their agricultural activities.)

Craik is a former Executive Director of the National Farmers’ Federation (NFF) and former head of the Great Barrier Reef Marine Park Authority. She is well respected by government, the farm and conservation sectors.

Useful but mostly problematic

Craik has handed over a good report. The review has produced some useful proposals, including ways to improve environmental information and to align existing research with regulatory objectives.

It does however throw up some old conundrums for government. Maybe this is why its release was delayed till after the election, and then done with little fanfare.

The review recommends keeping farmers informed about what they can and can’t do on their land by investing in environment department services and systems, yet Coalition governments have cut federal environmental resources by 40% in six years (ACF 2019). You can’t make an omelette without breaking eggs.

It also prescribes a new $1 billion National Biodiversity Conservation Trust as a remedy for biodiversity decline, an amount exceeding existing funding under the National Landcare Program. Same problem, a good proposal but requiring considerable additional resourcing.

Craik also made a number of recommendations, including nationally-aligned policies and encouraging environmental markets, that would require genuine and ongoing federal-state collaboration on policy, something that has mostly eluded federal and state governments over nearly 50 years of trying.

The conundrums are not confined to the recommendations.

The review found that only 2.7% of the 6000 referrals considered under the EPBC Act have been for agriculture.

This is a striking statistic given nearly 90% of all land clearing in Australia is for agriculture, suggesting that the EPBC Act is significantly under-applied and (from the government’s perspective) an indigestible outcome from a review originating in farmer complaints of regulatory burden.

Ley’s brief media release implies that she will defer responding until completion of a much larger review, the forthcoming second 10-year statutory review of the EPBC Act.

It is little wonder Ley is kicking the can down the road, a decision no doubt aided by current controversy concerning Minister Angus Taylor’s involvement in some of the events behind the review (Guardian 2019).

A gem of an opportunity

There is one recommendation however that presents a gem of an opportunity for immediate action.

One of the triggers for the review was complaints by farmers in the Monaro region of southern NSW about the combined effect of federal and state laws affecting the management of native grasslands on their properties (farmonline 2017).

The review prompted a ‘well-resourced’ offer from NSW that federal and state officials work together on two pilot studies, one in the Monaro, to identify what biodiversity needs protecting under both federal and state law and how to achieve this.

Craik supported the idea, proposing the production of non-statutory regional plans under an independent chair.

The NSW offer is significant. The traditional approach of the states towards federal environmental regulation has been to resist and contain, especially in regard to on-ground management, which the states have seen as their exclusive role and a major bulwark against federal jurisdiction creep.

Previous attempts at regulatory collaboration, such as the ‘one-stop-shop’ for development approvals, have focused on regulatory change negotiated between officials rather than on-ground management and service-delivery, and have been conducted in an atmosphere that was at least lacking in trust, if not adversarial.

A genuine attempt to work together on the ground, along with local stakeholders and twin aims of protecting what is ecologically significant while also making life easier for farmers and other businesses, has much better prospects of building the trust necessary for effective regulation. It would also be a valuable investment in social capital.

Cynics may regard the prospects of successful on-ground collaboration as limited. The problem is, we have tried most of the other options with limited success, especially over time.

The environment continues to decline, dramatically according to the latest UN report. The opportunity to trial collaborative regional planning is too good to leave in the in-tray.

From ‘cowboy economy’ to ‘spaceman economy’

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Kenneth Boulding and the view from Spaceship Earth

By Peter Burnett

Sustainability is a complex multidisciplinary field, so it’s not surprising that many of its concepts evolved over decades of scholarship and policy development. However, in my research, I have been surprised on several occasions by scholars putting forward valuable framings of sustainability concepts well before the emergence of the notion of sustainable development itself. Kenneth Boulding’s 1966 essay The Economics of the Coming Spaceship Earth is the example par excellence of this phenomenon. Not only did Boulding hit the nail on the head in regards to the nature of the problem, he also framed the way forward in a compelling and lucid way. It’s something we can still learn from today.

Early Boulding

Boulding was a British-American; a professor of economics by title, a social philosopher by inclination and a Quaker by conviction.

He began publishing in the 1930s and had been pushing boundaries long before Spaceship Earth. Influenced by his study of accounting, he had argued in his 1950 book A Reconstruction of Economics that the balance sheet should be a central analytical concept in economics, specifically that asset preferences (stocks) rather than profit maximisation (flows) should be a central to explaining the behaviour of economic entities. It is thus not surprising to find Boulding talking elsewhere about World War II as having ‘drained the economic bathtub in a great waste of consumption’, with the task of post-war reconstruction being to refill the bath.

Boulding argued for a ‘conceptual revolution’ concerning consumption. He believed the emphasis should be on the enjoyment of assets rather than their consumption (or, as Boulding put it, their destruction). Through this lens, production and income should be seen as quantities to be minimised rather than maximised, in the interests of maximum enjoyment. This would have been complete heresy in an era when the idea of unbounded growth was rapidly becoming dominant.

Undaunted, Boulding would make much the same argument a decade and a half later in Spaceship Earth, but this time in connection with the environment.

Spaceship Earth

In 1966 Boulding was invited to write an essay for a forum held by the think tank Resources for the Future (RFF, itself an interesting organisation that played a pivotal role in sustainability thinking). Prompted by growing recognition that most of the pressures on the natural environment were the result of high levels of consumption and economic growth, RFF adopted a forum theme of ‘Environmental Quality in a Growing Economy’. (If RFF had added the word ‘maintaining’ to this theme they would, in essence, have defined environmental sustainability 20 years early: another example of prescient thinking.)

Boulding was a big picture thinker and in 1966 the ‘space race’ and the ‘moonshot’ were the order of the day (as was the sexist language in the quotes that follow). His narrative was that humans were making a long transition in their image of interaction with the environment. This transition involved moving from the ‘cowboy economy’, in which there were vast expanses of resources and an ever-beckoning frontier, to the ‘spaceman economy’, which was a closed system, a single earthly ‘spaceship’ in which man must find his place in a cyclical ecological system that is capable of continuous reproduction but limited by energy inputs from the sun (whether directly as solar radiation or indirectly through fossil fuels).

The measure of success in the cowboy economy was production and consumption (throughput), because reservoirs of resources were effectively infinite. In contrast, the measure of success in the spaceman economy was not throughput but the nature and extent of total capital stock, including human bodies and minds (which we would now call human and intellectual capital). The task in the spaceman economy was thus to maintain the stock, in part by increasing resource-use efficiency. In a masterly understatement, Boulding noted that the idea that both production and consumption were undesirable would be very strange to economists. It would have been to politicians too, who by then had become wedded to the mantra of economic growth and GDP as the only measure of success, as reflected in the OECD’s 1961 target of increasing growth by 50% in a decade!

Sustaining capital in time and space

Boulding describes the sphere of economic activity as the ‘econosphere’ and society as the ‘sociosphere’, with environmental resources passing from the environment into the econosphere and waste passing in the reverse direction. This pretty much captures the later foundational model of ecological economics (figure 1) in which the economy is a subset of, and thus dependent on society, which in turn sits within and depends upon the environment.

Figure 1: The foundational model that lies at the heart of ecological economics.

Boulding recognised that a prescription of maintaining capital for the long haul raises the question of why we should do such a thing, encapsulated in the sardonic aphorism ‘What has posterity ever done for me?’ Rather than pose a normative answer to this question, as nations later did in endorsing the principle of intergenerational equity through the Rio Declaration (1992), Boulding argues an anthropological rationale: that the welfare of the individual depends on identifying with a community, not only in space but over time. In other words, we identify with future generations as part of our own well-being.

Natural capital on Spaceship Earth

The Spaceship Earth essay carries, expressly or by implication, a full theory of, and prescription for, environmental sustainability. It recognises that our attitude to the environment is based on our image of the environment, which thus explains our attitudes. It presages the insights of ecological economics and the policy prescriptions of modern environmental sustainability: maintain natural capital, increase resource efficiency and ensure that the scale of consumption remains within the regenerative capacity of the environment.

Even where Boulding does not solve a problem of sustainability policy, he plants the seed of its solution. For example, he recognises that even if we accept the welfare of future generations as part of our own welfare, it remains economic practice to discount future values. He explains that discounting is based on our myopia concerning the future, which is ‘an illusion which the moral man should not tolerate’.

Although he does not propose a solution, he nevertheless plants the seeds of one in his prescription to maintain capital. In economics, the case for any project is evaluated by cost-benefit analysis, in which future costs are discounted. If the maintaining of capital is a prescribed as fundamental policy, then the case for any individual project, which might otherwise have been justified solely by reference to cost-benefit analysis, must now be made within and subject to a constraint of maintaining capital. In other words, you can discount all you like but your project will be constrained by rules concerning or prices of natural capital.

Beyond Silent Spring

Rachel Carson’s Silent Spring (1963) is generally acknowledged as the foundational work of the modern environmental era. However, Silent Spring identified a particular aspect of the problem of environmental decline and did not develop a solution. Spaceship Earth came a little later, but it was the first to describe the problem in holistic and conceptual terms and the first to outline a policy solution.

The best modern approaches to environmental sustainability can trace a direct lineage to Boulding’s essay and sit entirely within its construct. It is a tour de force.

Image: The Blue Marble, the view from Apollo 17 of Spaceship Earth some 45,000 kilometres distant. (NASA, 1942)

Regretfully, it’s too late for ‘no-regrets’

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What’s the pathway for real sustainability following the Australian Election?

By Peter Burnett

Like many people, I was surprised by the win for conservative parties in the recent Australian election. I know there were lots of factors in play, but I thought that the extreme weather of last summer in particular had propelled climate change to the top of the political agenda, especially in the minds of young people, who were enrolled to vote in record numbers. I was reinforced in my views by much of the political commentary. Progressive parties seemed to have reached a similar conclusion, campaigning hard as they did on ambitious environmental policy platforms.

How wrong I was

Financial issues, especially proposed tax changes, appear to have weighed more on the minds of voters. The views of one young voter, who appeared on the television show ‘Q&A’ after the election, seemed to me to encapsulate the electoral mood. This voter commented that she was concerned by climate change (and also, she implied, by the expected opprobrium of her climate-voting cohort) but ultimately voted conservatively because of her concerns about the more immediate impacts of progressive party tax policies on her family.

While the election result could be attributed to various one-off factors, from an environmental perspective the underlying problem is that environment continues to be framed as an issue of progressive vs conservative, left vs right. Unless both sides pursue strong environmental policies then we cannot hope to sustain the policies necessary to avert the ‘dangerous climate change’ of the UN Climate Convention, let alone other disasters such as the loss of a million species predicted in the latest report from the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES).

The divide over environmental policy was not part of the political landscape when environmental concerns first became prominent in the public consciousness in the late 1960s and early 1970s. Rather, it emerged much later as vested interests, realising the implications of the policies necessary to counter environmental decline, pushed back hard, including by framing issues in terms of the ‘environment vs jobs’ dichotomy that reflects the dominant and still-powerful post-war paradigm, that of economic growth as progress.

A clash of paradigms

Can we return to bipartisanship? This would require a shift from a growth paradigm to one of sustainability. In pure policy terms the case for such a shift is clear: the growth paradigm became outdated around 50 years ago, when humans realised that the environment was a limited, rather than unlimited, resource. The sustainability paradigm that emerged in response rests on the recognition that we can only consume nature at the rate at which it renews itself. If we exceed that rate, we are headed for disaster.

In political terms however the case is far from clear. The growth paradigm is based on ‘growing the economic pie’ and gives a ‘win-win’ outcome: grow the pie and you grow every slice, including the slice constituted by government spending on the environment. ‘A rising tide lifts all boats’, as they say.

The sustainability paradigm on the other hand gives a ‘win-lose’ outcome. If we consume to our hearts’ content, we court disaster at the expense of future generations (if not our future selves). If on the other hand we live within our environmental means, we do the right thing by future generations, but at the expense of constraining our own consumption, especially by those who do, or aspire to, consume a lot.

And who wants to give government a mandate to constrain consumption, unless convinced there is no other way to look after their children and grandchildren? Although this has been a logical conclusion to draw for over 50 years, this framing has yet to be adopted generally, in part because so many people have a vested interest in either clinging to the growth paradigm or watering down the sustainability paradigm.

This watered-down version of sustainability is that we can live within our means simply by using environmental resources efficiently, with the bonus outcome that efficient consumption will save us money. Another win-win, achieved for example by switching off lights in empty rooms. We might have got away with such an approach in 1969, but in 2019 it’s far too late for such a ‘no-regrets’ approaches.

It’s time (?)

I argued in an earlier blog that it will probably take a significant environmental crisis to generate the social consensus necessary to support a paradigm shift. I still hold that view, although there is at least one example of a country finding an easier path. In the period 2005-2009, the United Kingdom shifted from a bland incremental climate policy to an ambitious goal, enshrined in law, to an 80% cut in emissions, from a 1990 base, by 2050. There was no crisis, but a confluence of factors conducive to change.

The UK Government had commissioned the influential Stern Review, which argued the economic costs of not acting (Sir Nicholas Stern pointed out that climate change is the “greatest and widest‐ranging market failure ever seen”). Al Gore produced his influential documentary, An Inconvenient Truth (aimed at alerting the public to an increasing ‘planetary emergency’ due to global warming). And future Prime Minister David Cameron wanted to modernise the Conservative Party (then in Opposition) and actually beat the Government to the punch in opting for ambition. And the Global Financial Crisis gave the UK Government an opportunity to present ‘green economy’ measures as a major part of the solution to the crisis.

Whatever the precipitating event, we will only respond effectively to environmental issues when we abandon the growth paradigm in favour of one built around sustainability. If that happened, environmental policy would become much more like foreign policy: generally bipartisan because we are all in favour of Australia being a secure country able to pursue prosperity under an effective international rules-base order. If only Australia had a David Cameron or two (circa 2006 of course, not the Brexit David Cameron).

Image by Mediamodifier from Pixabay

All the way with EIA

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There’s still value in persisting with Environmental Impact Assessment

By Peter Burnett

For more than a decade I’ve been working and researching in the field of Environmental Impact Assessment (EIA). I keep telling myself to move on, that my priorities lie in overarching environmental policy frameworks and that EIA is just one decision-support tool (admittedly one that is very popular), best adapted for dealing with local issues. But I can’t stay away from EIA. Is there new life for this old tool?

Why can’t I stay away from EIA?

It’s partly a ‘boys-and-their-toys’ thing. I’m a lawyer by training and EIA has developed from a simple idea of gathering all the relevant environmental information for decision-making into a complex nested set of processes that can take up hundreds of legislative pages. It’s even more complicated in Australia’s federal system, which has EIA at national and state levels. I admire the sophistication of the EIA process as it has evolved and enjoy nutting out how this complicated system applies to any particular development project.

It’s partly an ‘in-the-club’ thing. Having been responsible for administering EIA under Australia’s national environmental law, the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) and having been accepted by peers as having some knowledge and expertise, I found myself reluctant to let this ‘club membership’ expire when I changed status from senior public servant to PhD candidate in 2013. So I found a way to make EIA one of my case studies in a thesis that was focused on high level policy relating to sustainability.

But the strongest reason was my belief in the potential of this tool. My instinct was that even though EIA didn’t seem to be achieving its original aspirations of leading to decisions that would protect the environment, not just in particular cases but across the board, it still had potential to play a major role in doing so.

But I wasn’t quite sure why it didn’t seem to work or how it might be improved, beyond the consensus view to make more use of strategic approaches to EIA. This would avoid the ‘salami slicing’ or ‘death of a thousand cuts’ involved in project-based EIA decisions such as the approval of individual mines or housing divisions.

Regulating discretion

One of my research findings concerned the way in which discretionary decision-making works in our legal system. EIA decisions need to be at least partly discretionary to allow decision-makers to tailor approval conditions to a multitude of cases and circumstances. Yet if that discretion is to be exercised consistently, it must also be constrained.

The problem here stems from the way the legal system has evolved to regulate discretion. First there are general principles of administrative law, which are directed to making sure that decision-makers takes fair decisions based on all the relevant information, at the same time preventing them from straying off the reservation by taking irrelevant factors into account or doing someone else’s bidding. These general rules are usually supplemented in EIA by statutory directions to consider specific environmental factors, such as the principles of Ecologically Sustainable Development (ESD).

But in either case the courts treat these as rules of due process. Short of the rare instances in which a substantive decision has no apparent rational basis (or in special cases such as the NSW Land and Environment Court) they won’t go into the merits of the decision. They regard merits as the province of governments or their appointed statutory expert decision-makers.

So they won’t tell a decision-maker what to decide. Fair enough. But Parliament can tell the decision-maker what to decide, although this is harder than it seems.

Take the EPBC Act. At first blush, it seems to be steering decision-makers towards a goal of ESD. But on closer examination the Act uses qualified language, saying it wants to ‘promote’ ESD. Then it takes a reductionist approach and breaks (an undefined) ESD into five ‘principles of ESD’ which the decision-maker must simply ‘consider’.

We’re back to due process. If he or she chooses, the decision-maker can pay lip service to these ‘considerations’ and then take any decision at all, short of irrationality.

Even if the Act used the clearest of language to define ESD and direct decision-makers to achieve that goal in all their decisions, this is probably not enforceable, because in such a broad context the courts would regard the question of whether any given decision achieved ESD (or other clearly defined policy goal) was one of merits or expertise, not law.

Can we fix it?

My research conclusion was that there were only two ways to ensure that individual EIA-based decisions deliver environmental policy goals in an enforceable way. Both involve translating the policy goal into limits of acceptable action at any given place and narrowing the scope for discretion, and the two approaches are related.

The first is environmental planning. In an ideal world of environmental plans, if you want to build a mine, the relevant plan will tell you whether this is possible on an unrestricted basis, or on conditions; for example that there were offsets available for certain vegetation losses.

The second, a combination of specific decision rules plus comprehensive environmental information (which often needs to be geospatial, thus bearing some resemblance to planning) will achieve a similar result. If you want to build a mine and there is a rule against clearing critical habitat, the answer depends in part on whether the mine site is listed as critical habitat. And a decision to approve a mine in an area of critical habitat would be challengeable in court, because this is not an instance of discretion but the breach of a rule.

There would still be a role for EIA and discretion under both these approaches, but its task would be more oriented to the detailed conditions under which the proposal should proceed. Of course, these approaches would be expensive and, in our federal system, particularly complex.

They also shift decision-making away from pluralism and trade-offs towards a more constrained application of rules. This is uncomfortable territory for politicians, but a necessary evil if we are to make EIA an instrument of our high-level policy goals.

Sticking with EIA

So I found a way to satisfy my urge to stay involved with EIA, by connecting it to policy and information. To highlight that connection, consider this poetic metaphor inspired by John Masefield’s poem, Sea Fever. We need to shift our attention from the ‘tall ship’ of EIA to the entire voyage of environmental decision-making, which requires both a clear sense of destination (policy) and fulsome environmental information, ‘a star to steer her by’.

EIA is an important tool but unless we have a clear sense of where we want it to take us and ensure the necessary information is available to guide its application, then this venerable tool will not be delivering the environmental outcomes it was established for.

Image by MonikaP from Pixabay

Twenty Years of the EPBC Act – looking back, looking forward

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Reviewing our national environmental law as if it mattered

By Peter Burnett

It’s hard to believe but Australia’s national environmental law, the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act), is twenty years old. Given that it lies at the centre of so many important and controversial debates, how is this 20-year old piece of legislation tracking? In a time of climate change, extinction and growing uncertainty, is the EPBC Act still fit for purpose?

As is appropriate for such a critical piece of law, the EPBC Act gets a statutory review every 10 years. That means the EPBC Act is up for its second review later this year. Does it need a little tinkering or a major overhaul?

Because I had been responsible for the administration of the EPBC Act during the first review in 2009, I was asked recently* to share my reflections on how we should frame the review of the EPBC Act.

To my mind, this is a valuable opportunity for environmental policy reform and the thing we need to resist is the notion that it’s simply a matter of looking inside the Act to see how we can make it work better. The way forward lies on the outside of the Act, and I’d like to pose five big ‘outside’ questions.

But before I talk about these, I should tell you briefly what happened to the first review, led by Dr Allan Hawke, a former federal department head, and completed in 2009. Because what happened back then may help us make the most of this second review.

A potted history of the Hawke Review

The Hawke Review was comprehensive in approach and well-packaged in its recommendations.

Hawke was assisted by an expert panel and engaged extensively with stakeholders. He laid the ground well by packaging his recommendations in an integrated nine-point plan, which had something for everyone: new environmental protection for environmentalists; streamlining of regulation for business; stronger institutions for administrators; and a fresh name and look for maximum political effect.

Unfortunately these outcomes never materialised.

It was 2010 by the time government was able to act on the review and (as some will remember) there was significant political turmoil following a leadership ‘coup’ against Prime Minister Rudd, precipitated in part by a proposed mining tax. That culminated in the watering down of the tax, an election, a change of environment minister and a minority government. Of course, minority government in turn increased the ‘transaction costs’ of reform.

New environment minister Tony Burke announced a detailed government response to the Hawke Review in 2011, but in the ensuing period the minority government was giving high priority to pleasing business generally (and mining companies in particular). The Government thus focused its attention on a ‘one-stop-shop’ initiative to reduce regulatory duplication by using an existing mechanism in the EPBC Act, under which States could be accredited to approve development projects on the Federal Government’s behalf. 

As a result, progress on the EPBC reforms slowed to the point where, late in its term, the Gillard Government decided that there wasn’t enough time to get them through and deferred them to the next Parliament. But the next Parliament brought a change of government and the incoming Abbott Government returned to pursuing the ‘one stop shop’.

So, except for some administrative changes, including a policy on biodiversity offsets, the response to the Hawke Review was never implemented. Good policy reform foundered on the rocks of difficult politics.

Back to my questions for the forthcoming review.

The big ‘outside’ questions

1.‘What are we trying to achieve?’

A goal well defined is a goal half achieved. Neither the EPBC Act itself, nor the policy or explanatory documents that surrounded it, answer this question. The Act does include goals such as ecologically sustainable development, but expresses them in qualified language and leaves it open to decision-makers to simply pay lip service to them, so this fundamental question remains largely unanswered.

2. How do we allocate roles & responsibilities between federal and state governments?

Australia’s Constitution operates to share these roles and responsibilities between the two levels of government, but not in any clear or obvious way. However, there is considerable scope for the two levels to agree on a sensible division. In fact there are some agreements of this type, but they date back to the 1990s and were less than ideal even at the time. The EPBC Act is built in part on these agreements and so they need to be renegotiated before major legislative reform.

3. Given that roles are shared, how should the two levels of government cooperate, especially on areas in which overlap in unavoidable, such as environmental information?

Again, the 1990s agreements addressed this but implementation has been desultory. Governments should have tried harder.

4. How do we regulate discretion to ensure conformity with goals?

The freedom that decision-makers have under the current Act is too great: even if the goals of the Act were clear, there is no guarantee that discretionary decisions will implement them. Discretion is necessary in regulatory schemes, but my research suggests there are only two ways to ensure that such discretion is confined to implementing the goals of the Act. The first is to make environmental plans and require that decisions conform to the plans. The second is to have a series of specific decision rules (for example, not to approve development in listed critical habitat). Because characteristics such as critical habitat are usually geospatial, the two approaches are related.

5. How do we ensure that the Act is funded so that it is commensurate with its goals?

The EPBC Act has never been properly funded, going right back to the time when it’s principal architect, Environment Minister Robert Hill, was unable to secure additional funding for his new law. This is one reason why several major mechanisms under the existing Act, including provision for bioregional planning and grants for information-gathering, have been little used. In the absence of election commitments or an environmental crisis, in the current culture there is a high risk that Budget offset rules would strangle reforms.

The bottom line

I leave you with this thought. Unless the government elected later this month addresses the big ‘outside’ questions, the second statutory review of the EPBC Act can only deliver incremental change. That would be a wasted opportunity.

*The National Environmental Law Association (NELA) recently held a short conference to promote discussion of the upcoming review, under the theme of ‘Twenty Years of the EPBC Act – looking back, looking forward’. NELA asked me to reflect on the conference theme.

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