Resources sector regulation

Study report

This report was released on 10 December 2020. It examines regulation of the resources sector, identifying issues and leading practice approaches to addressing them.

The main focus is on how regulation is designed, administered and enforced. The key message is that there is room for significant improvement.

Greater use of leading practice would encourage investment (because it would remove unnecessary regulatory costs) and would build confidence and trust in regulation of the sector across the wider community.

Download the overview

Download the report

Key Points

Resources activities demand strict, often complex regulation. But if regulation is not done well it can impose unnecessary costs, fail to meet objectives and diminish net community benefits.
There is considerable scope to improve regulatory processes and reduce unnecessary burdens to encourage resources investment without diluting requirements to mitigate impacts on the environment, heritage, worker safety, landowners and communities.
Indeed, confidence in regulatory regimes is critical for community support for resources investment and, in some areas, more rigour is warranted. Creating an environment conducive to sustained investment requires regulation that not only is administered efficiently but also delivers desired outcomes.
Notwithstanding recent worthwhile initiatives, regulatory processes in the resources sector remain unduly complex, duplicative, lengthy and uncertain, and may be becoming more so.
Sustained improvement requires greater attention to the pre‑conditions for leading‑practice regulation — clear regulatory objectives, effective governance, incentive and accountability frameworks for regulators, and adequately resourced institutions. A focus on these foundations would also help industry investment recover from the impacts of COVID-19.
Leading regulatory practice supports an effective risk‑ and outcomes‑based approach by regulators who: are accountable and transparent; follow clear and predictable processes; build fit‑for‑purpose technological and staff capabilities; collect, use and disseminate data effectively; and work to inform the community about their activities.
Improved co-operation and coordination between regulators, both within jurisdictions and between the Commonwealth and States, would reduce delays, duplication and inconsistency.
Enhanced regulator accountability and transparency — including around monitoring and compliance actions and performance meeting timelines — would reduce costs, improve regulated outcomes and build community trust. Clearer requirements for mine rehabilitation would also deliver community and industry reputational benefits.
The destruction of Juukan Gorge has focussed attention on the inadequacy of Indigenous heritage protection regimes. Early engagement with traditional owners as part of the project assessment process is critical, centring them in decisions affecting their heritage.
Capability gaps within regulators are a key cross‑cutting issue. Governments should assess whether their regulators are appropriately funded, and the potential for greater cost recovery.
Communities and landowners understandably want to know how projects affect them and comment on development proposals. Meaningful engagement should begin early in a project and continue throughout. Trusted institutions can play an important role through building community understanding of resources projects.
Companies should consult and coordinate with local governments and community groups to promote local benefits from their community investments. Mandating requirements such as local content can be counterproductive.
There are several factors limiting the benefits that traditional owners derive from agreements with resource companies, including resourcing constraints within; Indigenous organisations. Clearer guidance on how funds in charitable trusts can be used is needed.

Media Release

Improving resources sector regulation can support the COVID-19 recovery

Better regulation of the resources sector across Australia would support future investment and build community trust.

The Productivity Commission’s final report examining resources sector regulation identifies 48 leading practices that would lower costs for industry and deliver environmental and social outcomes of importance to the community.

“The community needs to have confidence in regulation and how it is enforced. As well as identifying many opportunities for streamlining and simplification we also found a need for more rigour in areas, such as protection of Indigenous heritage,” Commissioner Lisa Gropp said.

While regulatory systems in all jurisdictions have elements of leading practice, considerable scope for improvement remains, and there is much that governments can learn from each other.

Governments should focus on getting the basics right, such as setting clear regulatory objectives and establishing institutional and resourcing arrangements if they are to achieve sustained improvement in their regulatory systems.

These foundations authorise and enable regulators to do their jobs well and hold them accountable. They can be put in place reasonably quickly and, by facilitating investment, would help support the COVID-19 economic recovery.

The report lists several priority areas for reform including using a risk-based approach to regulation so that effort is focussed on areas of most significance to the community.

Duplication of regulatory processes is a major issue for project proponents and can cause significant delays. The report identifies opportunities for more co-operation, better coordination between regulators and more effective use of data to reduce timelines.

The report also highlights the importance of effective engagement with local communities, including Aboriginal and Torres Strait Islander communities.

Engagement with communities ensures that concerns about issues including environmental and heritage impacts are properly addressed and programs that aim to share benefits are effective and align with communities’ needs.

“Building trust is critical and meaningful community engagement should begin early in a project and continue throughout,” Commissioner Gropp said.

The full report can be found at www.pc.gov.au/resources

Cover, Copyright and publication detail, Foreword, Terms of reference and Abbreviations
Overview
- Key points
- 1 Australia’s resources sector at a glance
- 2 The regulatory landscape is complex
- 3 Australian jurisdictions have been working to improve their regulatory systems
- 4 Considerable scope for improvement remains
- 5 Effective community engagement and benefit sharing can build trust
- 6 Indigenous community engagement and benefit sharing
Leading practices, findings and recommendations
1 About the study
- 1.1 What has the Commission been asked to do?
- 1.2 The scope of the study
- 1.3 The Commission’s approach
2 Resources activity in Australia
- 2.1 Australia’s resources sector — an overview
- 2.2 Resources investment in Australia
3 Regulation: rationales, principles and landscape
- 3.1 Why do governments regulate resources?
- 3.2 What does Australia’s resources regulation look like?
- 3.3 A framework for leading‑practice regulation
4 Resource management
- 4.1 Government provision of pre‑competitive geoscience information encourages exploration investment
- 4.2 Where can resources developments take place?
- 4.3 Resource management policies
5 Land access
- 5.1 The process for obtaining access to private land
- 5.2 Resources development on Indigenous land
6 Approval processes
- 6.1 Application through to assessment
- 6.2 Approval and conditioning
- 6.3 Post‑approvals
- 6.4 Review mechanisms
- 6.5 Broader approval processes
7 Managing environmental and safety outcomes
- 7.1 Compliance monitoring and enforcement
- 7.2 Environmental offsets
- 7.3 Resources site rehabilitation and decommissioning
- 7.4 Worker safety
8 Indigenous heritage
- 8.1 How is Indigenous heritage regulated?
- 8.2 Indigenous heritage regulation is under scrutiny across Australia
- 8.3 Leading-practice Indigenous heritage regimes
- 8.4 What is the role of the Commonwealth?
9 Other factors affecting investment
- 9.1 Policy and regulatory uncertainty
- 9.2 Workforce issues
- 9.3 Barriers to foreign investment
- 9.4 Taxation
- 9.5 Other factors raised in submissions
10 Community engagement and benefit sharing
- 10.1 What problems are community engagement and benefit sharing trying to address?
- 10.2 Identifying leading-practice community engagement
- 10.3 Identifying leading‑practice benefit sharing
11 Indigenous community engagement and benefit sharing
- 11.1 Understanding Indigenous community engagement and benefit sharing
- 11.2 Engaging and making agreements with Aboriginal and Torres Strait Islander people
- 11.3 Managing benefits from agreements
12 Improving regulator governance, conduct and performance
- 12.1 Governments are responsible for the foundations of robust regulatory systems
- 12.2 Regulator performance is also key to outcomes
A Conduct of the study
B Regulatory arrangements across jurisdictions
References