Project approval crisis: Mitch Hooke takes aim at red tape

Australian Mining today published an article by John Quiggan regarding approval delays for mining projects.

Quiggan argues that despite Tony Abbott’s claims that gaining mining approvals takes more than three years, evidence suggests this is not that case.

‘Most projects subject to the federal process are approved, typically with minor conditions, in less than twelve months – the length of time claimed by Abbott for the pre-2007 period,” Quiggan argues.

“A graph provided by Abbott’s office as evidence for his claim that approvals take “more than three years” relies on a single project in NSW, the Ashton South East Open Cut coal mine. The NSW Planning Assessment Commission initially rejected the proposed mine because of concerns about health and water impacts. After modifying the proposal, Ashton successfully appealed. In the absence of appeals, the NSW process takes around twelve months.

“The Ashton South case shows the process working. The time taken to approve it wasn’t the result of bureaucratic obstructionism. It reflected the fact that original proposal required major improvements.”

However Minerals Council of Australia chief Mitch Hooke argues there were facts overlooked in Quiggans’s article, including work from leading industry consultants Port Jackson Partners showing that it take on average 3.1 years to get a thermal coal mine approved in Australia.

Below, Hooke explains why the process for project approvals in Australia is in crisis:

By any measure, Australia's problem with project approvals is lurching from a major issue to a full blown crisis.

Just ask the 1800 workers in the Hunter Valley coal fields whose jobs have been swinging in the breeze for the last four years as two major mining companies work through the approvals processes to expand existing operations.

It is some coincidence that the canary in the coal mine for Australia's deeply flawed approvals system is, quite literally, a couple of coal mines about 200 kilometres north of Sydney.

The Drayton South and Mount Thorley Warkworth mines in the Hunter Valley are not new projects – the operators simply want a green light to access reserves on the existing sites. Almost 1800 direct jobs, hundreds of indirect positions and more than $100 million a year in revenue for Hunter Valley businesses are hanging on the approvals.

At Drayton South, the mine owner Anglo-American have been working closely with the community on the expansion proposal. They have made no less than 10 changes to the mine plan to meet the requirements of the nearby community and regulators, including a guarantee not to access up to 35 per cent of the available coal so that there is a significant buffer between the mine and neighbouring race-horse breeders.

After four years (and 25 meetings with the breeders), Anglo American are yet to receive the green light and were advised recently that a Planning Assessment Commission process was being suspended by the New South Wales Planning Minister to look at further visual mitigation. The mine is rapidly approaching the zero hour when a decision will have to be taken on whether to close it or push on with the approval process.

Over at Mount Thorley Warkworth, miner Rio Tinto has spent four long years rigorously presenting its case and successfully obtaining expansion approval, only to have it overturned at a minute to midnight by the NSW Land and Environment Court.

Amongst other things, the court ruled that the expansion should be halted because an activist group claimed it might create new jobs, potentially attracting workers from other industries. Come again? Shouldn't our economy be in the business of creating new jobs?

As a company seeking to invest billions of dollars, you couldn't make this up in your worst nightmare.

Mount Thorley Warkworth mine has been operating for 30 years outside Singleton. The expansion is critical to its future and to provide ongoing employment for more than 1300 workers.

Regrettably, these are not isolated examples. Every Australian mining company has a list of projects beset by unnecessary regulatory delay; bound-up in state and federal green tape.

In thermal coal, the average Australian project experiences an additional 1.3 years of delay relative to those elsewhere (3.1 years compared with 1.8 for the rest of the world). Project delays in Australia have been increasing over the past decade, and the gap relative to other countries is likely to be higher now than it has been for some time.

Much of the delay can be attributed to the duplication of state and federal approvals processes. This is not only creating significant and unnecessary delays but also adding massive extra costs.

In the first 10 years of the operation of the Commonwealth's project approval laws under the Environment Protection and Biodiversity Conservation (EPBC) Act, the Australian National University estimates that duplication has added up to $820 million in extra project costs for no extra environmental protection.

This is not sustainable if Australia is to continue enjoying the benefits from a growing resource sector that is continuing to meet the ongoing demand from China and the developing world.  Our resources will be needed for decades to come, but unless we dramatically improve our approvals system and policy settings more generally, we risk missing the boat.

The minerals industry does not want any diminution of environmental protection. This is not the issue. Unnecessary and counter-productive regulation is.

The current arrangements do not pass any reasonable test of regulatory efficiency or environmental dividend. There is a better way.

There should be a single assessment and approvals process to cover State and Commonwealth environmental matters for major projects across any industry and approvals process should be bound to statutory timeframes.

The Commonwealth should be the standard setter and the states the deliverer. The Commonwealth should assume an auditing and enforcing role against an agreed set of standards for state approvals, not run a parallel process. This is consistent with the review of the Commonwealth's approvals powers conducted by Dr Allan Hawke for the Rudd Government.

There is too much at stake not to get this right.

Research undertaken for the New South Wales Minerals Council by PricewaterhouseCoopers found that project delays of 12 months or more would cost 29,000 jobs, $10.3 billion in lost investment and $600 million a year in lost mining royalties over the next 20 years. That’s just New South Wales.

Prime Minister Rudd (or if there is a change of Government, Prime Minister Tony Abbott) and our state leaders have a long to-do list, but, as unsexy as it sounds, reform of green tape must be near the top.

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