Current legislation is killing the development of mining in this country unless central government fulfils its promise to modernise the increasingly anachronistic Resource Management Act.
Key policy recommendations in the From Red Tape to Green Gold, the second in a series of two reports on our minerals sector authored by research fellow Jason Krupp, iterates the problem with the RMA holding back development.
This report follows on from Poverty of Wealth, which was published in December 2014 and is the second in a two-part series on the country’s extensive resource estate and, more importantly, the regulatory barriers that prevent businesses from tapping this mineral wealth.
Jason Krupp sees a significant problem with the current RMA and says it is severely dated. At the time the legislation was drafted (1991), under the care of Geoffrey Palmer, the country had a hazards-based regulatory framework. Palmer, and indeed most politicians of the time, saw this as the best means to promote sustainable management of natural and physical resources. Over the years and in practice the Act is seen as being “effects-based”.
However, “hazards-based” regulation is the process whereby an applicant – such as a mining company – has to identify every potential damage or harm that could occur from a development activity, and then show how it will avoid, remedy or mitigate these effects.
Critics of the hazards approach see it as over-regulation, characterised by reliance on the courts to resolve disputes and inflexible rules, with little consideration given to the costs imposed by red tape. Anyone who has applied for consents through the RMA will be familiar with all of the above.
For this reason, Australia, Canada, parts of Europe and the US have since moved to a risk-based regulatory framework. A framework of this type looks at all the aspects that the hazards approach does but also considers the likelihood of the harm occurring, as well as the severity of the harm.
The risk-based approach is already used in our pharmaceutical sector. Regulators assess the negative side effects of a drug weighted against the chance of these effects occurring, as well as the severity of the effects.
The same risk assessment techniques can be used in mining and other markets, such as South Australia, have been using risk-based mining regulation for some time. South Australia is widely considered to have one of the best resource regulatory regimes in Australasia, which has resulted in more projects getting consented, and in a shorter timeframe, than most other Australasian jurisdictions, especially New Zealand. In fact, it is being used as a template for other parts of Australia. On average, it takes six months to obtain a commercial resource consent in South Australia while the average in New Zealand is two years.
South Australia’s track record on the environment and mining is also superior to ours, with the state ranked higher on measures of environmental assessment processes, native vegetation management, biodiversity offsets, noise pollution and fauna management.
Where mining is concerned, the RMA delivers neither the environmental protections that most of us expect from the legislation nor the economic benefits. The practical limits of the RMA’s hazards framework can be seen in the Trans-Tasman Resources and Chatham Rise Phosphates decisions.
In both of those cases, the Environment Protection Authority was effectively forced to decline the undersea mining applications because of the cautionary hazards-based approach to environmental management enshrined in the RMA that was carried over into the Exclusive Economic Zone and Continental Shelf Act (2012).
Even where the EEZ legislation allows for adaptive management to be used (small scale versions of a project to answer environmental uncertainties), the risks still seem to be too great to take on in light of the precautionary principles, regardless of the likelihood or the consequences of those harms.