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Are the Feds handing over their environmental powers by stealth?

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Larissa Waters 4 Jun 2015

Senator WATERS: The New South Wales major projects offsets policy, do we have folk that can talk about that?

Mr Knudson: Yes, we do. I will bring them to the table.

Senator WATERS: Thanks. Mr Tregurtha, can you explain for me the level of accreditation that is proposed for that policy under the draft conditions policy of your department?

Mr Tregurtha: The New South Wales major offer sets policy? Sorry, can you repeat the question?

Senator WATERS: My understanding is that your department has issued a draft conditions policy.

Mr Tregurtha: That is correct.

Senator WATERS: What does that say in relation to the New South Wales major projects offset policy?

Mr Tregurtha: The draft conditions policy recognises at this point in time three New South Wales offset approaches as being endorsed for the purposes of that policy.

Senator WATERS: So it accredits the New South Wales major projects offset policy?

Mr Tregurtha: It endorses those projects.

Senator WATERS: 'Endorses', 'accredits'—not accredits, just endorses? It is much of a muchness?

Mr Tregurtha: The first thing the conditions policy does, in effect, is set out the way in which the department will approach the approval process for projects that have been assessed under the three endorsed policies with New South Wales. So what that means is that when a project has been assessed by New South Wales under the assessed current bilateral agreement, and as part of that agreement the project's proponent puts forward an offsets requirement that meets the requirements of any of the three endorsed policies, then the policy sets out that the Commonwealth would accept that offset for the purpose of the EPBC Act requirements around the protected matters. In addition, it also provides for other projects in New South Wales that are being assessed by the Commonwealth that do not fall within the scope of the current assessment bilateral agreement where those projects also are proposed and are compliant with any of those three endorsed policies that the Commonwealth would accept as the offset requirement for the EPBC Act.

Senator WATERS: Would that abrogate the need for an approval as such?

Mr Tregurtha: No. There still must be a Commonwealth approval.

Senator WATERS: Why then does option one say that no conditions by the Commonwealth would then be attached?

Mr Tregurtha: The options that you are referring to in the projects that are processed under the conditions policy, where it is determined that those projects are effectively assessed by New South Wales under the assessment bilateral agreement and where they have met the requirements—where the New South Wales conditions meet those standards, including any of the three endorsed offset policies—then as far as possible in terms of streamlining environmental regulation the Commonwealth would not seek to add any additional conditions. There is still a requirement however—

Senator WATERS: Even if it did not relate to offsets? No additional conditions at all?

Mr Tregurtha: You are missing the consideration step, I think, prior to the hierarchy of no conditions, one condition or many conditions, which is to determine whether or not which of those three approaches apply. If so, it takes you down a pathway if there is a condition required. So it is not an offset condition, and that condition would need to be applied. That can still be applied under the policy.

Senator WATERS: You can still put on other conditions as long as they do not relate to offsets?

Mr Tregurtha: Absolutely.

Senator WATERS: That sounds to me to be on that first pathway: 'Okay, your offset conditions are fine, we don't care anymore.' That sounds to me like an approval bilateral by stealth.

Mr Tregurtha: I disagree. There is still an approval step required by the Commonwealth. For the purposes of both the conditions policy and the revised assessment bilateral agreement with New South Wales, for the purpose of both those pathways, what we have done is undertaken an assessment of the New South Wales offsetting approaches, following which three of those approaches have been endorsed for use because we believe that they meet the standards required under the EPBC Act.

Senator WATERS: I reckon, and putting my environmental lawyer hat back on, someone will challenge that in court because the HIS case in the Federal Court in whenever it was—2003 or something—says you cannot just do a sneaky process. You have got to follow the processes in the act. This sounds like a backdoor way of achieving the accreditation of an approval phase, because the conditions are at the approval phase. Is there anyone in the department that is looking at your legal liability for following an unusual course of action that the act did not set out?

Mr Knudson: In undertaking any of our activities, whether it is an individual project approval, whether it is consideration of endorsement of a policy of a state, whether it is an accreditation under an approval bilat, of course we do legal due diligence on the proposal because fundamentally we are also very concerned with providing regulatory certainty for industry and for communities.

Mr Thompson: To be clear, it does not remove the decision point for the Commonwealth minister in relation to approving a decision. The policy itself states up-front that it is designed to provide guidance on setting conditions. The Commonwealth minister and his delegates, or the decision makers, retain the discretion to make decisions concerning the particular circumstances of each project. So the policy does not bind—any of the decision makers.

Senator WATERS: That is important. Why is the risk assessment framework that underpins that draft policy not publicly available?

Mr Knudson: I assume you are talking about the system that we have developed for assessing risk associated with compliance matters. We are in the process of taking a look at how do we use, again as guidance, our analytical tools to better indicate what sort of level of effort we need to put behind various assessments. Because that work is not finished that is not in the public domain at this point. That being said, Mr Gaddes can talk a little bit about some of the work that CSIRO have done in this space. They have done a research paper on this system, and that is in the public domain.

Senator WATERS: In the interests of time and everybody's patience, I am interested in that, but if you could give me that on notice, I will read it when it comes through. Before we leave this area, if you have gone down that pathway of not attaching additional conditions, as the policy recommends but does not oblige, what level of involvement does the Commonwealth then have in the enforcement of those conditions? I would think none; is that correct?

Mr Knudson: If there are no Commonwealth conditions on an individual project then that leaves us in a space where, as the Commonwealth, we would reserve the right—there are certain provisions in the act where we can still step in, but it would be subject to those provisions.

Senator WATERS: So an injunction for significant impacts on matters of NES?

Mr Knudson: Mr Gaddes will be able to talk about that more explicitly.

Senator WATERS: I do not know whether the department has used those powers before. Have you taken any injunction action before?

Mr Knudson: What we have done, and what we do on a regular basis, is that when we have projects that are assessed by states we will systematically take a look at the conditions that they have imposed and then figure out whether there are any additional Commonwealth conditions required or whether they are fully and adequately addressed by the state.

Senator WATERS: It is more about the compliance with those conditions as opposed to the content.

Mr Knudson: It is compliance with—

Senator WATERS: Conditions. You have said, 'We don't need to impose extra conditions because your conditions do our job as well as your own.'

Mr Knudson: Yes.

Senator WATERS: Obviously it is not the federal government's responsibility to enforce those conditions, even though they relate to matters of national environmental significance. If the state drops the ball on enforcement, which frequently happens, for all sorts of reasons, including the fact that many of them have had quite significant staff losses, what role can you then have? I think you told me you could then use your injunction powers for a significant impact on a matter of NES. I am interested in how frequently those powers get used. I could not bring to mind any example in the last 15 years that has been used.

Mr Gaddes: Just to clarify, the injunction power would be for a breach of the act. I do not think that would apply.

Senator WATERS: What other remedy would you have?

Mr Gaddes: Under the circumstances there are certain provisions under the act where there was a significantimpact substantially greater than that which was assessed. So if there was a—

Senator WATERS: But the impact is not different; it is just that they have not complied with the conditions. Because it is not your condition, you cannot enforce it, so what happens then?

Mr Gaddes: My understanding of the bilateral approval and assessment process, which Mr Tregurtha can go through in more detail, is that there is a senior officials committee meeting and there is a range of mechanisms whereby the Commonwealth can raise concerns about noncompliance with conditions with the states and then have them address that.

Senator WATERS: So you can ask the state to please enforce their own laws. It does not fill me with confidence.

Dr de Brouwer: There are three steps in the draft conditioning process. The one we are talking about is the one where the Commonwealth does not impose its own condition over and above the state conditions. There is a second step whereby the Commonwealth does have a condition that the state conditions must be satisfied, which then provides the Commonwealth with the right and the power to enforce compliance or exercise compliance.

Senator WATERS: Can I have an assurance that that would be the default and preferred option as opposed to the one where it is totally hands off?

Dr de Brouwer: What we have been talking about and discussing with people is a risk based approach.

Senator WATERS: Which we do not know about yet because it is not finished.

Dr de Brouwer: It is a risk based approach.

Senator WATERS: Will you be making that risk based approach framework public once it is finished?

Mr Knudson: We will be absolutely talking about that framework and how it is developed and what the criteria are et cetera behind that in a public way.

Senator WATERS: To the public?

Mr Knudson: To the public. Indeed in our compliance management plan we will also be indicating—because that is the origin of this—how we are using a risk based approach to focus on key sectors where we are finding noncompliance issues, so that we are transmitting very clearly and appropriately to the public that we are looking at where there is greatest risk. In terms of the question of how we do the risk based approach with respect to conditioning, as the draft conditions policy talks about, we are looking at the idea that you would impose no conditions where there is a number of elements that would be taken into account, including that our assessment is that the state has done an adequate assessment of the proposed action, and that the impact on the matter of national environmental significance would not be significant, even if there was noncompliance. So you can understand that, for a lot of the large, complex projects, that would not be the case. There would be a significant impact or the potential for a significant impact on a matter of national environmental significance if there was noncompliance.

Senator WATERS: Otherwise it would not have been referred in the first place.

Mr Knudson: Correct. Again, it is about taking a look. You have to take a look at it in the context of the state assessment and conditions, the idea being that the test for referral and assessment is that there is a likelihood of a significant impact. That does not mean there is a certainty of a significant impact. It is through the assessment that often we gain a lot of information and can then determine what the real likelihood of a significant impact is. That is where that example of zero conditions could apply—where we are dealing with something that is quite low risk, the state has done a good job on it and even if there was noncompliance we do not think there would be a significant impact.

Senator WATERS: Thank you. I understand that; that is helpful. Has there been, either through that risk assessment framework or any other process, any assessment of the capacity of the states to enforce conditions?

Mr Knudson: I think we have answered in other Senate estimates sessions that what we are focused on is ensuring that the states have a robust system for adequately addressing matters of national environmental significance.

Senator WATERS: What is written down is one thing. I am talking about whether they have the capacity to enforce that. Has anyone looked at that?

Mr Knudson: Again, our focus is wholly on the adequacy of the state processes to effectively manage matters of national environmental significance.

Senator WATERS: I am going to take that as a no, but I do not want to verbal you. Have you looked at their capacity to enforce their own legal systems that you are accrediting?

Mr Knudson: We have ensured that they have an adequate system for addressing matters of national environmental significance.

Senator WATERS: Again, I am going to take that as a no, so you have a chance to dissuade me from that conclusion.

Mr Knudson: I think you are inferring an answer that I have not given.

Senator WATERS: I am trying to get an answer from you and I am still not clear on what you are saying. I understand that you have looked at the laws. I am asking if you have done an assessment of the capability of the state government to enforce those laws.

Mr Knudson: We do take a look, again, at the adequacy of the state's processes to protect matters of national environmental significance. We do not do, for example, a headcount of how many people are doing which activities in each jurisdiction.

Senator WATERS: Okay, so you have not looked at staff losses. Thank you. That is a bit of extra information.

Dr de Brouwer: We do work with the states, as all regulators do, around compliance and how to improve compliance. That is a regular thing that would come up through workshops or other opportunities—the risk assessment tools. Environment regulatory agencies share that and talk about how they go about that. There is always an aim to improve your practice and how you define 'best practice'. I do not want to leave you with the idea that the answer is no—the idea that we are doing this blind, as to whether there is a formal headcount of numbers and other things. Not formally on headcount, but we do regular work with our counterparts in states and territories around compliance. That is a natural part of any regulatory agency.

Senator WATERS: As it should be, but given the number of staff losses I would have thought it has become not just an ancillary point but in fact the main point.

Dr de Brouwer: Staff numbers are one thing but frankly it is the competence, ability and the other frameworks—the risk assessment frameworks that are in place and how they are used. That is the thing that matters.

Senator WATERS: That is what I mean; people have put them in place.

Dr de Brouwer: That is where the focus of the cooperation with the states and territories is. That is a mutual thing. It is back and forth between jurisdictions.

Mr Knudson: To expand on the secretary's comments, we have a regular program of capacity building with the states so that we can ensure that where they think that they would benefit from sharing their experiences on different elements of the EPBC Act and how to implement that in the most effective way possible, we have very much indicated a willingness to do that in a systematic way with any jurisdiction that is interested in doing that.

Senator WATERS: And they need that because they have lost all of their people.

Dr de Brouwer: And jurisdictions do that with us. So they go through their models, for example—

Senator WATERS: And you have lost some of your people too—a quarter of your staff.

Dr de Brouwer: The thing is the capacity of people. There is back and forth; it is a two-way process.

Senator WATERS: Yes, everyone is really nice to one another and everyone is—

Dr de Brouwer: It is quite detailed.

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