A Productivity Commission report this week has given state and federal governments a clear guide towards a better project approvals system.
The Productivity Commission is famous for being an advisory body that is usually ignored by policy makers in Canberra.
As a bastion of market-based analysis free from vested interests, it often challenges the rules and regulations that assist specific industries but serve as a drag on the economy at large.
Its latest report, ‘Major Project Development Assessment Processes’, tackles a perennial issue in Australian policy making – how to balance the interests of industry with community concerns regarding the social and environmental impact of major projects.
It’s an inherently difficult challenge; large projects require careful scrutiny, and that usually takes a long time.
But the concern for many in business is that approval time frames keep getting longer.
One mining company told the commission that the approval time frame for projects has increased from approximately seven months on average in 2002 to 18-36 months now.
Another specific example was AngloGold Ashanti’s Tropicana gold project in Western Australia, which required 66 different approvals.
The community concern has also resulted in a significant degree of duplication, after ministers in Canberra decided they needed to get involved in project assessments traditionally handled by the states.
This has led to a lot of debate about whether Canberra or the states are better able to handle these matters.
I’ve always thought that was nonsense; as the political complexion of governments change, so does their approach to project assessment.
The better answer is to have a rigorous and efficient system that works, irrespective of which party holds the reins of power in Canberra or Perth.
The project assessment system, and the people who work in that system, should also recognise the ability of industry to successfully co-exist with the community and the environment.
There are many impressive examples around Australia of industry operating in a way that actually enhances the local environment and community.
That usually has occurred because governments have set appropriate and transparent standards and ensured industry complies.
The Productivity Commission did not try to evaluate whether Australian governments were setting the correct standards.
Instead, it was focused on finding the most efficient way to achieve the defined standard.
Its starting point was to benchmark Australian practice against practices in other jurisdictions, namely Canada, the US, the UK and New Zealand.
It found that none of these countries stood out as a better performer overall than Australian jurisdictions, but in each system there were leading practices.
Based on that assessment, it listed a number of aspects in the development assessment and approval system that require attention.
These include unnecessary complexity and duplicated processes, lengthy approval timeframes, the lack of regulatory certainty and transparency in decision making, and inadequate consultation and enforcement.
Specific reforms that it proposed include a five-point plan to move towards a ‘one project, one assessment, one decision’ framework for environmental approvals.
This would include a strengthening of bilateral assessment and approval agreements between Canberra and the states – in other words, working together more effectively rather than working in parallel.
The commission acknowledged the breakdown of recent reform efforts in this area.
Hence it suggested a targeted or staged approach, rather than trying to secure a comprehensive nationwide agreement.
The commission acknowledged progress that has been achieved in WA, including setting timelines for project assessment, separating the environmental assessment and environmental policy functions, and using a strategic framework that recognises the cumulative impact of projects.
This is a good start, but more can be done.
