Reducing Red Tape

DPI are currently conducting a review of the legislation that will regulate the extractive industry from 1 January 2010; the Mineral Resources (Sustainable Development) Act 1990 (MRSDA). CMPA membership provided strong feedback on this issue to DPI staff during the recent DPI Information Days conducted around the State. ROGER BUCKLEY, CMPA Executive Director, provides a summary of the CMPA submission to DPI on this important issue.

APPROVAL PROCESS

Streamlining the Work Authority and Work Plan approvals process by reducing costs and time of approvals has the potential to make the greatest reduction in regulatory burden on the extractive industry.

CMPA report on approvals process

The CMPA report An Unsustainable Future: The Prohibitive Costs of Securing Extractive Industry Access in Victoria, 2009 is currently being finalised and highlights issues in the planning approval process identified from nine case studies and makes recommendations to address these issues.

The report highlights the following issues relevant to the MRSDA:

• Unacceptable time – It takes on average 2.5 years for a relatively simple, new Work Authority to be granted, with more complex applications taking at least 6 years and costing over $5 million with no certainty of outcome.
• Unacceptable costs restricts new entrants – The costs to gain a Work Authority range from $10,000 for a “simple” site to $1.25 million for a contentious site under the “planning permit” approval with higher costs up to $5.1 million for an “EES” approval.
• The goal posts keep changing – Work Plans are referred to agencies several times with duplication and escalating information requirements each time they are consulted, especially if there is an appeal to VCAT.
• The regulatory burden keeps on growing – Increasing regulation is required to gain approvals, e.g. Native Vegetation Framework, Cultural Heritage Management and Community Engagement Plans.
• Duplication in roles – DPI and local councils duplicate requirements and conditions.
• Consistent lack of consistency – Inconsistent interpretation of the legislation by the referral authorities.

Multiple referrals of Work Plan

A key aspect to reduce regulatory burden is to ensure that the Work Plan approval process will not need multiple re-submissions to referral authorities in the future. The Work Plan process should be centrally coordinated with a single referral to other agencies with enforceable time limits in place to ensure a decision is made within a reasonable time-frame.

Councils contribute to multiple referrals by not having in house expertise to adequately assess the Work Plans. Councils need a greater understanding of the regulatory role of DPI so that Planning Permit conditions consider only off site impacts.

The viability of an independent ‘Resources Industry Warden’ that has the power to enforce decisions and ensure time-frames are met by the regulators should also be investigated.

Code of Practice

The introduction of a Code of Practice applicable to all quarries that sets out performance based criteria that operations have to comply would simplify the Work Plan process. A shorter Work Plan that provides site specific information would only then be required. Existing benefits of the Work Plan process of exemptions from Planning Permits and approvals would be retained.

Implications of the slow, costly and uncertain approvals process

There has been a deterioration of investment interest in Victoria’s quarrying industry evident by the decreasing number of work authority applications in recent times.

At a time of increasing demand when new quarries would be expected to be developed, very few significant operations are in fact being approved. Of the 275 new Work Authorities granted between 2000-01 and 2007-08, only 18 (7%) were for significant operations (those with a rehabilitation bond greater than $50,000) of which only 6 were for a significant hard rock quarry.

The high sovereign risk that arises due to the slow, costly, uncertain approvals process that is creating disharmony in the system needs to be addressed.

The capacity for companies to continue to absorb these additional and escalating costs in their efforts to establish a new quarry, or extend the life of an existing operation to supply a cost effective product is limited and in numerous instances these costs have been the tipping point to withdrawal from the industry and Victoria.

The lack of new quarries being developed or existing operations expanding will lead to a decrease in both supply and competition in the market place. This will cause an increase in the cost of construction materials, leading to an increase in building and infrastructure projects and a decrease in housing affordability.

It is estimated that this situation would cost an extra $240 million/year for Victoria. This market failure needs Government action now. The MRSDA needs to implement an improved approvals process as a matter of urgency.

The An Unsustainable Future: The Prohibitive Costs of Securing Extractive Industry Access in Victoria, 2009 report suggests various other actions to address issues, including:

• Regulatory bodies should make decisions based on evidence according to the triple bottom line of social/environmental/economic values without undue political pressure.
• DPI and local government should streamline Work Authority/Work Plan approvals that recognise DPI’s regulatory reach.
• The administration of the MRSDA should aim at performance based outcomes that lower the costs and reduce the time of approvals to proponents.
• New regulation should not be introduced unless appropriate resources are devoted to administer the regulation effectively.
• The State Government should implement the recommendations of VCEC’s environmental regulation inquiry concerning the mining and extractive industries (assuming they are as per the draft recommendations).
• Referral agencies must be accountable. Regulators must be able to publicly defend their decisions.
• DPI should be focused on its role to improve approval outcomes.

GOVERNMENT STEWARDSHIP

The CMPA suggests that the DPI has a role as steward of the stone resource, identifying strategic stone resources through targeted geological mapping and drilling initiatives and to ensure high level planning protection of these resources.

Stewardship also implies that DPI has a central role in managing the Work Authority approval/Work Plan variation process to Best Practice standards.

COMMUNITY CONSULTATION

The CMPA would like to place on record its disappointment at the complete disregard of industry concerns expressed during the consultation with the industry prior to the introduction of a mandatory requirement for inclusion of Community Engagement Plans in applications for Work Authorities and variations of Work Authorities from 1 January 2010.

Not one CMPA member supports the introduction of mandatory Community Engagement Plans and sees this additional legislative obligation as a significant additional cost to conducting their business.

Formalised community consultation obligations beyond that currently enshrined in the planning process will result in significant additional costs to operators.

CMPA estimates that the existing ‘Community Engagement Guidelines for Mining & Mineral Exploration in Victoria’ indicate that for a moderate sized operation producing 175,000 tonnes per year, an EXTRA $52,000 is required to gain approvals. An EXTRA $17,000 per annum is required for ongoing consultations in addition to the current community consultation requirements under the planning permit approval process.

REHABILITATION BOND

To further encourage progressive rehabilitation of sites, it is suggested that the rehabilitation bond be reduced by a standard percentage if the operator has completed appropriate, documented rehabilitation works during the previous year.

A simplified rehabilitation bond system must also be introduced.

ROYALTIES

The royalty for most minerals is 2.75% of value of production. The extractive industry currently pays $0.87/tonne of stone extracted from Crown land which equates to about 6.3% of the value of production. There should be parity with minerals so that the royalty rate is consistent at 2.75% or $0.38/tonne.

The option of buying out the future royalties for a Work Authority at a discounted rate at the beginning of operation should also be considered.

FUTURE REVIEW OF LEGISLATION

DPI should commit to a review of the MRSDA after five years of operation.

UNDER RESOURCED AGENCIES

The regulatory system needs to be operated by government agencies that are adequately resourced with appropriate numbers of competent and professional staff trained in an appropriately structured organisation.

The Earth Resources Division should be structured to ensure it is focused on its role to improve the approval outcomes.

A wider use of accredited experts, such as the EPA use for environmental auditing, may need to be investigated. The Auditor General for Western Australia has suggested similar actions in approving resource projects.

THE KEY FEATURES OF THE CURRENT “EXTRACTIVE INDUSTRY ACT” THAT MUST BE RETAINED ARE:

• Ongoing private ownership of stone,
• Continuation of extractive industry specific regulations,
• Work Authority granted for life of resource, and
• Continued Planning Permit exemptions for native vegetation removal and EPA Works Approval.
• Ancillary works to be included as of right within the Work Authority area

SECTIONS OF THE “MINING ACT” THAT MUST NOT BE APPLIED TO THE EXTRACTIVE INDUSTRY ARE:

• Section 15(6) requirements of a fit and proper person,
• Statement of Economic Significance of the value of quarrying compared to the value of agriculture on private land,
• The “100 metre rule”, and
• Offsite landowner compensation.

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