Washing off the virus

Featured

Will we throw the environmental baby out with the bathwater?

By Peter Burnett

In canvassing our recovery from the COVID-19 crisis, Prime Minister Scott Morrison has made bold statements about giving first priority to growing the economy through a business-led recovery. Finance Minister Mathias Cormann has deployed equally strong language about an ‘aggressive’ deregulation agenda.

The strength of such language must give anyone concerned about the environment pause for thought. There’s no doubt the economy will need some heavy duty kick-starting as we recover from the COVID-19 disaster.

However, might this crisis be used to justify a political narrative about environmental regulation being ‘green tape’? Could we, in the name of curing the current big crisis, end up accelerating the next big crisis, brought on by environmental decline?

Wrapped in green tape

Federal Environment Minister Sussan Ley already has a predilection for the green tape narrative. Announcing the current review of the Australia’s national environmental law, the Environment Protection and Biodiversity Conservation Act (EPBC Act) last October, she cast the review as an opportunity to cut ‘green tape’ and increase certainty for business.

The environment itself was only mentioned in the context of ‘maintaining high environmental standards’. Ley expressed no concern about the ongoing decline of the environment itself. And this was well before the COVID-19 crisis.

It is fair enough for the Government to look for increased efficiency, including in regulatory processes, as part of a plan for environmental recovery.

In federal environmental regulation, my first suggestion for efficiency would have been to fund the regulatory process properly. Successive governments have reduced efficiency by whittling departmental resources away through inflated ‘efficiency dividends’, code for general cuts. As a result, delays have gotten longer and longer, but of course they could have been reduced again by restoring the money.

But it seems that the Government is already on top of this one.

In November 2019 (ie, still before the crisis), it announced a $25m ‘congestion busting’ initiative to reduce delays in federal environmental assessments, including by establishing a major projects team ‘to ensure assessments can be completed efficiently and thoroughly in accordance with the Act.’

Recently, Ley announced that this initiative was delivering what appears to be significant progress. As of December, only 19% of ‘key assessment decision points’ were being met. But by March 2020 this had improved dramatically, to 87%. What’s more, the Minister says that figure should reach 100% by June 2020, all without relaxing any environmental safeguards under the EPBC Act.

In other words, the problem of slow environmental approvals will be solved in a couple of months.

I must admit to scepticism about this claim. I suspect that the assessments are much more superficial than they once were, more reliant now on accepting information provided by proponents and state regulators.

I also suspect that the introduction of user-charging for federal environmental assessments a few years ago, together with limited resources for compliance, mean that there are fewer projects under assessment. This is because proponents abandon a bias towards referring projects on a ‘just-in-case’ basis, in favour of a risk management approach, under which proponents weigh the costs of referral against knowledge that compliance action for failure to refer is unlikely.

However, let’s take the Government’s claims at face value for the moment and accept that regulatory delays, at least at the federal end, are on the way out. What else could they do to speed up environmental approvals?

More juice in the efficiency lemon

Even if individual statutory timelines are met, overall timelines can still be reduced, first by removing duplication between federal and state processes and also by removing delay at the proponent’s end. This latter kind doesn’t count as regulatory delay but is, of course, still delay.

Duplication is a complex issue and reform is a medium term task. But short-term gains could be achieved administratively, by forming federal-state task forces, ie by putting regulatory staff from both levels of government into a single team, tasked with shepherding the project through all processes as quickly as possible.

In the past I would have said the politics wouldn’t allow this, but I would also have said that a thing called ‘National Cabinet’ would never work. These are extraordinary times.

Proponents could also contribute to a task force model. I wouldn’t recommend direct secondment of proponent staff to task forces, as this is mixing the foxes in with the hens, but by increasing resources for their own project teams proponents could improve quality and responsiveness, both of which are essential to timely environmental assessment.

Avoiding the temptations of short-termism

So there are some gains to be had. Yet the temptation in a crisis is to grab onto anything and everything that might conceivably help deal with the problem at hand, taking a ‘tomorrow-can-look-after-itself’ attitude to any longer term consequences. And this is no ordinary crisis.

Beyond the marginal gains of efficiency, trading parts of the environment itself for a short term economic hit could look very tempting.

The OECD is alive to this issue and has come out with all guns blazing. In a recent statement, OECD Secretary General Angel Gurría argues, not just against weakening environmental standards, but in favour of stronger standards. In his view, governments should seize ‘a unique chance for a green and inclusive recovery … a recovery that not only provides income and jobs, but also has broader well-being goals at its core, integrates strong climate and biodiversity action, and builds resilience.’

In other words, kill two birds with one stone. Use your spending on post-virus economic recovery to advance longer term environmental recovery. Gurría has a three point plan for this:

First, align short-term emergency responses to long-term economic, social and environmental objectives and international obligations (ie, leverage your investment).

Second, prevent lock-in, not only of high-emissions activities, but also of impacts on vulnerable groups, who have been the worst affected by COVID-19. A key way to do this is through a fair transition to a low-carbon economy.

Third, policy integration. Integrate environmental and equity considerations into the economic recovery. This means that infrastructure investment, as well as government support to virus-affected sectors, should pass the test of contributing to a low carbon economy.

Don’t throw the baby out with the bathwater

The OECD is often described as a club for rich nations. And rich nations, including Australia, could be expected to take a conservative view about maintaining wealth.

Yet this advice sounds rather left of centre. In fact, in an Australian context, it is redolent of the mostly unlamented Rudd/Gillard/Rudd Government, which aligned its short term emergency responses to long term environmental objectives (think Pink Batts, 2008) and also pursued a fair transition to a low-carbon economy by compensating low income earners for the impact of the carbon price (think Clean Energy Future, 2011).

In my view the OECD is right but, in Australia, its advice may be cruelled by our recent political history. If the Government were to take the OECD’s environmentally-responsible but mildly collectivist advice it would be accused of taking the Rudd/Gillard path to disaster.

On the other hand, if the Australian Government follows through on its current rhetoric of a growth-led recovery and aggressive deregulation, we may be headed for solutions that throw the baby out with the bathwater.

Which will it be?

Image by Pezibear from Pixabay

Environmental regulation and the Productivity Commission

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