Resources sector regulation

• There is no question that resources activities should meet reasonable requirements in relation to their impacts on the environment, heritage, worker safety, landowners and communities. Achieving them demands strict, often complex regulation, but if not done well this can create unnecessary costs for companies and diminish benefits for the broader community.
• This study focuses on whether regulatory processes can be improved to reduce unnecessary burdens without diluting environmental and other regulated outcomes. Indeed, reflecting growing community expectations and concerns, confidence in the robustness of regulatory regimes to achieve their objectives will be critical for ongoing support for investment in the resources sector.
• Notwithstanding many recent initiatives, there is evidence that regulatory processes remain unduly complex, duplicative, lengthy and uncertain and may be becoming more so.
• Many of the issues raised in this study have been raised in previous reviews. Successful reform will require greater attention to the pre‑conditions for leading‑practice regulatory systems — in particular clear regulatory objectives, effective governance, incentive and accountability frameworks for regulators, and adequately resourced institutions.
• No one regulatory system here or overseas stands out as leading practice in its entirety, but all have elements that merit this description. All jurisdictions could learn from each other.
• Leading regulatory practice supports an effective risk‑ and outcomes‑based approach by regulators who: are accountable and transparent; follow clear and predictable processes; build fit‑for‑purpose technological and staff capabilities; collect, use and disseminate data effectively; and work to inform the community about their activities.
• Enhanced regulator accountability and transparency could significantly reduce unnecessary costs and improve regulated outcomes. Provision of clearer information about assessment requirements, agreed timelines and reporting against them, improved inter‑regulator cooperation to reduce duplication, and publication of monitoring and compliance actions including for offsets commitments would assist proponents and build confidence in regulators’ effectiveness. More comprehensive arrangements for mine rehabilitation would deliver community as well as reputational benefits.
• Capability gaps within regulators are a key cross‑cutting issue. Governments should assess whether their regulators are appropriately funded, and the potential for greater cost recovery.
• Both governments and companies have responsibilities for addressing negative impacts of resources projects on local communities, but mandating requirements such as local content is not leading practice. Companies should consult and coordinate with local governments and community groups to promote local benefits from their community investments.
• Communities and landowners understandably want to know how a project may affect them and to comment on development proposals. Engagement should begin early in a project and continue throughout, and provide meaningful opportunities for the community to present their views. Trusted institutions can play an important role through building understanding of, and potentially allaying, stakeholders’ concerns.
• Many resources projects are located on native title land. Benefits are shared with Aboriginal and Torres Strait Islander communities through native title agreements and targeted voluntary activities by companies. There is scope for reform to help ensure that management of native title agreement benefits promotes communities’ objectives.

Better regulation will support investment and build community trust in the resources sector

Government commitment to improve regulation for mining and gas projects will have benefits for both industry and the wider community according to a Productivity Commission report released today.

Improving regulation in the resources sector will not only reduce delays and other costs for industry but also help build community confidence in an industry that sees its social licence to operate as one of its greatest risks.

The report is about identifying leading practice processes that reduce unnecessary costs without undermining environmental outcomes.

While all governments have adopted elements of leading practice there remains considerable room for improvement.

“All jurisdictions could learn from each other. A consistent theme is that approval processes have become more complex, take longer and are less certain, for no apparent environmental benefit,” Commissioner Lisa Gropp said.

Leading practice requires focusing on what matters — the biggest risks to the environment and community — and being accountable and transparent.

Priorities for improvement include:

• effective risk- and outcomes-based approaches
• clearer guidance to and stronger engagement with industry
• use of target approval timelines and reporting against them
• improved coordination between regulators to reduce needless duplication
• greater engagement and transparency to build community confidence.

“Few of the issues raised in this study are new. Enduring reform will require governments to provide clear policies and set expectations for regulators, ensuring they have the resources they need to do their job well,” Commissioner Gropp said.

The report also considers how communities, including Indigenous communities, are engaged in projects and share in their benefits.

“Effective engagement is needed to build trust, so listening and being transparent are key,” said Commissioner Gropp. “Regulators need to actively reach out to affected communities. Governments and companies both have roles to play in managing project impacts on local communities.”

The full report can be found at www.pc.gov.au. The closing date for submissions to the draft report is 5 June 2020.

• Preliminaries: Cover, Copyright, Opportunity for further comment, Terms of reference, Contents, Abbreviations
• Overview - including key points
  • Key points
  • Australia’s resources sector at a glance
  • The regulatory landscape is complex
  • Australian jurisdictions have been working to improve their regulatory systems
  • Considerable scope for improvement remains
  • Effective community engagement and benefit sharing can build confidence
  • Indigenous community engagement and benefit sharing
• Leading practices, findings and recommendations
• Chapter 1 About the study
  • 1.1 What has the Commission has been asked to do?
  • 1.2 The scope of the study
  • 1.3 The Commission’s approach
• Chapter 2 Resources activity in Australia
  • 2.1 Australia’s resources sector — an overview
  • 2.2 Resources investment in Australia
• Chapter 3 Regulation: rationales, principles and landscape
  • 3.1 Why do governments regulate resources?
  • 3.2 What does Australia’s resources regulation look like?
  • 3.3 A framework for leading-practice regulation
• Chapter 4 Resource management
  • 4.1 Government provision of pre‑competitive geoscience information encourages exploration investment
  • 4.2 Where can resources developments take place?
  • 4.3 Resource management policies
• Chapter 5 Land access
  • 5.1 The process for obtaining access to private land
  • 5.2 Mining on other Crown land
  • 5.3 Resources development on Indigenous land
• Chapter 6 Approval processes
  • 6.1 Application through to assessment
  • 6.2 Approval and conditioning
  • 6.3 Post‑approvals
  • 6.4 Review mechanisms
  • 6.5 Broader approval processes
• Chapter 7 Managing environmental and safety outcomes
  • 7.1 Compliance monitoring and enforcement
  • 7.2 Offsets
  • 7.3 Resource site rehabilitation and decommissioning
  • 7.4 Safety
• Chapter 8 Other factors affecting investment
  • 8.1 Policy and regulatory uncertainty
  • 8.2 Workforce issues
  • 8.3 Barriers to foreign investment
  • 8.4 Taxation
  • 8.5 Other factors raised in submission
• Chapter 9 Community engagement and benefit sharing
  • 9.1 What problems are community engagement and benefit sharing trying to address?
  • 9.2 Identifying leading practice community engagement
  • 9.3 Identifying leading-practice benefit sharing
• Chapter 10 Indigenous community engagement and benefit sharing
  • 10.1 Understanding Indigenous community engagement and benefit sharing
  • 10.2 Effective Indigenous community engagement
  • 10.3 Effective Indigenous benefit sharing
• Chapter 11 Improving regulator governance, conduct and performance
  • 11.1 Governments are responsible for the foundations of robust regulatory systems
  • 11.2 Regulator performance is also key to outcomes
• Appendix A Conduct of the study
• Appendix B Regulatory arrangements across jurisdictions
• References