MACINTOSH, Mr Andrew Kerr, Associate Director, Centre for Climate Law and Policy, College of Law, Australian National University

CHAIR: We resume committee proceedings and welcome our next witness, Mr Andrew Macintosh. Although the committee does not require you to give evidence under oath, I should advise you that the hearings are legal proceedings of the parliament and warrant the same respect as proceedings of the House itself. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. Andrew, we have received your submission and members have a hard copy of it, but we invite you to add to it or make any changes you feel are necessary, or simply summarise it for us so that we can then ask some questions of you and enter into a general discussion. So I will hand over to you.

Mr Macintosh : Generally, I think the bill is a good one. The one issue that has arisen is about the perverse impacts, which I am sure you have discussed this morning, and in the submission I have outlined a potential solution to it. The government has come up with this idea of a negative list, where there is a discretion to create regulations to knock out project types or project types in certain areas. Hypothetically, if I were in the shoes of a parliamentarian and given a bill where it said that the minister had the discretion to make regulations to knock out particular projects to deal with a risk, I might not be satisfied that that provided me with sufficient certainty that that would deal with it.

The idea I have put forward a very simple one, and that is to use the strategic assessment provisions and the trigger provisions under the Environment Protection and Biodiversity Conservation Act to set thresholds in regions or bioregions. If revegetation or reforestation passes beyond a certain threshold, a threshold that will be determined after deliberations, then any further project in that region or bioregion would require approval under the EPBC Act—so that is project based approval. Now, that would mean that individual projects would have to go through the environmental impact assessment and approval process that starts under part 3 of the EPBC Act. There would be an obvious objection to that from project proponents, who would say, 'That's going to add to project costs and that's going to cause us transaction costs.' The response to that is: the EPBC Act contains a number of provisions to minimise transaction costs for proponents, and the process can last a very short period of time and can be relatively cursory, so you can get projects in an out and deal with major issues rather quickly.

The other thing is that under the EPBC Act there is a strategic assessment process. Since about 2004, the Commonwealth has been trying to get itself involved in strategic assessments for environmental purposes. It has not had a lot of success to date; there have been problems with resourcing and problems with the interaction with the states. By using that process under the EPBC Act, not only could you deal with the problems associated with perverse impacts of the CFI bill; also you could potentially roll in other issues associated with the environment. So the way I could see it rolling out is very much like a regional zoning process. You tie it in with the regional NRM processes, get the information from that and basically feed into developing regional plans that would deal with the perverse impacts associated with CFI projects. That is basically it, in a nutshell.

CHAIR: Thank you for that. That is one of the issues of concerns that have been raised by people have made representations to us. I will open it up to questions from the members here. It seems to me, Andrew, that your submission is pretty much focused on that one aspect entirely.

Mr Macintosh : That is right. I think the rest of the bill is fairly robust. Sure, there are a few other issues, but from my evaluation of it—and I must say I have not gone through it with a fine toothcomb—it looks pretty robust and I do not think there are that many issues associated with it beyond the perverse impacts. And, on the perverse impacts, I should say that personally I do not think they are going to be an enormous issue in the early stages of the scheme. I think it is further down the track that we are likely to see those issues arise. Some people might say, 'It's merely theoretical,' but, given what happened with managed investment schemes and the Great Southern and Timbercorp collapses, I think it would be remiss of people to say it is a completely hypothetical issue and it is never going to arise.

Dr WASHER: I think it is a very valid point. Being a great hater of the managed investment schemes, I have a passionate dislike for them and think that they cause major problems. Your recommendation here is very good.

Mr MacIntosh : I have heard other people suggest using some sort of provision that says that projects have to be in accordance with NRM plans. While I like it at a general level, I think it might confront problems in that those plans were not designed to deal with these issues and also a lot of them are not statutory instruments. It might cause problems if you have a one line provision that simply says, 'Projects must be in accordance with NRM plans.' I think this idea of folding in the EPBC Act could have something. You could use all the information from the NRM plans and I would envisage that being done but I do not think that solely using an NRM process would hit the nail on the head.

Dr WASHER: We are also told there is a bit of variability in the quality of some of these organisations.

Mr MacIntosh : In the quality of the organisations and the quality of the plans themselves.

CHAIR: That is absolutely correct. I do not know whether you have had time to look at the legislation but I thought the previous witness made an interesting comment that the 100-year rule applying to projects is almost unnecessary—I might be paraphrasing him—because proponents can get out of it simply by paying back the credits or buying an equal number of credits at the time. Therefore, in essence, is there any reason to specify a particular timeframe on it? Do you have a view about that?

Mr MacIntosh : I will be honest. I have not put a lot of thought into it. Yes, you can buy permits to get out of it but, obviously, as the price of permits increases it is going to become increasingly difficult. Is it necessary? I would say that it probably is. It is the general course that is being done. If you had simply an indefinite period, which is the other option, that does not solve the problem of people saying it is too long. I imagine that people have been saying that the length of the period is a deterrent to getting involved. Obviously, if you do not have some period or an ongoing obligation then there is the fear that people would simply default on projects. That leaves the liability holding somewhere else, either with a future land-holder or with the Commonwealth.

CHAIR: Okay, I was curious from almost a legal perspective as to whether you had given it some thought.

Ms HALL: Reading your submission your recommendation goes to one particular aspect. Is it fair to say that you are supportive of the legislation that we are looking at?

Mr MacIntosh : Yes.

Ms HALL: That is good. Your suggestion is looking at, I suppose, perverse outcomes. Would you like to share with the committee the types of perverse outcomes that you think could occur? You said it is not an enormous issue at first but further down the track you can see it possibly becoming an issue.

Mr MacIntosh : The main one is to do with reafforestation and potentially revegetation—mostly it is going to be reafforestation. Obviously, the fear is that you would have an enormous amount of reafforestation in particular regions. That would firstly from a social impact probably put pressure on local towns just like we have seen with MI schemes. There is pressure on local water resources, obviously forests draw a lot of water, and under the National Water Initiative they are trying to integrate water with things like reafforestation. You could potentially have adverse biodiversity impacts. A great example is in Tasmania where they have had a homogenous plantings and you have seen water pollution as a result of single species eucalypt plantings. There are these sorts of environmental impacts as well as those social impacts.

Ms HALL: Another message you are giving us is that it is imperative that we get the planning right.

Mr MacIntosh : Yes, this scheme has to sit alongside some sort of planning scheme and that is what the EPBC Act provides. Obviously, the states will play a role in this because usually you cannot set up plantations without some sort of state approval as well. I think it would be remiss of the Commonwealth to set up a scheme like this just like the MI scheme where you provide an incentive for reafforestation without having some mechanism for controlling those perverse impacts.

Ms HALL: You mentioned the states and that was my next question. Do you think there will be any difficulties, problems or unforeseen issues that arise when dealing with the states?

Mr Macintosh : There are always issues dealing with the states, aren't there!

Ms HALL: How do you counteract that?

Mr Macintosh : The state and territory processes are very variable and very different; they are different in terms of planning and they are also different in terms of environmental processes. There are going to be issues with dealing with the states. That is the beauty of relying on the EPBC Act: the Commonwealth can basically confine itself or deal with those perverse impacts through its own process. By having a threshold, you are not saying every project that goes through this has to go through an environmental impact assessment process; it is only beyond a certain threshold. Of course, some level of reforestation in catchments is really not going to make that big a difference; it is when it crosses a certain threshold that you will have those issues.

Ms HALL: Thank you. You have answered all my questions. It is always good to have a new direction to look at and other suggestions for ways we can do things.

CHAIR: Returning to the question of the EPBC Act and the regulations, is it your suggestion that it be written into the legislation that the regulations must be in accordance with the EPBC Act or—

Mr Macintosh : Sorry, I should have explained it. I sort of assumed that everybody spends their days wading through the EPBC Act! With the EPBC Act you have to cross a threshold called the significant impact threshold, and there are a collection of triggers under that—matters of national environmental importance. There is also the power for the Commonwealth to make regulations. I am suggesting that you make regulations that say: for X regions, if there is this amount of revegetation and reforestation in this area any further project in that region requires approval under the EPBC Act, so it triggers the requirement under part 3 and therefore requires assessment and approval. The government or the minister would recommend to the Governor-General that regulations be made that would prescribe those threshold limits.

CHAIR: In the EPBC Act?

Mr Macintosh : Under the EPBC Act regulations.

CHAIR: Not under the Carbon Farming Initiative?

Mr Macintosh : No.

CHAIR: That is what I was trying to clarify.

Mr Macintosh : They would be sitting side by side.

CHAIR: Instead of having regulations, if you have pretty well identified a framework that you would work under, why would you not simply have it written into the original Carbon Farming Initiative legislation?

Mr Macintosh : That is a valid point. The Carbon Farming Initiative bill would be administered by DCC whereas the EPBC Act is administered by the department of the environment—I cannot remember what the hell it is called these days; it keeps changing its name every five minutes! If you put it just in the CFI bill it would sit under DCC's remit and, with respect to them, I do not think they have expertise in administering an environmental assessment and approval, particularly strategic assessments, like the environment department does. And the EPBC Act structure is already there. If you were concerned about regulations you could pass an amendment to the EPBC Act—there is nothing stopping you doing that—and that would effectively achieve the same thing. You would simply have a transitional bill that would accompany the CFI bill.

CHAIR: I can just see that being raised as perhaps a point of objection by some. Are you familiar with the five per cent risk of the reversal buffer?

Mr Macintosh : Yes.

CHAIR: Do you have a view on that?

Mr Macintosh : I think that is fair and reasonable. People have said it is just an arbitrary number picked out of the air. There are always going to be arbitrary numbers picked out of the air. Five per cent seems there or thereabouts in terms of the sorts of risks we are facing. Other countries have higher buffers, but I think five per cent is fairly reasonable.

CHAIR: That leads me to something else. You mentioned other countries. Are you familiar with what other countries are doing in respect of similar matters and is there any similar legislation that you are aware of that we could compare this with?

Mr Macintosh : From what I understand this is the first legislative offset scheme. There are other schemes that have offsets in them—GGAS in New South Wales and the ACT—but this is the first certification scheme of its type in the world as I understand it. There are other schemes. I am no expert—and I cannot go through tooth and nail again the details of other schemes and the sorts of offset requirements—but I have been told on good authority that the sorts of risk reversal buffers that other schemes have thought about have been in this ballpark and slightly larger in some cases.

CHAIR: That is consistent with other evidence that has been presented to us. No-one is absolutely certain because so far no-one has been able to categorically say that nothing else exists anywhere else. That is why I am asking you as well.

Mr Macintosh : I am peeling through my head. The New Zealand emissions trading scheme has certain things like that and there is GGAS in New South Wales.

CHAIR: That has been mentioned. Thank you for what you have presented. Your comments in respect of the EPBC Act I suspect will be very useful in trying to address some of the concerns that have been raised. I thank you for that and for your submission.

Mr Macintosh : Thank you for your time.

Proceedings suspended from 15 : 16 to 15:32