Opening Remarks to the Senate Select Committee on Red Tape, Perth

You can now read my opening remarks to the Senate Select Committee on Red Tape, focusing on environmental assessments and approvals. These remarks were made at a public hearing in Perth on 22 August 2017.

CHAIR: I welcome representatives from the Institute of Public Affairs. Thank you for appearing before the committee today. I invite you to make a brief opening statement should you wish to do so.

Mr Allen:  Red tape costs Australians $176 billion each year in foregone economic output. That is the equivalent of 11 per cent of GDP. This burden is not just the paper or direct costs of red tape; it also includes those businesses that were never started, those jobs that were never created and the lost time adhering to unnecessary regulation.

Environmental assessments and approvals are one of the key aspects of Australia’s red tape crisis. This is because Australian environmental law has not only been expanding but it has been becoming more centralised. As our research reveals, the number of federal pages of environmental law has increased 80-fold since the first federal environment department was introduced. In 1971 there were 57 pages of federal environmental law. In 2016 there were 4,669.

Cutting red tape is critical because we are reliant on business investment and we operate in an internationally competitive marketplace of mobile capital. The current level of Australian business investment, however, is only 12.2 per cent of GDP. That is lower than the Whitlam era average of 13.7 per cent. Furthermore, whilst since 2004 Australia’s population over the age of 15 has grown by 22 per cent, the number of new businesses opening has dropped by five per cent. This means Australia has both declining investment and entrepreneurial activity. Environmental red tape discourages starting new projects and expanding existing ones. For example, the Adani coal mine has spent seven years in the approvals process and prepared a 22,000-page environmental impact assessment. The Roy Hill iron ore mine required more than 4,000 separate licences, approvals and permits in the preconstruction phase alone. While the optimum level of regulation to achieve a given environmental objective may not be zero, requiring thousands of licences for a project is far above what can be considered minimum best practice regulation.

Our submission has emphasised a number of key aspects of red tape in Australia’s environmental law, including green lawfare through section 487 of the EPBC Act, the water trigger in that same act, as well as native vegetation clearing laws at the state level. Given the federal emphasis of this inquiry, however, we will focus on the former two. Section 487 of the EPBC Act should be repealed. Section 487 extends legal standings specifically to green groups to challenge federal environmental approvals, even when the private rights of the challengers are not affected by a proposal. This section is being used to gain legal standing for anti-development activism through the legal system. Indeed, green groups do not need to win a case in court for their activism to be successful; disrupting and delaying projects through lengthy court appearances often makes projects commercially unviable.

IPA research has shown that 87 per cent of challenges under section 487 that have proceeded to judgment have been rejected in court. That is 87 per cent. Since 2000, major projects in Australia have spent approximately 7,500 cumulative days, that is 20 years, in court due to legal standing gained under section 487. The IPA estimates that these delays have cost the economy as much as $1.2 billion.

The water trigger within the EPBC Act should also be repealed. Introduced in 2013, the water trigger requires all large coal and coal seam gas projects which may affect the water resource to receive approval from the federal environment minister. The water trigger is not intended to protect water resources but rather aims to slow the development of coal seam gas and large coal mines. Why else would the water trigger not apply to other activities? The regulation of water activities should be returned solely to the power of the states.

These two examples of environmental red tape speak to some of the core problems of over regulation and red tape within the environmental law more broadly. Any agreed-upon environmental objectives are not necessarily most effectively achieved through the use of complex and costly government approvals processes. We encourage the development of alternatives to this heavy handed regulatory approach. This could include, for instance, the development of market based mechanisms where those who value environmental amenity pay to achieve that objective.

Policy makers should also focus on removing unnecessary duplication and overlap with regulatory responsibilities between different levels of government. This process should include the principle of devolving regulatory powers and responsibility downwards to the state level; that is, to embrace environmental federalism. Thank you very much. We welcome any questions that you may have.

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