Prime Minister Julia Gillard says she wasn't willing to hand environmental approval powers to the states for fear it would create a "dalmatian dog" of legal risk and uncertainty for business.
The federal government today backed away from its earlier plan aimed at cutting "green tape" for major projects, angering state leaders, but pleasing conservationists who fought tooth and nail against the idea.
Several state leaders were unimpressed, with Western Australian Premier Colin Barnett branding it a step backwards in the fight against green tape.
"I would hope that the commonwealth would be more trusting of the states to deal with environmental assessments," he said.
He said the commonwealth would always have retained the power to intervene if it thought a project wasn't being properly handled.
Chamber of Minerals and Energy WA chief executive Reg Howard-Smith said yesterday that "it would be disappointing if the federal government missed this significant opportunity to streamline project approvals".
"The West Australian resource sector had expected the full implementation of bilateral agreements between the Commonwealth and the State/Territories as agreed at the last forum meeting," he said.
"Bilateral agreements would have avoided unnecessary duplication in environmental assessments and delivered much needed certainty, efficiency and transparency of decision making for resource projects. Despite concerns raised by conservation lobby groups, bilateral agreements would not see a 'watering down' of environmental standards."
The Council of Australian Governments in April agreed to shift some federal powers to the state and territory governments in a bid to streamline environmental regulation and slash duplication for business.
It would have given states responsibility over their own environmental approval and assessment processes, a scenario conservation groups and the Australian Greens campaigned heavily against.
Ms Gillard said it became clear the states had conflicting views on the issue and there was a real risk of creating more legal uncertainty and litigation for businesses.
"I became increasingly concerned that we were on our way to creating the regulatory equivalent of a dalmatian dog," she told reporters after the COAG meeting on Friday.
"That for businesses would be the worst of all possible worlds."
COAG did commit to working towards achieving the "twin goals" of high environmental standards and streamlining for businesses, and will report back on progress at the next joint meeting.
Ms Gillard also indicated the federal government would legislate some measures in response to the Hawke review aimed at streamlining and bolstering environmental regulation.
The Australian Conservation Foundation's Charles Berger welcomed the "reprieve", but urged more to be done to make sure they're not revived later on.
"Giving state governments the final say on major development proposals that affect the environment would be a grave mistake future generations would find hard to forgive," Mr Berger said in a statement.
