Reforms to NSW state significant development assessment

The Minister for Planning, The Hon. Pru Goward, has announced proposed changes to how state significant development (SSD) proposals are processed.  In an effort to reduce the current lengthy delays, the NSW Government has made a commitment to cut the average time that it takes to process SSD applications (including mines) by up to 170 days. 

The reduction in processing time for SSD applications will be achieved through the introduction of:

• clear timeframes for certain assessment processes
• clearer guidance to the Planning Assessment Commission (PAC) on the application of government policies, and
• the appointment of case managers to manage planning applications. 

The Minister also proposes to establish a panel of independent experts to advise the NSW Government and the PAC on technical issues.

The timeframes are not enshrined in law and the proposed changes do not include deemed approval provisions, so it remains to be seen whether the reforms will result in a significant reduction in processing times for SSD applications. 

 

Samantha Daly, Patrick Holland, Kate Swain

New land acquisition and mitigation policy for NSW mining, petroleum and extractive industries

The NSW Government has released a new State Environmental Planning Policy Amendment (Gas Exploration and Mining) 2014 (SEPP Amendment) which came into force on 19 December 2014. 

The SEPP Amendment introduces a new land acquisition and mitigation policy to formalise landholder protection from noise and dust for State Significant Developments (SSD) in the mining, petroleum and extractive industries. 

This means that decision-making bodies are now obliged to take into account the new 'Voluntary Land Acquisition and Mitigation Policy' in determining development applications.  This policy provides guidance on measures to reduce the impact of noise and dust on adjoining properties from proposed new activities.  It applies to all undetermined SSD applications and any future applications to modify existing operations. 

The policy provides that the acquisition price to be paid by a proponent be an amount no less favourable that a 'market value' rate calculated as if the land was unaffected by the development and with reference to section 55 of the Land Acquisition (Just Terms Compensation) Act 1991 (Land Acquisition Act).  This requirement is controversial as the Land Acquisition Act is a statutory scheme introduced for use by NSW government authorities during compulsory acquisition of private land for a public purpose. 

The policy also has the potential to significantly impact proponents of SSD in the mining, petroleum and extractive industries, as it introduces voluntary land acquisition criteria for particulate matter applicable to the majority of workplaces on privately owned land (in addition to residences). Importantly, the consent authority maintains discretion as to whether or not to apply the particulate matter acquisition criteria to workplaces, with a range of factors for the consent authority to consider including the nature of the workplace.

Under the policy, a 'workplace' is defined to include 'a lawfully operating office, industrial premises or intensive agricultural enterprise where employees are grouped together in a defined location, but does not include broad-acre agricultural land, heavy, hazardous or offensive industry or businesses intentionally located close to mining operations.'

Outcome

The requirement that the Land Acquisition Act criteria be applied to acquisition of some types of workplaces affected by dust has the potential to make smaller SSD applications and modifications unviable, as the cost of relocating and compensating a business owner could be substantial. 

Samantha Daly, Patrick Holland, Kate Swain

Draft Industry Action Plan for NSW minerals industry

The Minerals Industry Taskforce (Taskforce) was formed in 2014 with the goal of addressing challenges faced by the NSW minerals industry, and to drive growth, innovation and productivity in the industry.  The Draft Industry Action Plan (Draft IAP) has been developed by the Taskforce and proposes a number of strategies that are aimed at reversing the fall in mining capital expenditure in NSW and increasing the value of mineral production by 30% by 2020.

The Draft IAP is a long-term strategy, and is seeking the NSW Government’s commitment to the following priority areas:

• a transparent process and integration policy that provides certainty for mining companies investing in NSW
• providing fiscal certainty – ensuring no increase to royalties over the next 25 years and a consolidation of fees and charges to reduce these in real terms over time, and
• developing skills and providing supporting infrastructure to foster a vibrant mining sector.

The flaws in the current planning approval process

The Draft IAP indicates that reform to the planning and regulatory decision making regime is the single most important initiative that the NSW Government can implement to address the current flaws in the process, which include:

• delays in the assessment and determination of projects – alarmingly, a development application can take up to 1323 days from the date of submitting an application to when a decision is made as to whether the development can proceed
• lack of accountability and responsibility in the decision making of the Planning Assessment Commission (PAC)
• failure of the PAC to follow government policy and the advice of the Department of Planning and Environment, and
• manipulation and abuse of the PAC referral and hearing process to deliberately delay a decision being made by the PAC and mislead the PAC about often trivial issues.

Recommendations of the Taskforce

The Taskforce has made 12 recommendations to address the above priority areas, including a number of fundamental changes to the planning approvals process and the role of the PAC in the determination of mining related projects. 

 

Transparent process and integrated policy

The following recommendations have been made by the Taskforce to address the significant issues associated with the planning approval process:

• the Taskforce argues for the removal of PAC as the answer to the ‘broken’ process, or at the least the following reforms are considered vital to improving the system:
• projects undergo only one rigorous and thorough review process and are not subject to a merits-based review, and
• if the PAC is to be retained the following further changes are required:
• return of decision-making authority to the elected government
• finalisation of clear policy parameters for project assessment
• tighten the scope for any PAC assessment
• introduction of clear timeframes for the PAC process, and
• reform of the PAC referral and hearings process
• establishment of a lead agency with the authority, sufficient capability and power to drive cross-agency decisions – this body should be the single point of contact for major resource and industry infrastructure projects
• streamlining the decision-making processes and addressing policy gaps with an emphasis on implementing outcomes and risk based regulation.  For example, the Draft IAP advocates for the reintroduction of a broad based modification power for State significant development into the Environmental Planning and Assessment Act 1979
• NSW Government excellence in service delivery and regulation – the Taskforce recommends that an online lodgment and tracking capability be developed
• clear communication of NSW’s robust regulatory regime by providing clear and factual information to the public, and
• continue to provide information to, and engage with communities – encouraging the use of community liaison officers by NSW Trade and Investment.

 

Fiscal certainty

A number of industry-specific taxes are levied on the minerals industry by the NSW Government such as mining royalties, fees and levies.  Stability in taxes and levies will lead to investor confidence and in turn, the growth of the sectors.

 

The Taskforce is seeking a commitment from the NSW Government for:

• no increases in royalties for the next 25 years, and
• consolidation of mining related fees and levies, and a reduction in the real cost to explorers and miners over the long-term.

The above changes will reduce investment risk by increasing certainty, resulting in increased capital investment in NSW mineral projects.

 

Developing skills and providing supporting infrastructure

Finally, the Taskforce proposes a number of changes to ensure that the NSW Government works together with industry and the skills and training sector to ensure direct investment in developing and maintaining a skilled workforce for a competitive and growing minerals industry.

 

Other recommendations include improvements to pre-competitive geosciences information, funding for research in deep cover exploration, mining operations productivity and low emission energy technology and enhancements to ensure the competitiveness and efficiency of the NSW freight network.

 

Submissions on the report can be submitted via email to the Taskforce’s secretariat (minerals.iap@trade.nsw.gov.au) or by post, Minerals Taskforce secretariat, GPO Box 5477, Sydney NSW 2001 until 5pm Friday, 19 December 2014.

 

 

Patrick Holland, Samatha Daly, Michelle Sirasch, Kate Swain

Safety, Rehabilitation and Compensation Legislation Amendment Bill 2014

On 19 March 2014, the Federal Parliament introduced the Safety, Rehabilitation and Compensation Legislation Amendment Bill 2014 (Cth).  If the legislation is passed, it will significantly alter the landscape of workers’ compensation insurance in Australia. 

The aim of the amendments is to remove the requirement for certain organisations to comply with the separate workers’ compensation schemes of each and every State or Territory, by allowing them to apply for a licence to self-insure under the Safety Rehabilitation and Compensation Act 1988 (Cth).

On 15 May 2014, the Senate referred the Bill to the Senate Education and Employment Legislation Committee (Committee) for inquiry and report.  The Committee’s report was completed 8 July 2014.

Safety Rehabilitation and Compensation Act (Cth)

The Safety Rehabilitation and Compensation Act 1988 (Cth) was established to provide statutory insurance cover for Commonwealth and ACT government employees.  Changes were made to the legislation in 1992 and 2006, allowing certain other organisations to self-insure under the Federal legislation. 

In 2007 however, the Rudd government instituted a moratorium preventing any further self-insurance by non-government corporations.  This ban was finally lifted on 2 December 2013.

Proposed changes to the scheme – national employers

If the Bill is passed, ‘national employers’ will be eligible to self-insure under the Federal Comcare scheme and will be covered by the Work Health and Safety Act 2011 (Cth).  A ‘national employer’ is a corporation that has employer obligations in two or more Australian States or Territories.  A national employer has employer obligations if the corporation is, or would be required to meet the obligations of an employer under a workers’ compensation law of the Australian jurisdiction to pay premiums, contributions or similar payments.

This ‘national employer test’ will replace the current definition of ‘eligible corporation’ under the Act and the associated ‘competition’ test.

The decision whether or not to award a licence will be determined by the Safety Rehabilitation and Compensation Commission (Commission) directly and the requirement that a corporation be declared ‘eligible’ by the Minister will be removed, thus providing a more streamlined application process.

Licensed employers may engage a claim management firm or insurer to manage their workers’ compensation claims.  Licencees will also be required to provide a bank or insurer’s guarantee, for an amount that could be called upon by the Commission in the event a self-insurance licence is suspended or revoked, together with a reinsurance policy.

Benefits of the scheme – resources sector

There is a high prevalence of personal injury claims across the resources sector due to the physically demanding nature of the work.  As such, insurance and risk control is particularly important for employers in the resources industry.

Many companies involved in mining and infrastructure development have projects in regional and remote areas throughout Australia and will operate across multiple States.  These companies may therefore meet the requirements of the new legislation and be eligible for self insurance.

Self insurance may be a particularly attractive option for these larger corporations as a way to increase operating profits through the reduction in compliance costs and overheads associated with the maintenance of insurance in each state. The scheme will also provide those licensees with increased freedom and control through self-management.

The introduction of a single licence for self-insurance for a related group of companies, as opposed to the requirement of single licenses for each corporation, will also increase efficiency and reduce costs and avoid the situation where only some entities within a group are eligible to be licensed, while other members of the same group fail to meet the requirements.

There are currently some 30 employers, which are self-insured under the federal scheme.  Yet, there are approximately 2000 companies operating in two or more States or Territories, which could potentially become licensees.  A large number of those employers are operating in the resources sector, and the legislation therefore has particular relevance with its potential to significantly impact the way risk is managed by those employers.

Findings of the Senate Education and Employment Legislation Committee

The Committee received submissions from 18 organisations, including a number of unions, government departments, as well as the Queensland Government.

In its submission, the Queensland Government called for the Commonwealth to consult further with the States and Territories, in an effort to reach agreement about the proposed amendments, raising a number of areas of concern. 

The Committee chaired by Senator Bridget McKenzie has recommended the Senate pass the Bill.  We now await the Second Reading Speech of the Bill in the House of Representatives. 

Companies who operate within two or more jurisdictions and are interested in reviewing their current workers’ compensation arrangements should seek advice from our Insurance and Risk Group about the process and a comparison between schemes.

Kate Denning, Brad Russell

Trade Agreements with Japan and South Korea

Benefits to the Australian resources sector 

The recent trade agreements reached between Australia, the Republic of Korea (South Korea) and Japan enhance the incentives to trade and the depth of the relationship with two of Australia’s most important trade partners.  This strengthened relationship has specific benefits for the resources sector.

Background

The first half of 2014 has seen Australia finalise two separate trade agreements, the Korea-Australia Free Trade Agreement (KAFTA) and Japan-Australia Economic Partnership Agreement (JAEPA).  These two trade agreements enhance Australia’s already robust resources and energy trade relationships with South Korea and Japan.

South Korea is Australia’s third largest export market, its total trade with Australia amounting to $30.46 billion in 2012/13.  KAFTA, which reduces the trade restrictions between Australia and South Korea, was signed on 8 April 2014.  The Australian Department of Foreign Affairs and Trade predicts KAFTA will see Australian exports to South Korea increase by 25% by 2030 which would result in an approximate increase of $653 million a year after 15 years.

Japan is Australia’s second largest trading partner, its total trade with Australia for the 2012/13 financial year equalling $70.8 billion.  Japan is one of Australia’s largest destinations for thermal and coking coal and iron ore, with Australia’s exports of iron ore and concentrates and coal equalling approximately $23.2 billion.  JAEPA was signed on 8 July 2014 by Japanese Prime Minister Shinzo Abe and Australian Prime Minister Tony Abbott. 

Trade agreement benefits for the resources sector

South Korea
Many of Australia’s resources and energy exports already enter South Korea tariff free.  KAFTA however removes, or requires the removal within 10 years of, the remaining tariffs on products such as LNG and similar gases, titanium dioxide and copper and copper based alloys.

The LNG and other natural gases industry is rapidly growing in Australia, with industry revenue growth for 2013/14 estimated to be 5.2% to reach $11.4 billion.  KAFTA removes the current 3% tariff on LNG and other natural gases entering South Korea. 

Gold producers also benefit, as the current 3% tariff on gold is to be removed upon South Korea ratifying the KAFTA.

Refined copper and various copper alloys currently have tariffs imposed on their importation into South Korea.  These tariffs are to be removed upon the date of entry into KAFTA.   Copper ore and copper concentrate exports from Australia for the 2013/14 financial year are estimated to amount to approximately $7.7 billion.  Reducing tariffs for Australian imports into South Korea will assist Australia in competing against other major copper exporters such as Chile, China and the USA.  

Japan
Similar to South Korea, many of Australia’s energy and resource exports to Japan are already tariff free.  JAEPA, however will see an immediate removal of tariffs from coking and semi coking coal, petroleum oils, aluminium hydroxide and titanium dioxide.

For the 2013/14 financial year, coking coal is estimated to have accounted for 44.2% of Australia’s coal exports.  With Japan being one of the world’s largest producers of steel, a removal of the tariff on coking coal imported into Japan from Australia provides a significant advantage to coal miners in Australia. 

Overall JAEPA will see more than 97% of Australia’s exports receive preferential access or duty free access to Japan, once JAEPA is fully implemented.

Other relevant issues
The Foreign Investment Review Board thresholds for both South Korean and Japanese investors will also increase.  The foreign investment review threshold for both South Korean and Japanese originated investment is to increase from $248 million to $1.078 billion for non-sensitive sectors.

This is positive news as in 2013 South Korea and Japan invested $15,059 million and $130,982 million respectively in Australia.  This spells further gains for Australia’s emerging natural gas export industry which has received significant investment from Japan in projects such as the $34 billion Ichthys project in the Northern Territory, headed by Japan’s INPEX Corporation.

Timeline for the agreements
KAFTA was referred to the Senate Committee for Foreign Relations, Defence and Trade on 27 March 2014, and submissions closed on 13 June 2014.  Once the Committee process is concluded, the bill enacting KAFTA can be passed.  This is expected to take place sometime this year.

As noted, JAEPA was signed on 8 July 2014, and will need to undergo the Senate Committee review process as well.  The bill enacting JAEPA will also likely pass before the end of 2014.   With the Japanese Prime Minister due back in Australia for the G20 summit in November, JAEPA is likely to be progressed quickly through the committee review process.  

Damien Clarke, Duncan Bedford, Emma Murray

Introduction of risk-based scheme for NSW EPLs

Holders of environment protection licences (EPLs) could see their administration fees increase in the 2016/17 financial year.

On Friday 2 May 2014, the Protection of the Environment Operations (General) Amendment (Licensing Fees) Regulation 2014 (Licensing Regulation) came into effect.  The Licensing Regulation introduces a new risk-based licensing scheme that aims to encourage EPL holders to improve their environmental performance.

The risk-based licensing scheme will change the way that EPL fees are calculated and inform the level of regulatory intervention imposed on EPL holders.

Higher fees and a greater regulatory burden will be imposed on operators who have a poor environmental management history or who are carrying out operations that pose significant risks to the environment.  Fees can be reduced when steps are taken to mitigate the environmental risks caused by an operation. 

For more information and comprehensive detail on the Licensing Regulation, please visit the McCullough Robertson website.

Samantha Daly, Patrick Holland, Kate Swain

New ‘fit and proper person’ test to apply on NSW mining title grants

The NSW Government has introduced legislation that replaces the ‘public interest’ test with a ‘fit and proper person’ test which is to be applied by a decision maker when determining whether to grant, renew or transfer an authority under the Mining Act 1992 (Mining Act).

The new fit and proper person test includes consideration of whether the person has contravened relevant legislation; the person has held a mining right or petroleum title that has been cancelled, suspended or revoked; whether the person is of good repute, and the person's character, honesty and integrity.

These changes will significantly increase the uncertainty associated with obtaining, renewing and transferring mining titles in NSW.

Resources participants should also be aware of The Mining and Petroleum Legislation Amendment Bill 2014 that introduces amendments to the Mining Act and the Environmental Planning and Assessment Act 1979, requiring a proponent of a mining project to hold an underlying coal title or have the consent of the title holder prior to lodging a development application for a project that involves the extraction of coal.

The amendments provide that an application (including a modification) for a coal mining project cannot be made or determined unless the applicant is the holder of a mining authority for coal over the land in question or has written consent from the holder of the coal mining authority.  A mining authority is not required over the whole of the land to which the application relates but must be in force for the land where extraction of coal is proposed. 

For more information and comprehensive detail on the above changes visit the McCullough Robertson website.

Samantha Daly, Patrick Holland, Kate Swain