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Thursday, 14 March 2013
Page: 1685

Senator WHISH-WILSON (Tasmania) (10:31): It is great to focus on the benefits to the states and the Commonwealth, Senator Birmingham. We did not hear much there about the risks to the states and the Commonwealth.

My journey to the Senate is very close to the bone on this topic of risks in assessments for large projects between the states and the Commonwealth. My journey really began by jumping a farmer's fence in Tasmania, going surfing—as we often do there—and talking to a few mates about a project that we had heard about: Gunns Limited were going to put a large pulp mill in the Tamar Valley and pump effluent into the ocean in Bass Strait, exactly where we were going surfing. It occurred to me, from chatting to some of the guys, that nobody really knew much about the project. So we wandered down to a place called Cow Head, we jumped into Bass Strait in the frigid winter, and I started thinking about this—what is this stuff that is going to go into the ocean, how much of it is going to be going into the ocean, where is it going to end up and what is it going to do?

When I moved to Tasmania in 2003, I do not think I classified myself as an environmentalist—certainly not as an activist. I went and met with Gunns Limited, I knocked on the door, and I made an appointment for a meeting, and I said to them, 'What's this business about you guys pumping stuff into the ocean?' It was probably too early then for them to give me any substantial detail, but the following nine years was my journey to find out about the risks of this particular project. As it turned out—and I will get to this a bit later in the speech—the only body that was assessing the risks to the ocean and the ocean outfall was the federal body under EPBC law, because it did not fall under state laws. The outfall was just far enough out to sea for it to fall under Commonwealth approval. I spent four years engaging in that process to get some scientific scrutiny on what this ocean outfall would do to a very special part of Bass Strait. I will get back to that in a minute, because it is really critical and it is a really good example of why devolving powers to the states is not the right thing to do. I also believe keeping a strong Commonwealth environmental law in place is the right thing to do not just in terms of the environment and for communities but also for businesses, for profitability and for certainty.

So why are we here debating the Environment Protection and Biodiversity Conservation Amendment (Retaining Federal Approval Powers) Bill 2012 today? What is it that has drawn us to this issue? The answer is pretty simple: it is a big push by the business community to streamline—as Senator Birmingham was discussing—environmental approvals between states and the Commonwealth—quite simply, to facilitate economic development. Now, there is nothing wrong with appropriate economic development, and I have no issues with always searching for better efficiencies in systems and processes, but this system and process that we have in Australia between the states and the Commonwealth has been in place for a long time. A lot of work has gone into improving it and it is not a stationary thing. There are thousands of people employed in this area. I have worked with some of the scientists at the University of Tasmania, for example, who have been doing cutting-edge research on looking at biological offsets under EPBC law. A lot of research is constantly going into this area, to upgrade systems, checks and balances and protocols. So it is not as if the whole system has not changed. It is always a dynamic moving feast with a lot of good people.

The Business Council's central argument for rejecting the bill is that it will inhibit long-term economic development of the Australian economy, and therefore the broader wellbeing of the community. That is fine if you see economic growth and profitability as being the same thing as the broader interests of the community. In my opinion, most of the business community these days has moved beyond that assumption. That assumption is very much a last-century assumption. In fact, business profitability is closely linked to the health of communities and the two cannot operate without working together. They also argue that successful delivery of major capital projects is critically dependent on timely regulatory approvals and well-considered and well-managed regulatory conditions upon approval. If Australia takes too long to deliver approvals or the conditions placed upon approvals are unworkable, major capital projects will not proceed or will not deliver full value to their owners or to the Australian community. It has already been pointed out several times, including by my colleague Senator Waters, that there is no evidence or justification for these assumptions. In fact, even the BCA itself—the Business Council of Australia—admitted that the data to support this was scant. Nevertheless, it felt it was a reasonable basis to proceed with respect to entirely changing our national laws on approving major projects.

The Senate Environment and Communications Legislation Committee heard a lot of good evidence—I was not a part of that committee, but I have managed to read some of the information—but there was no empirical evidence to suggest that the current EPBC approval process is hampering investment or imposing unreasonable costs on individual projects. In fact, some of the evidence strongly opposed that and provided alternatives.

One submission which certainly caught my interest was from Economists at Large, who are partly commissioned by the Conservation Foundation to actually look into these assumptions of the Business Council of Australia. They came up with the following broad conclusions:

There is an inherent conflict of interest in furthering the powers of the state governments to approve projects from which they will derive revenue. state Governments' desire for increased revenue may act as a disincentive to adequately assess the environmental and social costs of a particular project and to act on this assessment.

I would like to come back to that one in a moment in relation to the pulp mill. The submission went on:

There is a limited empirical evidence to suggest that the current arrangement is hampering investment …

And further:

The EPBC Act should be concerned with effectiveness as much as it is concerned with efficiency.

Effectiveness is the absolute key point in the submission by Economists at Large. It is not just about business efficiency here; it is about the effectiveness of these approvals—an effective means of delivering social, environmental and business outcomes and not just for the short term but over a long period of time. They also went on to conclude:

There is little empirical evidence that links removal of "green tape" with improved productivity and enhanced competition.

Economic assessment of projects commissioned by project proponents need independent review which state government planning departments are proving unable to provide. Federal and other independent reviews have shown serious flaws in economic assessments that have passed state approval. Diminishing federal powers would reduce opportunity for greater economic scrutiny of projects.

I can certainly attest to the following from my own personal experience. The largest commercial project proposed in Tasmania's history, the Gunns Limited pulp mill, started at about a $2 billion capex but, over time, climbed significantly higher than that. It was to be assessed by the Resource Planning and Development Commission in Tasmania, the RPDC. That process took too long for Gunns Limited. The company pulled out of the independent process. Within a few weeks we had legislation before the Tasmanian parliament to fast-track the assessment of this project. We have since found out, through evidence provided by members of the RPDC, that Gunns was critically noncompliant in a number of key areas under the state assessment process.

However, after Don Wing, one of the longer serving upper house members in Tasmania's history, said that it was one of the darkest periods of Tasmanian parliamentary history, this legislation was rammed through both the lower and upper houses of parliament. I know because I was there lobbying as many people as I could to try to get them to see community concerns and not just take evidence from the proponents of this project. The legislation was rammed through parliament and passed into law.

I and a couple of other landowners in the Tamar Valley then challenged this legislation in the Supreme Court. Unfortunately, we were unsuccessful. The state government even went to the extent of putting privity clauses in place to prevent them ever having to provide reasons for the decisions that they made in relation to the biggest project in Tasmania's history.

That is a good example of a state government in bed with a large corporation, driving a project that was not properly assessed. The majority of assessment topics or points of assessment—such as air quality in the Tamar Valley; concerns that the locals had about odour issues, which are very common with pulp mills, particularly in a valley with an inversion layer; reputational impacts for the large and burgeoning wine industry in the area, which I was also a part of; thousands of truck movements a day, going in and out of this project; and numerous other concerns—were not covered off by the state based process, nor were some of them covered off by the EPBC process, because they did not fall under federal environmental law. I think that has also been missed here. The EPBC Act has very strict conditions in relation to what it can and cannot cover.

Luckily, for the people in the Tamar Valley and for me and my mates who surf in Bass Strait, the area that I mentioned that was covered by EPBC law was the ocean outfall. It is pretty hard to get surfers off their arse to do things, but we managed to get money and a surf rider group together to look into the scientific scrutiny of dumping 30 billion litres of industrial effluent a year, four kilometres offshore, downwind of our surf spot and 11 kilometres from seal colonies in one of the most productive salmon fisheries in Tasmania. We scraped together money. One of my friends paddled a kayak from Byron Bay down to Hobart and raised $60,000, which we used to fund a research report. We got volunteer pulp mill experts from all around the world, including from South America and Canada. We worked our networks as hard as we possibly could. We came up with a 68-page report, which we put to the RPDC, all based on input by some of the best scientists, including the Australian Maritime College, which wrote an entire chapter for us on the potential impact on marine species. This is all from volunteers, in their own time, with families, with jobs, with businesses, having to get this assessment done. Anyway, it went to the RPDC and of course we never got a response, because the RPDC process was cancelled. So we then went to the federal government. We met with then Minister Peter Garrett in his office in Maroubra. We also met with him later in Canberra with, at that stage, the shadow caucus and a large number of people and we lobbied really hard to get some work done on Bass Strait. I would like to put on record that my group at this point had never said they opposed the pulp mill project; they simply wanted the risks to the ocean to be addressed. As it turned out, Minister Garrett agreed with us: the modelling that had been done had not been based on any data collected in the field.

Gunns then had to go away and do the oceanographic studies that would show where this effluent would go. This effluent included dioxins and furans, some of the most toxic substances known to man. It took them three years to actually map how far this effluent would go. At the end of the day, the project then ran into global financial crisis headwinds and it never got off the ground. To this day, we still do not have the evidence back as to the potential impact of this project. It is a really good example of why we need federal environmental laws, because we would not have got that project assessed—just like all the other things that were never assessed.

Companies that just focus on efficiency rather than effectiveness think that that is good for profitability. I would argue that that is not the case. In fact, any financier for a project or any company looking at corporate finance, whether it is for a coal seam gas project, a new coalmine, a pulp mill or a forestry or a fishing operation, has to have a return, and risk is always written into that return. This risk-return relationship is very familiar to most university students or even to most finance students at school. The higher the risk of the project, the higher the required return for it to get financed.

In this day and age—in the information age where everything is online, where citizens are empowered to go onto social media, where messages are relayed very quickly and where blog sites are everywhere discussing these things—information is the key to the future for environmental awareness and education. It cannot be ignored. No matter what project we look at now, it will be scrutinised—if not by state governments, if not by federal powers, the community will scrutinise these projects. I have seen it not just with the pulp mill, where 20,000 people marched and hundreds of people I know gave up their time to make sure everything was scrutinised. Our group split up an 8,000-page environmental impact statement amongst 200 people. Everyone had to read a certain number of pages and report back.

If a community is motivated enough, they will scrutinise a project. It is dangerous for companies to assume that they can go ahead with large projects without that type of scrutiny. In the risk-return relationship, I would argue that not addressing all the risks comprehensively upfront is an enormous opportunity cost for companies and it is an enormous risk for their future projects. If things go wrong or the community are not on side and social licences have not been delivered, my experience is that shareholders will walk away—and shareholders are very easy to lobby these days in the new age of technology—ethical investors will pull their money and it is going to be very difficult for companies to operate in these environments. And, if the externalities that are created by projects are not assessed as well, eventually companies will end up having to pay for those externalities. It is much better for investors to get that information upfront before they proceed with a large project, no matter what it is. It is better for that information to come out upfront in a comprehensive form before they proceed with the project.

As for an extra layer between federal and state assessments increasing inefficiencies in the process and the idea that that is somehow a fillip to increasing sovereign risk of investing in Australia, I again highlight that this was disputed by the Senate inquiry as having no factual basis. Regarding sovereign risk, go and speak to Tom Albanese, the recently departed Rio Tinto CEO, and ask him about sovereign risk. We often hear this throwaway line that a carbon tax, a mining tax or federal approval processes are increasing sovereign risk and that companies are going offshore, that they are taking their money and their investment elsewhere and that this is impacting on jobs. What evidence is there of this occurring?

Senator Eggleston: Look at west Africa.

Senator WHISH-WILSON: Yes, look at what happened in Mozambique—my point exactly. Mozambique was going to be Rio Tinto's new, big greenfields coal site—one of the biggest coalfields in the world. Look at what happened: $14 billion in write-downs. 'Thank you very much. Thanks for coming. There's the exit, Tom Albanese, see you later.' Just because we have an efficient system in this country for assessing environmental projects on a federal and state basis does not mean that we are a high sovereign risk.

I have here the SmartMoney list of countries for sovereign risk, political risk and country risk. I used to teach this to my students. Australia is in the top 10 and has been for a long time. Mozambique is about No. 48 on a lot of different factors. Go and read that and then tell me that companies are going to leave this country—a stable political environment, English-speaking and with long track records—and take their billions of dollars elsewhere. It is the No. 1 argument that I hear on that side of the room and it is rubbish. Yes, they will diversify their portfolios; they will always look for projects offshore to diversify their earnings—they need to do that from an exchange rate point of view. The idea that they are somehow going to dump Australia is false. We need to maintain our federal environmental powers in balance with the states. That is why this bill needs to be supported.