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Environment and Communications Legislation Committee

GRIST, Mr Peter Gerard, Manager, Resources, Australian Forest Products Association

JOHNSON, Mr Grant Gregory, Policy Manager, Australian Forest Products Association

Committee met at 9:00

CHAIR ( Senator Cameron ): I declare open this public hearing of the Senate Standing Committee on Environment and Communications in relation to its inquiry into the Environment Protection and Biodiversity Conservation Amendment (Retaining Federal Approval Powers) Bill 2012. The committee's proceedings today will follow the program as circulated. These are public proceedings. The committee may also agree to a request to have evidence heard in camera or may determine that certain evidence should be heard in camera.

I remind all witnesses that, in giving evidence to the committee, they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee, and such action may be treated by the Senate as a contempt. It is also a contempt to give false or misleading evidence to the committee. If a witness objects to answering a question, the witness should state the ground upon which the objection is to be taken and the committee will determine whether it will insist on an answer, having regard to the ground which is claimed. If the committee determines to insist on an answer, a witness may request that the answer be given in camera. Such a request may of course also be made at any other time.

A witness called to answer a question for the first time should state their full name and the capacity in which they appear and witnesses should speak clearly into the microphones to assist Hansard to record proceedings. Mobile phones should be switched off.

With the formalities over, I welcome everyone here today. I welcome representatives from the Australian Forest Products Association. Thank you for talking to us today. The committee has received your submission as submission No. 126. Do you wish to make any amendments or alterations to your submission?

Mr Johnson : No, Mr Chairman.

CHAIR: Do you wish to make a brief opening statement before we go to questions?

Mr Johnson : Yes. Thank you very much. Members of the committee, on behalf of the Australian Forest Products Association, we welcome the opportunity to address the committee’s inquiry into the Environment Protection and Biodiversity Conservation (Retaining Federal Approval Powers) Bill. AFPA is the peak national body for the Australian forest, wood and paper products industry, representing industry’s interests to governments, the general public and other stakeholders. The industry makes a significant contribution to the Australian economy, especially in rural regions, employing some 120,000 people, with a total sales turnover of some $23 billion annually.

It is the view of AFPA that the proposed bill is counterintuitive to good public policy by excluding the option of delegated responsibility for environmental approvals under the act where such approvals at a state level could be deemed to be appropriate and reasonable. The proposed exclusion of the option of approval bilateral agreements is contrary to good environmental, economic and social policy by potentially not allowing for flexibility for streamlining approval processes, by increasing potential duplication and bureaucracy and by raising compliance costs on projects and businesses across the economy.

The proposed bill is also contrary to the agenda of the Council of Australian Governments' reform agenda for environmental law reform to enhance regulatory efficiency and reduce costs for business, particularly through mechanisms such as national standards and guidelines to reduce duplication and streamline state laws with federal laws. A potentially important though to date rarely used vehicle for achieving such improved regulatory efficiency and reduced double handling of approval processes is the use of approval bilateral agreements. Indeed, the greater use of approval bilateral agreements was recommended by the independent Hawke review of the EPBC Act, and this recommendation was subsequently supported by government.

As noted in the submission by the Commonwealth department of environment, there has only been one approval bilateral agreement since the establishment of the act. Moreover, as detailed in that submission, there are stringent and onerous prerequisites and requirements under the act before the Commonwealth government can enter into such agreements. Consequently, given the fact of these stringent and onerous prerequisites and requirements, demonstrably the Commonwealth has not improperly used its ability to enter into approval bilateral agreements—only one has been approved to date—and, because the enhanced use of approval bilaterals would not be progressed until the Commonwealth is assured that any issues related to their increased use are properly addressed by states and territories, there is no reason to support the bill, which aims to remove provisions for approval bilateral agreements from the act.

The clear national focus on the development of national standards and appropriate safeguards for the delegation of such approval powers would ensure the required environmental integrity needed to ensure compliance with the aims and objectives of the Environmental Protection and Biodiversity Conservation Act as well as the judicious use of such powers by the responsible Commonwealth minister. For the proposed bill to outright preclude such approval bilateral agreements would be a retrograde step that is contrary to the national reform agenda for environmental law. In doing so the bill would reduce the flexibility of the current system and impose an additional and often times unnecessary regulatory layer, thereby reducing the flexibility, efficiency and effectiveness of the current system. Furthermore it would have the direct effect of raising environmental compliance costs and uncertainty with adverse impacts on businesses and the national economy.

Finally, it is important to note that as COAG is committed to continue its work to improve the efficiency and effectiveness of environmental regulation, the proposed bill would appear to be presumptive. We would therefore be more than happy to take questions and elaborate on these issues.

CHAIR: For the COAG agenda, as you have described it, to work you have to have the resources at the state level. Is that correct?

Mr Johnson : Depending on the nature of the reform, yes.

CHAIR: Have you consulted with any of the state governments as to where resources are available to increase their oversight and operation of a devolved approach?

Mr Johnson : No, I have not, but I would have assumed on the basis of COAG's consideration, which is a joint Commonwealth-state and territory consultative reform process, and the fact that the Commonwealth has developed its framework for safeguards and assurance mechanisms that those considerations would surely have been taken into account by the Commonwealth. Also, as I understand it, the Commonwealth, because there are some ongoing uncertainties as detailed in the Department of Sustainability, Environment, Water, Population and Communities submission about the nature of the ability of the states and territories to respond to possible issues such as you have just raised, the Commonwealth is taking further time to consider the nature of its response to the reform requirements. I would have to defer to the council's consideration in those circumstances.

CHAIR: Basically you are not aware of whether the COAG option is practically achievable?

Mr Johnson : I am not an expert on this, but from my research and my understanding of the issue as outlined in the SEWPaC submission, there has only been one bilateral approvals process so far, and that was in 2005 for the Sydney Opera House. It has been used, but it has been used very conservatively. The Commonwealth has adopted a very precautionary approach in the way it may seek to use approval bilateral agreements with the states. It would appear to me that in the process the Commonwealth has considered all the factors and proceeded on an appropriate basis.

CHAIR: Have you had a look at the other submissions?

Mr Johnson : A number of them, but not all of them.

CHAIR: There are some very powerful submissions on this point saying that, given the budget stringency being adopted in a number of states, they would not have the expertise to carry out appropriate assessments. I had a look at things this morning and I think 430 jobs have gone from the environmental department in New South Wales alone—that is without going to Queensland or any of the other states. I am sure if you are arguing for a proposition then the proposition must be achievable in practice, surely?

Mr Johnson : I would agree totally with you there. All I am saying is that on the basis of the Commonwealth's engagement with this provision of the act to date, it has been extremely conservative and precautionary. It seems to have proceeded on the basis of wanting to achieve the highest standards in assurance with the aims and objectives of the act. To be honest, I would not deem myself as appropriate to start commenting on the ability of the states to appropriately enforce agreements with the Commonwealth or not.

CHAIR: But your organisation has engaged in a lot of commentary in the past about the capacity of state and federal governments to actually carry out obligations. I have seen submissions from you in the past which comment on legislation. You are never backwards in coming forward. I am wondering why it is different this time.

Mr Johnson : I am not saying it is different. All I am saying is that, to date, the Commonwealth, in its response to exercising its ability to enter into bilateral agreements under the act, has been extremely precautionary. It has done so with due recognition, presumably, of the ability of the states to properly implement what would be agreed. I know that, in the areas we deal with, the states are extremely rigorous in terms of their prosecution, if you like, of their monitoring and evaluation processes. I feel that is all I am competent to comment on. Possibly my colleague Peter might have something to add.

Mr Grist : No.

Mr Johnson : I think that is the best I can do in answering your question.

CHAIR: So this precautionary approach the federal government has taken—you seem to be quite approving of that?

Mr Johnson : Certainly. As noted in our opening statement and in our submission, AFPA fully supports the maintenance of the highest environmental standards—but with an eye, at the same time, to reducing unnecessary and burdensome overregulation where it does exist. I am not saying that, in all circumstances, it does exist. But, where it does, it seems sensible, in the national interest, to begin to progressively reform those aspects so that you still get the maintenance of the highest standards of environmental performance. By the same token, you seek to reduce the regulatory burden which is possibly inhibiting proper social and economic development—which is also an aim of the act, as I understand it.

Senator WATERS: Do you see the regional forest agreements as a good model for how bilateral approvals should work?

Mr Johnson : I think you would have to argue that they do. I know that there is some disagreement between our industry and certain environmental groups in relation to that issue. But I think that, objectively, any fair assessment of the RFA process would have to deem it a very great success. I could provide the committee with an independent international assessment of OECD countries and their performance in forestry regulation. This assessment was designed to compare national regulatory regimes against independent certification schemes such as PEFC—the Programme for Endorsement of Forest Certification Schemes—and FSC. In all instances they found that the regulatory regime of Australia—and of two provinces of Canada—was at the pinnacle of environmental regulation on this planet. It sets the very highest standards and it is designed to achieve the highest environmental outcomes.

In terms of the comprehensive regional assessment process under the regional forest agreement process—that was one of the largest scientific and community consultative processes in Australia's history. It was an extraordinary process which set an international standard for the independent verification of the sustainability of forest operations. It is extremely precautionary. Written into the ecologically sustainable forest management guidelines is a requirement to harvest no more than one per cent of forest resources in any one year, which is always set below, or equal to, the natural regeneration growth rates of forests. Given all that—and we can, if you like, provide more written comment—I think you have to argue that it does work well.

Senator WATERS: Just building on from that—you say that they are good example of bilateral arrangements and you claim that they have achieved good environmental outcomes. I want to take you to the example of VicForests' RFA region, which contains the last remaining habitat of Leadbeater's possum. There are less than 2,000 left in the wild and their last habitat, as I said, is within that RFA region. Half the habitat was lost in the 2009 Black Saturday fires and the recovery team agreed to make protection of the remaining habitat a priority. Yet there has been no change in the amount of logging allowed. How do you think that is a good example of achieving an environmental outcome?

Secondly, I want to link that question. Last year Australia's leading authority on Leadbeater's possum, David Lindenmeyer, resigned in disgust over the mismanagement by the Victorian government. He said that the state government's policies and the RFA work were 'unable to appropriately protect the possum' and as a result he could 'no longer be a part of such a highly ineffective body'. Can you respond to those claims, please?

Mr Johnson : I could. I am not wishing to be evasive here, but I have to ask for some direction. As I understand it, the aim of this committee is to inquire into the Senator's bill in relation to the stopping of the delegation of Commonwealth powers for approval of bilateral agreements under the EPBC Act. That is under an entirely separate chapter to the RFA section of the EPBC Act.

CHAIR: Mr Johnson, let me help you on this. I think Senator Waters is going to a similar argument that I raised and that is the competence of state governments to carry out the role that the COAG agenda would want them to. I think it goes exactly to the point of consistency with the issues we are trying to investigate with this bill. You should be happy to answer that question.

Senator WATERS: That is why I asked the first question—do you think RFAs are good models for approval of bilaterals? You said, 'Yes', and so I am now taking you to some challenges to the outcomes that have been delivered under the RFA model and asking for your response.

CHAIR: Mr Johnson did say he would go that, provided he got some clarity.

Mr Johnson : I am going to request that we take that question on notice and perhaps provide a written response. I would be grateful to do that if the committee is okay with that response.

Senator WATERS: If you are saying that RFAs are a good model, clearly—

Mr Johnson : I was responding to the Senator's question as to the efficacy or not of RFA's. I appreciate that there is a difference between sections of the Australian community—predominantly some sections of the environmental non-governmental organisations—but there is a sustainable difference in relation to the point of view that I just enumerated. We are only too willing to take that question on notice, because it is outside what we prepared for today. I have tried to be honest in my answer there and do my best to respond.

Senator WATERS: Thank you, and I will move on then. In your submission you say that removing the ability for the Commonwealth to enter into these approvals, bilaterals will 'have the direct effect of increasing uncertainty with adverse impacts on businesses and the national economy'. Can you explain what evidence base you have to make that statement? I do not follow it, because, as you would know, there was a whole lot of legal uncertainty surrounding the hand-off of powers. Have you done any analysis of the likely litigation risks and the uncertainty that would eventuate from the hand-off of powers?

Mr Johnson : If I may ask for clarification, you said that you would be aware that there is a degree of uncertainty in relation to, and I did not quite get what you said after that.

Senator WATERS: I am sure you would have read the Prime Minister's statements at the COAG meeting in December, where she appeared to dump the proposal on the basis of the legal minefield it would create. Have you had any legal advice on that point?

Mr Johnson : In my research and the quote you provided from the submission was actually taken from, I am pretty sure, the Business Advisory Forum Communique following their meeting and I built on their comments there about the requirement or desire to reform the environmental law as appropriate, consistent with the aims and objectives of the act.

Senator WATERS: I am just seeking to understand why you say it would increase uncertainty. It is not clear to me why you make that claim.

Mr Johnson : I think our submission and the BCA submission makes a very solid case that there is a welter of environmental regulation and good environmental regulation at the Commonwealth, state and local government levels. Oftentimes those jurisdictions overlap and there can be a duplication in regulatory requirements. So, the argument is that, given the duplication in regulatory requirements and the differing abilities for different people to make decisions at different levels in that process, there is uncertainty, which adds to costs, which also therefore impacts on business's ability to invest with confidence or plan for the future with confidence. A request would be consistent with that aim to reduce complexity and to increase certainty for there to be reform of environmental law where it is unnecessarily duplicative and where it does not seem ostensibly or efficiently to meet the objectives of the act. Beyond that, I do not think I am competent to speak.

Senator WATERS: You also say in your submission that environmental regulation generally contributes to a slowing broad economic growth. What is your evidence base for that?

Mr Johnson : Can you just refer me to the part in the submission.

Senator WATERS: It is in the middle of page 2.

Mr Johnson : Once again, this was taken from the reform communique, because I felt that it provided an adequate summary of our concerns and we supported the forum in its communique in seeking for rational and effective reform of environmental law as appropriate. What stands behind all of this is that the forestry industry has been a willing participant in reform of environmental law over the decades and has improved its standards to such an extent that, if not at the top, it certainly represents world's best practice. Given that experience and the way that the industry has benefited from the increase in its environmental performance and on that basis, the certainty that was to be provided by environmental law reform is an important aspect of—sorry, I was just trying to answer your question.

Senator WATERS: Continue—I would love an answer.

Mr Johnson : I have sort of lost track now.

Senator WATERS: I was asking for an evidence base for your claims, and you were referring to a different submission.

Mr Johnson : The evidence was based on the communique provided by the Business Advisory Forum.

Senator WATERS: Which itself lacks an evidence base, but I will take that up with them. I will put on notice, given we are short of time, my final question. Your submission makes the claim that keeping approval powers with the Commonwealth where they have been for many years potentially further politicises the environmental approval process. I would like you to take on notice again what your evidence base is; why you think the federal government are likely to make a more political decision than a state government; and your position on the countless examples where the Commonwealth has made a decision to step in and protect the environment where states have been willing to give an approval.

Mr Johnson : That is why the word 'potentially' was in there. I will take that on notice and provide the best response we can.

CHAIR: Maybe you can explain why you believe that is a potential.

Mr Johnson : The concern—

CHAIR: I am not asking you to do it now; you can take it on notice, but it is a very important point if you are arguing there is potential for political manipulation maybe.

Mr Johnson : We will take that on notice and provide the best possible response.

Senator BILYK: You mention in your submission the need for substantive and effective reforms to reduce the costs incurred by business in complying with unnecessary regulations. Could you provide to us some examples of where compliance costs to developers increase as a result of having separate Commonwealth and state approvals.

Mr Johnson : Certainly we can do that.

Senator BILYK: Are you going to take that on notice?

Mr Johnson : I will take that on notice.

Senator BILYK: Can you tell us how integrating these assessments reduces compliance costs?

Mr Johnson : My understanding of the situation is that that provision is in there—it is also stated in one of objectives of the act and that is to seek efficiency, I think, and avoid duplication in terms of environmental administration. The ability for the Commonwealth to enter into approvals and assessment bilateral agreements was incorporated. There are quite a few instances where the recognition, if you like, of the veracity and the ability of the Commonwealth and the states to properly manage their affairs under the act in terms of assessment bilateral agreements is well recognised. Obviously, it is not an issue, because it would have been included in the senator's bill. Had it been an issue, the bill targets only approval bilateral agreements, not assessment bilateral agreements. Therefore if there was a problem with assessment bilateral agreements, you would imagine that it would have been a bill to strike out both options. It is not; it is just approval bilateral agreements. All we are saying is that, consistent with the performance of the Commonwealth to date and with the fact that there has been only been one approval bilateral agreement, it would appear a reasonable statement that the continuation of that requirement represents no threat to the environment; it represents a threat to ongoing improvements in business and regulatory efficiency in this country to take it out. That is all we are saying and I think that represents a common-sense point of view not only based on the facts of the situation as they are represented but also the experience to date.

Senator BILYK: In your submission you refer to RFAs essentially accrediting state and territory environmental management processes and ongoing monitoring and improvement, including three-to-five-yearly reviews. To put it succinctly, could you tell us how, from the forestry industry's experience, the RFAs' impact on compliance costs?

Mr Johnson : My understanding is—and I can back this up by in-the-field experience, if I may draw on a recent experience of working closely with the Commonwealth on the Illegal Logging Prohibition Bill—we have been hosting quite a number of site visits with departmental officers to look at the rigorous and integrated nature of the environmental assessment and approvals processes in the field. The level of regulation in relation to this industry is quite extraordinary. Indeed, the Department of Agriculture, Fisheries and Forestry's own website says that the timber industry is one of the most restricted and tightly regulated industries in Australia. It goes on to detail why that is the case. I can provide the committee with a copy of this.

It is without doubt that this industry is one of the most tightly regulated, and it is very well regulated. It sets out to get to the highest levels of environmental sustainability whilst at the same time providing reasonable and appropriate opportunities for social and economic development at the same time as getting the highest outcomes of biological sustainability, biodiversity and a whole range of other environmental outcomes in terms of catchment resilience, water quality and other desirable outcomes that we all want. It is pointless interacting with the environment if we are progressively degrading it. I think by any reasonable argument—and I can provide the committee, if it wishes, with independent international verification of this point of view—the standards in Australia are at the top of the planet with environmental requirements.

Senator BILYK: I do have a couple more questions but I will give them to you in writing on notice, if that is okay.

Mr Johnson : I would appreciate that, thank you.

Senator BIRMINGHAM: Thank you very much for your evidence this morning. I will touch on your industry-specific issues. In your submission you state that as a result of RFAs processes forestry operations are recognised as having met or exceeded the requirements of the EPBC act and that this is done in a world where we have a regional bilateral based approach to environmental assessment and approvals, and through the RFAs accrediting state and territory environmental methods and processes, et cetera. Can you briefly give the committee some evidence to back up your statement that you meet or exceed the requirements of the EPBC act through the RFA processes?

Mr Johnson : Sure. I will quote from the Hawke review, which says in relation to those abilities that:

The interaction between the EPBC Act and forestry operations is often referred to as an 'exemption'. This term does not, however, accurately reflect the relationship. The rationale for the RFA provisions in the Act recognises 'that in each RFA region a comprehensive assessment has been undertaken to address the environmental, economic and social impacts of forestry operations'. Rather than being an exemption from the Act, the establishment of RFAs (through the comprehensive regional assessments) actually constitutes a form of assessment and approval for the purposes of the Act.

For the RFAs process to meet the purposes of the act they must at least meet the objectives of the act, so we can agree there. But we would argue on the basis of some of the evidence that I have previously given here that the industry in Australia outperforms the requirements of the act and, indeed, sets a standard internationally which other nations aspire to. Sustainable forest management in this country reasonably, rationally and objectively can be argued to represent world's best practice. And I think the continued persecution of this industry is unreasonable—as it is for sectional interests to say otherwise.

This industry performs at a very high standard. It is staffed by extremely professional people with a real commitment to environmental outcomes. These people also perform a vital role at rural and regional levels, providing vital jobs. It is in their interests to sustain the environmental integrity of the resource from which they make their lives. Not only that, they live in that resource. They live in the rural and regional areas where these forests are. It is not fair to this industry that this type of statement just goes on and on, that the industry is not performing to the highest environmental standards.

I find it personally quite distressing that the good efforts of this industry are so denigrated. I hope I am not sounding too strong there but these issues reach into quite strong personal experience. I can see the toll of the stress that this industry is taking at rural and regional levels; the family breakups, the bankruptcies. This industry performs at an extremely high level. The reform process over the last 30 years has been almost unprecedented on the planet. We set a very high standard, and that should be acknowledged.

Senator BIRMINGHAM: Mr Johnson, your association is in a relatively unique position in terms of being able to look at how the RFA process operates with a cooperative approach between state and Commonwealth agencies for one part of the activities of your membership versus other activities of your members that are falling exclusively under the EPBC provisions that do not apply to the RFA. For example, if you are building a new pulp mill or whatever, you do not have an RFA; you just have to comply with the EPBC provisions as they sit. Looking at the experiences of your members in those two different streams of environmental approvals, how do you see those different experiences in terms of the costs and requirements and processes to gain approvals for their operations that apply?

Mr Johnson : That is a big question. Do you mind if I take that on notice?

CHAIR: I think, given the time, that is probably a good idea, Mr Johnson. We have one senator who has not had an opportunity to ask any questions, and I propose to go to her now.

Mr Johnson : I appreciate that. We are not seeking to be evasive. It is an important question. We would like to give the best possible response.

CHAIR: I agree; it is a complex question.

Mr Johnson : Thank you.

Senator McKENZIE: I look forward to getting the answer to that question. My question goes to the comments in your submission around the politicisation of environmental approval processes. Could you outline for us what the reality of the politicisation looks like on the ground.

Mr Johnson : I think that relates to Senator Bilyk's question. All we are saying there is that, if there is an additional level of government involved, obviously that level of government is a political process and, because it is a political process, the decision makers come under a variety of political pressures. So, if sensibly via a reform process you can reduce a level of government whilst not diminishing the ability to meet the high standards expected and demanded by the act, which we fully support, that has to be desirable. It simplifies things, in a whole range of ways that we have covered already, and it also diminishes potentially the impact for further political involvement, if you like, in decision-making processes. Notwithstanding that, I know that ministers and decision makers objectively strive for the highest standards, but they are also political representatives. The government is obviously a political being and it must react to political pressures; that is government. To say otherwise is ridiculous. In saying that, I am not trying to say that the process is corrupt or inefficient or not good, but the mere fact, the Realpolitik, of the situation is that it is political.

CHAIR: That raises an interesting question: if you have state governments determining the environmental outcomes, and your organisation has a very strong political influence on the state government, where does that take your argument? I am not asking you to respond to that now—

Mr Johnson : I can respond quickly, if you like.

CHAIR: I am just making an observation. We have other witnesses waiting to come in.

Senator McKENZIE: I have just one last question—sorry, Chair—and I am really looking forward to your answer to Senator Birmingham's question. Just going to your commentary around rural and regional Australians who work in the timber industry and in those forest communities, I was born in Marysville and my dad was a logger, so I grew up as part of that community. Do you think that they find this quite an offensive attack on what they do and the daily way they live and work in the community?

Mr Johnson : I think what is truly distressing is that the very real gains and the very real commitment of the industry to the highest environmental outcomes for some reason are not recognised and appreciated. They are simply people trying to do the best in a very difficult environment and at the same time meeting the highest standards that can be expected of them. I think that, rationally, objectively and reasonably, you would have to acknowledge that that is the case. It is not me saying that this industry is performing to extremely high and world's best standards; I can give you independent support of that. I know that there is a difference of opinion in this country. I have in the past been a member of the Greens party myself. I am not some rabid developer.

Senator McKENZIE: Not that at all developers are rabid.

CHAIR: As I said to you, we are five minutes over time. We have other people waiting on line. I am very happy to hear about your previous political activities if you want to take that on notice and give us that in writing. That is great. But, for the moment, I just think we are going to have to move on. Maybe you could take your response to that question on notice, thanks.

Mr Johnson : Sure. I would just like to thank—

CHAIR: Mr Johnson, just before you go, this will help you. Can I get a motion from the committee that the date for return of answers to questions on notice be 15 February. Someone move that way.

Senator BIRMINGHAM: If we need it.

CHAIR: It has been moved. All those in favour? I declare that carried. So, for those questions that you have taken on notice, Mr Johnson, we would really appreciate responses by 15 February.

Mr Johnson : Sure. Thank you.

CHAIR: Thanks for coming along. It has been very interesting. It has been very good. You have kept up your advocacy for your industry.

Mr Johnson : Thank you. I would like to thank the committee for its generous hearing and time today. Thank you very much.

CHAIR: Thank you.