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Standing Committee on Environment
26/06/2014
Streamlining environmental regulation, ‘green tape’ and one-stop shops

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HOFFMAN, Mr Martin, Deputy Secretary, Department of Industry

KING, Mr Demus, General Manager, Offshore Resources Branch, Resources Division, Department of Industry

McGLYNN, Mr Gene, General Manager, Building and Community Energy Efficiency Branch, Energy Efficiency and Renewables Division, Department of Industry

Committee» met at 09:34

CHAIR ( Mr Hawke ): I declare open this hearing of «the» House Standing «Committee» «on» «the» «Environment» as part of «the» committee's inquiry into streamlining environmental regulation, green tape and one-stop shops. «The» «committee» has received a significant amount of evidence in writing and in person from a range of stakeholders. «The» «committee» has heard «the» views of members of industry, environmental organisations and practitioners engaged with environmental assessments and members of «the» community. Today we are hearing from two Commonwealth government departments who are responsible for administering «the» bulk of federal environmental laws. Representatives of «the» Department of Industry and «the» Department of «the» «Environment» will update «the» «committee» «on» their deregulation activities and will also have an opportunity to respond to evidence that has been received throughout «the» course of «the» inquiry.

I remind members of «the» media who may be present or listening «on» «the» web of «the» need to fairly and accurately report «the» proceedings of «the» «committee» . I welcome representatives of «the» Department of Industry. Although «the» «committee» does not require you to give any evidence under oath, I advise you that this hearing is a legal proceeding of «the» parliament and has «the» same standing as proceedings of «the» House. We have received your written submission, thank you. Do you wish to present an additional submission or make an opening statement this morning?

Mr Hoffman : No, thank you.

CHAIR: We will go straight into questions. Thank you for appearing before us today. We have heard a lot from industry and from a lot of different industry groups about all of «the» Commonwealth's approval processes. This inquiry is looking into all of these matters in relation to environmental regulation. There are a few issues. Your submission refers to your internal deregulation unit. Could you update us «on» «the» activities of this unit, any benefits or cost reductions you have found so far from «the» development of this unit and «the» operation of it?

Mr Hoffman : «The» establishment of this unit was a requirement of each government department coordinated through a central unit in «the» Department of «the» Prime Minister and Cabinet. We established that unit shortly after «the» current government took office. They have been doing a number of things so far. Firstly, as with all «the» units across departments, they have been compiling a full audit of all «the» regulation that «the» department administers and then seeking to quantify or rank which have «the» biggest impact and then starting to cost that. That has been building up a database of regulation.

Parallel to that, «the» group has been coordinating some initial activities for deregulation. «The» primary example of that is one of «the» things that was covered in our submission— «the» streamlining of «the» interaction between NOPSEMA, «the» National Offshore Petroleum Safety and Environmental Management Authority, under «the» OPGGS Act, «the» Offshore Petroleum and Greenhouse Gas Storage Act, and «the» EPBC Act. Those changes came into effect in March this year and they were quantified at about $120 million a year of savings. That has been «the» largest single activity that we have shared between us and «the» Department of «the» «Environment» in accounting terms. There have probably been a dozen other smaller ones that have been put in place at this stage.

CHAIR: In relation to NOPSEMA, it is early obviously but is there feedback about how «the» process is working?

Mr Hoffman : We have received very good feedback from a range of players in terms of industry and «the» industry association. We have received what you might call watching briefs from a range of other groups. In terms of «the» mechanics of «the» new regime, you will be aware that it requires an OPP, an offshore project proposal. None of those have been submitted as yet, although there have been discussions with I think about 10 companies who might be preparing to put one in. There have been around 15 to 20 «environment» plans submitted in respect of ultrapetroleum activities under «the» new regimes. Some of those have been accepted, but most of them are still in «the» process of assessment by NOPSEMA.

CHAIR: Are you aware of any change in environmental outcomes or any criticism so far with regard to this?

Mr Hoffman : As I indicated before, there are some environmental groups who would be saying, 'We'll wait and see', so a watching brief. I am certainly not aware of any evidence that points to a diminution of environmental outcomes from this change at this point in time.

CHAIR: Do you envisage this process will be further streamlined in time?

Mr Hoffman : «The» significant further activity that we are seeking to do is to engage with «the» states and territories about «the» conferral of their powers for state waters—that is, from «the» low tide mark out to three miles—to NOPSEMA. So currently an activity— «the» same activity that crossed that three-mile—

Ms MARINO: Pipelines and whatever.

Mr Hoffman : Pipelines indeed—that is right—or seismic surveys require approval under two regimes: «the» Commonwealth one, through NOPSEMA, and then «the» particular state or territory one. At «the» COAG energy ministers council meeting «on» 1 May this year, this issue was discussed and South Australia and «the» Northern Territory gave an in principle agreement to look very seriously to move towards conferral of their powers towards that. We think this has significant benefits not only for streamlining but also for safety outcomes. It is not a good idea to have different regulators and different regimes applying to «the» same bit of CIC. This was one of «the» key findings from review into «the» Varanus Island explosion in Western Australia, and we are hopeful that we will make good progress through «the» rest of this year «on» «the» conferrals from at least those two jurisdictions.

CHAIR: I am not so familiar with those findings. Just briefly, that was a finding that two jurisdictions were not helping «the» outcome in relation to «the» regulatory «environment» ?

Mr Hoffman : Correct.

CHAIR: Okay; that is good to hear. This is a more general question. We have had some criticism from industries «on» offset regimes that have nothing to do with particular projects, particularly I think there was some oil or offshore gas saying they were required to do some—I know that is more of an environmental question, but do you have a view about this? In your approvals and assessment processes of offsets, are they required in any way to be about «the» project itself, or is there something here that is a problem in your view?

Mr Hoffman : With regard to offsets, as with all elements of an environmental management regime, it is important that there be certainty and clarity in what is required and that «the» regime effectively not be used as an offset regime, as a sort of negotiation point. You should be able to reach an outcome «on» «the» facts rather than having to negotiate what an acceptable offset is. There are concerns that «the» offset is not particularly well-related to «the» activity itself; it just becomes another payment and a form of tax, effectively, to make a payment over here for something different to «the» activity that is undertaken. So they are some general comments. There is also a need, and I know «the» «committee» has been looking at this in terms of «the» approval and assessment bilaterals between Commonwealth and state, to make sure that there is consistency in «the» offset regimes in terms of what «the» Commonwealth expects and what «the» state expects, and between states as well.

In terms of offsets in «the» offshore «environment» , they are probably of less relevance, and that is because it is difficult— «on» land, if you develop a piece of forest, you might buy another piece of «the» same sort of forest and in some way put a mandate around it. It is more difficult to do that in an ocean «environment» . «The» primary focus that NOPSEMA uses is a focus «on» ALARP—that is, reducing «the» risk to «the» «environment» to as low as reasonably practical. That is «the» test that is used. In doing that, offsets may come into play, but they have not been a significant part of «the» regime in «the» offshore «environment» . Desmus, do you want to add anything to that?

Mr King : Yes, thanks, Martin. In essence, it is an element of «the» EPBC Act and, therefore, «the» Department of «the» «Environment» would probably be better placed to add further to it. But Martin has certainly covered off «the» offshore space very well.

CHAIR: Yes, certainly. I think «the» complaint was particularly about NOPSEMA in this area and how it applies here, so I thought you might have some relevant—that was helpful, thank you.

Mr BROAD: I have a question about strategic assessments under «the» EPBC Act. «The» «committee» has heard from «the» Department of «the» «Environment» that «the» strategic investment assessments have been used very effectively across broad geographical areas in which several members of «the» mining industry may have an interest or be conducting activities. Has «the» department had any feedback from industry «on» «the» use of strategic assessments and what sort of feedback have you had?

Mr Hoffman : I think it would be fair to say that «the» feedback has been that «the» use of strategic assessments has been improving. «The» first ones that were done were seen as taking a long time, being very lengthy and not necessarily producing «the» outcomes that they had hoped for in «the» sense that «the» assessment was done and then they still needed to do project specific approvals afterwards. «The» feedback is that «the» process has been improving. Certainly «the» strategic assessment that NOPSEMA did in order to do «the» streamlining that I have just talked about was done very cooperatively, very quickly, in a two- or three-month period while still being a very solid piece of work. So there is renewed interest in «the» use of strategic assessments if they are done in a reasonable time frame and if they lead to a genuine reduction in «the» need for subsequent project specific approvals under «the» EPBC Act.

Mr BROAD: Okay, they are improving. Are they where they should be, or can you suggest anywhere where they can be improved even more?

Mr Hoffman : It is probably difficult to comment given there is not a huge number of them; they are pretty specific one by one rather than having a sufficient sample size. Given one needs to be done well, companies are interested in participating and I think «the» «environment» department is focused strongly «on» improving them.

Mr King : «The» strategic assessment of «the» Browse that occurred a couple of years ago, «the» overhang from that within «the» offshore industry was quite heavy. There was a lot of concern that «the» strategic assessment that «the» department did for «the» streamlining of NOPSEMA was going to go down «the» same route, that it would be multiple years, «the» quality of consultation would vary, that there would be all sorts of difficulties in terms of developing «the» documents required for «the» strategic assessment. That did not occur. I would suggest that there have been significant learnings, and industry that were involved in «the» strategic assessment of NOPSEMA felt that «the» process was run in a way that demonstrated that there had been significant learnings around how to do a strategic assessment. That was learnings within «the» Department of «the» «Environment» and industry itself and other stakeholders, as well as «the» Department of Industry.

Ms MARINO: With NOPSEMA—I am aware that it is relatively new—can you see other areas that you administer where that type of one-stop shop would be useful? Do you have any other practical examples of where there is an overlap and «the» duplication of state and federal? I would be interested in those. Also, we have heard in our deliberations that some witnesses have been concerned that «the» delegation of Commonwealth assessment and approval powers to «the» states would not necessarily result in efficiencies with mining, petroleum and forestry projects across state and territory boundaries. From your knowledge of this sector, and it is extensive, would it be common for projects to extend across «the» boundaries, beside in «the» «environment» we discussed earlier? Can you give any examples of those types of projects please?

Mr Hoffman : There are a couple of points raised there. Obviously «the» key one is all «the» work that has been done around «the» assessment and approval bilaterals between «the» Commonwealth and «the» states and territories «on» «the» EPBC Act. In relation to other examples of Commonwealth overlap that I would point to, just as we looked at «the» way «the» EPBC Act intersects with NOPSEMA's role, there could be, by analogy, a similar look at «the» way «the» EPBC Act interacts with ARPANSA's role and with ANSTO, although ANSTO is more «the» operator than «the» regulator. It is more ARPANSA and «the» EPBC Act—they both have roles in respect of uranium mining and similar radioactive related activities. From our perspective, having some responsibility in that area, including for «the» regulation of uranium mining, that would be one where we would be keen to see improvements made.

«The» second part of your question was about whether there were onshore mining activities that crossed state and territory borders. I am not personally familiar with any example; I am happy to take that «on» notice. If there were, you would be talking one or two. Individual mines are relatively stand-alone. «The» best example would be coal seam gas activity or other unconventional gas activity which extends over a large area. Often «the» same firms are involved and yet arrangements can be different between «the» different states. That is an example, because you have many hundreds, if not thousands, of individual wells being put in place. That is why, through «the» ministerial council, we have been working «on» a harmonised best-practice framework for regulation of unconventional gas activities. But, at «the» end of «the» day, those matters are still «the» province of «the» states and territories rather than «the» Commonwealth. So, in one sense, it is an encouraging role that we have for harmonisation and best practice rather than a formal legal role.

CHAIR: I want to quickly go to «the» Energy Efficiency Opportunities Program. A bill about this is currently before «the» Senate. We have heard some evidence in relation to this scheme about requirements which seem fairly onerous to me. For example, light fittings have to be inspected annually in commercial buildings, just to check that «the» fixtures are still there. If «the» bill is passed it will repeal all of those requirements. Are you familiar with this territory?

Mr Hoffman : Yes. Just to clarify that, «the» Energy Efficiency Opportunities Act is «the» one «the» government is seeking to repeal through «the» legislation you referred to. «The» issue about commercial buildings and light fittings et cetera relates to a separate act, «the» commercial buildings disclosure act. Repeal of «the» EEO will not affect «the» issues that you raise there.

CHAIR: That is important; I am glad you have told us that.

Mr Hoffman : That is «the» subject of a review, with a governmental agreement having been put in place. That will be done over «the» next six months leading up to «the» end of «the» year, as well as part of «the» general deregulation.

CHAIR: Who is conducting «the» review?

Mr Hoffman : That will be internal by «the» Department of Industry but will involve wide consultation and stakeholder engagement, including from groups such as «the» Property Council of Australia or «the» Green Building Council et cetera. Views «on» those issues will be fully canvassed.

CHAIR: Does «the» department have a view about this scheme? Is there a defence of this annual need to inspect light fixtures in commercial buildings?

Mr Hoffman : I will let Gene make some comments «on» that and then I will come back to it.

Mr McGlynn : Just a quick clarification: «the» act is «the» Building Energy Efficiency Disclosure Act, which supports «the» Commercial Building Disclosure Program. «The» requirements under «the» act are to disclose performance, including «the» base building and «the» lighting, at «the» time of sale or lease. So there is no requirement to get «the» ratings annually, other than situations where buildings are being sold, leased or subleased. Having said that, for a number of buildings that means they do it annually.

CHAIR: So you are saying it is required in cases of lease, sublease or sale. That could be regularly with leases.

Mr McGlynn : It could be quite regularly, but it is only required when those transactions happen.

CHAIR: It is simply to inspect «the» light fixtures within «the» building, isn't it?

Mr McGlynn : It is effectively to inspect «the» infrastructure of «the» lighting that is in place. It identifies what is called «the» nominal lighting power density—basically «the» amount of energy «the» lighting uses when it is in operation—and assesses «the» control systems that are in place to manage those, because they are both important parts of «the» lighting system.

CHAIR: Wouldn't it be smarter to do that at «the» time of changing it? Some of these things last five years. I do not understand this requirement at all.

Mr McGlynn : This is certainly one of «the» things that will be looked at in «the» review and it has been discussed. There has been some initial analysis of that. Lighting systems do seem to change more regularly, perhaps, than some people would think. «The» importance of «the» measure is to make sure that «the» lighting assessment is correct at «the» time that information is provided to «the» market. «The» lighting assessment lasts for 12 months and I think «the» issue that has been discussed is: should it last for longer, or should there be other triggers for when it gets changed?

CHAIR: Thank you. That is very helpful. Do you see any other benefits or savings in relation to «the» scheme being abolished? Have you got a view «on» «the» outcomes?

Mr Hoffman : In terms of EEO Act, this was a program which did not require companies to actually implement changes but to look at their energy use, identify opportunities and then report «on» them. Whether they went ahead and made those changes and invested was a matter for «the» company itself. «The» way we think about it now is that this program has built a significant capacity in industry broadly to better understand energy efficiency opportunities, to better cost them and to build «the» internal business cases that they need.

What we observed in «the» reviews was that, as «the» program went forward, «the» proportion of projects that went ahead only because «the» act was in place was declining significantly. So this means that «the» capacity was there and people better understood «the» benefits of energy efficiency. At a time of historically relatively high energy prices, «the» case for energy efficiency gets stronger. Therefore, having built capacity and built understanding, there was no need to continue with mandatory analysis and reporting. «The» business case to do it anyway, as part of normal business, has improved and «the» ability to do it has improved.

CHAIR: Yes, due to other factors.

Mr VARVARIS: «The» «committee» has heard from «the» Department of «the» «Environment» that strategic assessments have been used very effectively across broad geographical areas in which several members of «the» mining industry may have an interest or be conducting activities. Has your department had any feedback from industry «on» «the» use of strategic assessments, and what has that feedback been?

Mr Hoffman : I think there was an earlier question that was similar to that. I commented then that I think «the» use of strategic assessments has «the» potential to be very valuable. Our feedback would be that «the» early versions of those, going back even to «the» first ones in «the» Gorgon and Browse offshore basins, were not necessarily totally well received. They were lengthy, time consuming and expensive and people were not sure about «the» value of «the» outcomes. But since then there have been significant improvements in «the» way they are done, and our sense now is that industry are keen to engage in future ones.

Mr GILES: Mr Hoffman, I want to clarify something «on» «the» Energy Efficiency Opportunities Program. As I understand your response to «the» chair's question, «the» evidence that has been put to us about «the» allegedly duplicative effect of «the» program is misconceived.

Mr Hoffman : I was responding to «the» specific point about «the» lighting system.

Mr GILES: I think that is a matter that has been put in evidence to this «committee» . It appears «on» «the» basis of your evidence that there is some confusion amongst stakeholders.

Mr Hoffman : Yes. «The» obligation about «the» lighting assessments does not come from «the» EEO Act; it comes from «the» Building Energy Efficiency Disclosure Act, as my colleague said. «The» substantive point about how often lighting assessments should be done, as Gene indicated, is a valid question to be considered and it is one of «the» things that will be under review.

Mr GILES: This is a slightly more open question. I found «the» reflection in your submission around «the» application of «the» broad Commonwealth regulation approach interesting. You tease out «the» question of «the» implications of an objectives based approach to regulation in this field but not so much «the» other limb, «the» risk based approach to environmental legislation. Obviously a key part of our terms of reference is to try to get «the» balance right. It seems to me that a risk based approach is pretty fundamental if we are to safeguard environmental benefits and conditions. I just wonder if you have any thoughts in that regard.

Mr Hoffman : Sure. I think it is a very, very good point that you make. We would see «the» risk based approach as being a key component of an outcomes focused regulatory «environment» . «The» way you do outcomes based regulation requires an appreciation of «the» source of risk to desired outcomes and hence where activity should be focused. So we see them not as two things but as inextricably linked. You cannot do proper outcomes based regulation without some sort of risk focusing, in contrast to a straight compliance based or prescriptive one-size-fits-all checklist that can be «the» nature of other forms of things. Demus, do you want to add something?

Mr King : Yes. Just adding to that: an objectives based regime actually facilitates continuous improvement because you are asking «the» companies to think about «the» risks and come up with mechanisms to reduce those risks to as low as reasonably possible, and it enables you to improve «the» regulatory framework through its application rather than just have a prescriptive based regime that checks boxes.

Mr GILES: Thank you.

CHAIR: Thank you for your time today. Unfortunately, we have more questions, so we might put those to you in writing. We have some divisions coming up. There are some very non-controversial bills in «the» House about «the» carbon tax! So we will have a series of divisions.

Mr GILES: But you are welcome to stay here.

CHAIR: Yes. We would love to keep asking you questions. There are a few matters, but we will put those in writing.

Mr Hoffman : Of course.

CHAIR: Thanks for your time today. You will be sent a copy of your evidence, and if you want to make any corrections to «the transcripts you may do so. Thank you for appearing. That has been very helpful. There will be a few more questions coming to you. Thank you so much.