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The Productivity Commission report on its inquiry into Australia’s mineral and energy resource exploration sector was released on 5 March 2014, having been delivered to the Australian government in September 2013.¹ The report outlines reform options addressing the non-financial barriers responsible for the deteriorating competitiveness of the sector.

Of particular focus is the process and inefficiency of the regulatory framework that must be traversed in acquiring exploration licencing approval, land access, heritage protection and environmental management.

The report is very lengthy. A link to it is attached here. This note is intended to provide a high level summary and point you to sections of particular interest.

Background

The report provides some essential contextual background to its recommendations. It points out the self-evident proposition that mineral and energy resource exploration is an essential precondition to resource extraction in Australia, which accounted for 9% of GDP in 2012-2013.  Since the late 1990’s, exploration drilling costs have doubled due to compliance with government regulation and the need to drill to greater depths, yet the rate of discovery has declined.

Main Issues Of Relevance In The Commission’s Report

The report develops the following themes:

• The lack of transparency of the regulatory processes, in particular allocation and notification of exploration licences.²
• Issuing and approving exploration licences can be unnecessarily long and therefore detrimental to the timelines of explorers.³
• The need to improve the management of land access.⁴
• The costs and delays in undertaking cultural heritage surveys and the unnecessary overlap between Commonwealth and state/territory legislation. ⁵
• Costs and delays associated with the environmental approval processes and the need to streamline Commonwealth and state/territory regulations to remove duplication.⁶
• The increased burden on explorers due to a lack of proportionality between regulatory requirements of environmental impact assessments and the likely environmental impacts.⁷
• The scientific uncertainty of the environmental impacts of coal seam gas exploration resulting in subjective judgement driving regulation development.⁸

Productivity Commission’s Key Recommendations

The Commission’s recommendations on a whole aim to remove disproportionate burdens that obstruct exploration efficiency.

Improving Transparency

Increasing the transparency of the licencing approval process may be achieved by:

1. publishing the objectives and criteria on which licence applications are assessed,⁹
2. publishing the outcome of applications,¹⁰
3. creation of public databases allowing access to the location of exploration licences,¹¹ and
4. regulators providing applicants with a statement of reasons for decisions.¹²

The Report highlights that various regulators already have, or are in the process of providing, publicly available information. For example, Western Australia provides publicly available information and reporting on key performance figures, such as percentage of applications processed within target timeframe.¹³

Expediting The Decision Making Process

1. Timeframe targets should be set to improve the efficiency of the decision making process.¹⁴
2. Regulators should expand the use of online lodgement systems.¹⁵

The Report highlights that various regulators have introduced, or are in the process of introducing timeframes for processing applications.¹⁶ Queensland and South Australia have started to introduce online lodgement systems recently. Western Australia introduced online capabilities in 2009.¹⁷

Improving The Efficiency Of Heritage Protection Regimes

Governments should streamline the accreditation of Indigenous heritage protection regimes and create a system of lodgement of heritage surveys to diminish the potential for duplication.¹⁸

Removing Duplication Of Environmental Management Between The States And The Commonwealth

Improving the inefficiencies of environmental management can be achieved by:

1. increasing the efficiency of the environmental impact assessment under theEnvironment Protection and Biodiversity Conservation Act 1999 (Cth) through Commonwealth and state/territory governments establishing bilateral agreements accrediting their approval processes,¹⁹
2. regulators should set the requirements relating to exploration at the minimum necessary to achieve policy objectives,²⁰
3. the development of environmental impact regulations, in particular coal seam gas exploration, should be evidence based and not driven by subjective judgement,²¹ and
4. the environmental information that authorities use to assess the impact of exploration should be made available to the public within information protection protocols.²²

End Notes:

1. Productivity Commission Inquiry Report into Mineral and Energy Resource Exploration (2014).
2. At 68-71, Issues relating to the allocation of licences; at 86-94, Issues with regulatory practices.
3. At 1, at 103-108, Time taken for approvals.
4. At 113-134, Land access issues.
5. At 145-177, Heritage protection.
6. At 22-24 and 198-227, Environmental management.
7. At 227-232, Proportionate regulation.
8. At 135-141, Coal seam gas.
9. At 71, Recommendation 3.1.
10. At 71, Recommendation 3.1.
11. At 92, Recommendation 4.1.
12. At 94, Recommendation 4.2.
13. At 105, Time taken for approvals.
14. At 108, Recommendation 4.4;
15. At 112, Recommendation 4.5.
16. At 105, Time taken for approvals.
17. At 108, Online approval systems.
18. At 170, Recommendation 6.1.
19. At 217, Recommendation 7.2.
20. At 232, Recommendation 7.5.
21. At 135-141, Recommendation 5.3.
22. At 244, Recommendation 7.9.

For further information, please contact:

Mal Cooke, Partner, Herbert Smith Freehills

[email protected]

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