Opinion: governments should not charge ahead like bulls at gates on the EPBC Act

By Mark Pearson

Monday July 27, 2020


All legislation gets old. Becomes unfit for purpose and for the times. Creaks and groans.

Which is why the Environment Protection and Biodiversity Conservation Act 1999 is now being reviewed by an expert panel. Happily, the Australian government has appointed good people to the task and has in place a panel with the experience and ability to make sense of trees as well as woods.

The interim report has just been released and a finding that should concern us all is that many who made submissions — and 30,000 submissions were made — do not trust the Act to deliver for the environment. The review panel found that limited access to information about decisions and the inability to substantively engage in decision-making under the Act erodes trust.

Access, opportunity, engagement and trust therefore rear their heads as key issues to be resolved. This suggests that as they go about the work of reform, governments should consult carefully rather than charge ahead like bulls at gates.

To my way of thinking, four issues are important.

The first is the need to understand the meaning of the principles that guide the review panel. Embedded in the terms of reference is the phrase that the review panel will be guided by the principles of “supporting partnerships to deliver for the environment, supporting investment and creating new jobs”. That is, an objective of the review is to create a framework that allows the environment to be exploited for good economic reasons.

On the surface of it, this is just common sense. Of course, we want the environment to generate good jobs and growth and investment. But governments need to take care here. If the Act is to have a good environmental effect — and the review panel is clear: the Act as it exists is not fit to address current or future environmental challenges — then we must guard against conflicting priorities that cannot be reconciled.

An object lesson here is in the Water Act 2007. This provides for the use of water resources in the Murray–Darling Basin in a way to that optimises economic, social and environmental outcomes, and which improves water security for all uses.

Well good luck with that.

In their drafting, governments created a regulatory knot that is impossible to unpick. As a consequence, the review panel would be wise to suggest that economic objectives should be realised directly and efficiently by economic instruments and that the Act should serve to protect the environment. The best possible outcome therefore demands clarity of process and we must be wary of the potential for pressure to be exerted on a regulator as it seeks to make good decisions.

The second is the idea that powers should be handed over the states.

The review panel has argued for the development of a set of legally enforceable standards that would underpin a Commonwealth/State agreement. As enforceable regulatory instruments these would provide the foundation for the environmental and biodiversity framework legal framework.

The recommended delegation of decision making from the commonwealth to the states is premised on standards that would underpin bilateral agreements between the commonwealth and states. As enforceable regulatory instruments the idea is that these standards would lead to clear obligations, more efficient operation of environmental processes and result in an effective monitoring and compliance program.

Let’s be clear here. However good the theory, the devil is in the detail and the practice. A rush to develop interim standards that are skewed towards efficiency and the rapid clearing of projects will do little to improve the overall objective of protecting our unique environment from harm. Even though the stated aim may be to provide a more seamless process to make decisions, the hurried development of standards still runs the risk of creating eight different oversight models in eight different jurisdictions.

The review panel comments on moves towards a risk-based regulatory approach. I would caution here that developing interim standards and proceeding to a delegated model along the single-touch approach requires the construction of the regulatory framework at the exact same time. Developing a resilient and enforceable policy framework requires the concurrent development of the oversight body. This ensures that rules and regulations are well understood by the regulator and are appropriate for the tasks at hand.

The third issue therefore is, the creation of an independent regulator to oversee the monitoring, compliance and enforcement functions of the Act. The argument is that an independent regulator would assure Australians that the legal requirements of stakeholders were understood and implemented. In short, an independent regulator would hold the regulated community to account.

Now, it is true that the Minister for the Environment has said that the Australian government “will not support additional layers of bureaucracy such as the establishment of an independent regulator.” On this, however, I am confident that the minister and the government will see that in saying this they are actually making different points.

Certainly, we need to consider the cost of compliance; the idea that the regulatory burden imposed on industry in particular and the community in general. Good regulatory design minimises this burden.

But there is a separate point that goes to outcomes. In the words of the review panel, “The EPBC Act is broken. It does not enable the Commonwealth to play its role in protecting and conserving environmental matters that are important for the nation.”

The importance of what is at stake is best secured by a set of legally enforceable standards and the establishment of an independent regulator. This regulator, located outside of a departmental framework, is best suited to realising the compliance and monitoring functions that actually secure outcomes. I strongly agree with the review panel that, “An independent compliance and enforcement regulator will build public trust in the ability of the law to deliver environmental outcomes and that breaches of the law will be fairly, proactively and transparently managed.” It seems in the view of the review panel that sunlight is a powerful antiseptic.

I need to admit my bias here. I previously worked as a senior executive in the Australian Competition and Consumer Commission — a body that is recognised as being independent, expert and consistent in how it regulates competition and consumer law. In an environment where decisions have a major impact on the rights and responsibilities of the regulated community, and in which discretion is an important element of those decisions, the ability to demonstrate independence from those it regulates — and from government — is critically important.

If the regulatory process is to give confidence to the industry and individuals that decisions are being made impartially, then statutory independence is essential. Independence preserves the integrity of and support for decision making. While it is conceivable that a regulator could act independently within a departmental structure, the current arrangements are not trusted — by anyone. And it is difficult to overcome perceptions of undue influence from either government or interested parties.

In the world of competition and consumer law, there is no dispute on this. And it is not too hard to make the link and say that establishing a similar independent source of expert and consistent authority is just as important if we are to properly protect our unique environment.

The review panel also argues for a regulator with a strong enforcement culture “…that doesn’t shy from action where needed.” Stand-alone independent regulators with strong leadership and proper resourcing are more likely to develop a regulatory posture that encourages the effective use of all the enforcement tools, including court-based outcomes where required.

Finally, we come to the obvious point that governments and citizens get what they pay for. If we only pay peanuts, then we assure ourselves that we will get regulatory monkeys.

The review panel, very politely, makes the point that the existing system lacks funds and resources: “The available resources for monitoring, compliance, enforcement and assurance constrain the ability of the Department to deliver credible functions.”

Environmental regulation is hard to do well. It requires a group of dedicated, highly-trained professionals who can make sense of complex geo-physical and environmental systems. It requires a standardised approach to monitoring, compliance, enforcement and assurance functions.

On this, therefore, I find myself in furious agreement with the review panel when they say, “…there is a need to invest in appropriate systems and tools to enable the independent compliance regulator to effectively deliver monitoring and risk-based compliance, to help people comply with the EPBC Act and to assure the community that risks to the environment from non-compliance are identified and managed.”

The final report is due out in October, which means that the Australian and state governments should hasten slowly in the decisions they make. We should all look forward to its release and for beginning of a serious national discussion about serious national issues. That way we build on the work that the review panel has done and position ourselves to create a regulatory framework that that is fit for purpose and for the demands of the years ahead.

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