Recommendations for the Future of the Extractive Industry

ANNA CRONIN, Commissioner for Better Regulation provides recommendations for the future of the Extractive Industry from the Earth Resources Regulation (ERR) Continuous Improvement Project (CIP).

Victoria’s earth resources industries play a key role in supplying materials for infrastructure and other construction projects and meeting growing demand for our commodities. Thousands of jobs depend on these industries, particularly in regional Victoria and in the outer suburbs of Melbourne. That’s why it’s important for government to ensure that its regulatory framework for resource development strikes the right balance: facilitating the development of resources and the efficient operation of mines and quarries while ensuring that this activity is consistent with Victoria’s environmental, planning, heritage and local community regulations.

In July, the Treasurer directed me to undertake a Continuous Improvement Project with the Earth Resources Regulation branch (ERR) to:

• identify immediate opportunities for improvements in regulator operations and the regulatory framework;
• streamline and improve the interaction between ERR and other regulatory authorities; and
• make recommendations for the future.

The trigger for the Project was industry concern about the regulator’s operations and, in particular, approvals processes. One of the first things we were able to do was to secure additional staff resources for the ERR approvals team from the Department of Economic Development, Jobs, Transport and Resources (DEDJTR) so that the ‘backlog’ of applications sitting with ERR could be significantly reduced. These additional staff have been supported by a new prioritisation approach. So far, the number of applications on hand has declined by more than 25 per cent since the commencement of the Project. This is a good start, but there is much work required to continue to improve the timeliness — and predictability of timing — of approvals.

To address the major pain points for industry, the Project focused on how to deliver improvements to approvals processes for variations to work plans. Our work has confirmed that there is no requirement for older work plans (lodged and/or approved prior to 8 December 2015) to ‘transition’ to the new model: variations to such work plans can be assessed as variations rather than triggering a whole new work plan. ERR will soon issue a statement to explain how this approach will operate, and what this means in practical terms for industry.

The process for preparing work plans can be greatly simplified: ERR is now developing a standard risk management plan which will enable operators to apply standard controls to managing risks on site. This will then enable the regulator to focus its effort on how operators propose to manage specific, more complex risks. This has the potential to offer significant benefits for industry:

• for low-risk operations, the standard risk management plan can be applied as the default — minimising cost and effort for the operator; and
• where an operator has more complex risks to manage, or proposes to apply alternative controls, they will identify where their risk management plan adds to or varies from the standard.

ERR will develop the standard controls in consultation with industry, and in partnership with other relevant regulators.

Interaction between ERR approvals and other regulatory authorities, including those in the planning system, requires greater clarity and guidance. Work is already underway. One new initiative is the new Earth Resources Approvals Co-ordination Group. This comprises the senior executives from the relevant regulatory departments and authorities which have a role in earth resources approvals. This Group is chaired by Justin Hanney, Head of Employment, Industry and Trade in DEDJTR. It has met twice since September and is integral to ensuring that the Government can focus on eliminating log-jams in the approvals system and implementing initiatives to streamline approvals across government.

In addition, there is policy work in train between DEDJTR and the Department of Environment, Land, Water and Planning (DELWP) to improve clarity around the interaction between ERR’s approvals and the planning system. I am pleased to report that there is strong collaboration between the departments on this issue, with the prospect of some early improvements that will make a real difference to industry.

A range of other changes is included in my report. These are intended to enhance ERR’s capability and deliver better outcomes for industry. Most of these can be achieved within existing legislation and regulation: they involve changes to practice and process. For example:

• ERR is now updating and developing new standard operating procedures for staff: ensuring that there is a consistent basis for processing applications, making decisions and communicating with stakeholders.
• Staff training and recruitment are being bolstered at ERR to ensure that relevant regulatory, engineering and other technical skills are available. It is also critical that staff have a practical understanding of industry’s operations: more site visits and training programs with industry would help.

The changes outlined above will make a difference to industry through simplified and clearer applications and approvals process, better linkages across government and boosting the capacity and effectiveness of ERR.

There is a longer-term question around the effectiveness and adequacy of the current legislation. The Mineral Resources (Sustainable Development) Act 1990 (MRSDA) is broadly working well, but has been in service — with various amendments — for nearly 30 years. Economic conditions, regulatory best practice and community expectations have evolved over time, and will continue to do so. Legislative reform is not an immediate priority, and my report has focused on other key steps that need to be delivered now to make the greatest difference.

Nevertheless, a fresh legislative footing could provide a stronger foundation for continuous improvement into the future: providing industry and the community with a modern, consistent and transparent regulatory and policy framework for earth resources.

Our approach in this Project was to focus on fast responses to obvious problems rather than even more diagnosis. As you know, there have been many reviews undertaken over the last few years into the regulatory arrangements for earth resources. It’s the follow-through from these reviews — the practical implementation of changes — that has at times failed to deliver. I’ve emphasised in my work the need to get the implementation right.

DEDJTR has allocated an Implementation Team to work with ERR and other regulators to ensure that these changes are made and that the foot is not taken off the pedal. The Implementation Team is managing the delivery of the Project’s outcomes, and in the coming weeks and months you will see a detailed action plan that maps out the path forward.

I would like to thank industry representatives for their patience and support throughout this Project. I would particularly like to thank the members of the Construction Materials Processors’ Association for their thoughtful and useful contributions — the material you have provided has been instrumental in helping me understand the problems you face, and develop practical solutions.

Minister Pallas has asked me to undertake six-monthly reviews of the Project’s implementation and so I look forward to consulting with industry again in 2018.

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