Home   >   Issue 72 - Dec/Jan 2014   >   The Way Forward – Reform of the Rehabilitation Bond System

The Way Forward – Reform of the Rehabilitation Bond System

By on May 1, 2014

DR ELIZABETH GIBSON, General Manager CMPA provides a further update on the Rehabilitation Bond System.

OVER the past 10 years, the total bank guarantees for rehabilitation bonds (construction materials industry) held by the Minister increased from $37.51 million in June 2003 to $105 million in June 2013.

This is despite only $18,000 being spent by the Government on rehabilitation of construction material processors’ sites over the past 20 years.

Below are proposals for the reform of the rehabilitation system.

PROPOSED LEGISLATIVE/ADMINISTRATIVE CHANGES

Creation of separate bond assessment tools

The first and foremost change required to ensure the just and equitable assessment of the Minister’s liability is the separation of rehabilitation bond liability (and its associated procedures and tools) into industry sectors, being construction materials and mining due to construction materials being a significantly lower risk to the Minister compared to minerals.

Alterations of the existing MRSDA to reflect appropriate government exposure

Other amendments required to the existing legislation (Mineral Resources (Sustainable Development) Act 1990) to ensure the just and equitable assessment of the Minister’s liability include:

  • The removal of section 83(1)(c). As the relationship between the landowner/land manager and the construction material Work Authority holder is a commercial agreement covering the site’s final rehabilitation, the Minister should no longer hold any such responsibility in this situation.
  • Reviewing sections 80 and 82 specifically considering why the council’s involvement is required at a legislative level but appears to seldom occur in practice. Furthermore, there needs to be consistency regarding the Minister’s relationship with the land owner.
  • The consideration of the right of the land owner to refuse the Minister (or his representatives) access to carry out rehabilitation works and the possibility that such works jeopardised or reduced his/her optimum end use.

RECONSTRUCTION OF BOND ASSESSMENT TOOL
(taking into account legislative/administrative changes)

If a bond calculator formula is continued to be used, it must be able to withstand both commercial and public scrutiny. The existing bond calculator would need to be fully overhauled by an independent third party and incorporate underpinning evidence to support its continuation.

The following points should be considered on an individual Work Authority.

  • The resource reserves and the proportion of material expected to be fill/overburden is identified.
  • Aerial photograph is available on application and at review of rehabilitation bond liability (approximately every 5 years).
  • Management systems. There is evidence that the Work Authority is:
    • Being professionally managed;
    • Using capital plant and equipment of a standard to ensure it can meet all Regulatory requirements and ensures the health and wellbeing of those working on site and its neighbours;
    • Has evidence of complying with all obligations set by those Regulators they are reporting to; and
    • Undertaking ongoing rehabilitation of terminal faces.
  • There is documented evidence within the Work Plan and/or provided by the land holder of the requirements they wish to take up responsibility for e.g.:
    • Retention or otherwise of identified buildings, plant and equipment, hardstands, foundations, power, water and other assets.
    • Battered faces.
    • Ongoing environmental upkeep – weeds, vermin etc.
    • Maintenance of fencing.
  • There is documented proof of inward clean fill availability and revenue status to address any safe and stable issues at the end of the Work Authority life.
  • There is documented evidence of discussions with other regulatory and local councils regarding future use.
  • There is differentiation between terminal and non-terminal faces within the liability formula.

CONCLUSION

The current rehabilitation bond system is unfairly impacting on small to medium sized family construction material processors’ businesses. A number of proposals have been put forward in this summary for consideration in the Departmental review of the rehabilitation bond system. What is quite clear is that the current rehabilitation bond system must change.

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