Who’s afraid of green tape?
Lots of people, apparently. If you listen to business figures and certain cheer-leaders in the media, green tape is growing like topsy. Green tape has long been a bugbear for those who oppose more government regulation of the economy, like free-market think-tanks. It’s also understandably hated by business, which has to spend money to comply with environmental standards and regulations.
There is no doubt that the scope and complexity of environmental regulations has increased in recent years. This is especially true when business crosses state boundaries or must deal with the interaction between local, state and Commonwealth rules and laws. A joint paper released by the business lobby in the run-up to COAG highlights the case of Anna Bligh’s ill-fated Traveston Dam, a huge and complex piece of infrastructure that went through years of state approval processes before being ultimately vetoed at the federal level by Peter Garrett under the Environment Protection and Biodiversity Conservation Act.
Even if you ignore obvious disasters such as Traveston, there are certainly costs imposed on business by regulation. The paper cites "one BCA member" and that company’s unhappy experience complying with the Energy Efficiency Opportunity Act". For example, one BCA member company reported that complying with the EEO Act required 660 employee hours with $480,000 of consultancy fees. The same company reports similar compliance burdens for the NGER Act and the Commercial Building Disclosure program.
"Businesses, large and small, are absolutely on the same page when it comes to making the federation work better, including priorities for cutting red tape and reducing the cost of doing business in an increasingly competitive world," concludes the Business Council of Australia’s Jennifer Westacott.
Well, who can disagree with that?
Certainly not new Queensland Premier Campbell Newman. He is also in Canberra, joining business leaders for a COAG roundtable (called the "Business Advisory Forum") with the premiers and Prime Minister Julia Gillard. Green tape was at the top of the agenda.
This is Newman’s first COAG but he’s not letting that get in the way of his customary forthright style, calling for the Commonwealth to give up some of its environment powers to the states.
"If we are serious about sorting out this green tape, let’s get real and let’s actually delegate the powers of the Environmental Protection Biodiversity Conservation Act to states to actually evaluate these projects," Newman told the ABC this morning.
Newman went on to say that, while he’s happy to have the Commonwealth audit such handover, he wants to get on with fast-tracking environmental approvals. "I am happy to subject my Government to that but that is the way we have to do it to get these things fast-tracked and not have layers of approvals," he said.
Newman wasted no time in rolling out that old standard for the media stunt: a stacked copy of the various legislation surrounding the carbon tax. "That’s how much regulation this Prime Minister and this Government have brought in," he told the waiting television cameras with a gesture at the large pile of print-outs.
Yesterday’s roundtable ended with a statement from those assembled which pledged to cut some of the burdensome duplication of regulatory approvals between state and Commonwealth levels. "The Government has agreed to develop bilateral arrangements with the states to fast-track state assessments and approvals," it reads. "This means states will be accredited to do certain Commonwealth assessments." There will also be a commitment to form inter-governmental taskforces for major projects, "so approvals are administered by a single state agency and unnecessary duplication is removed."
But the Greens maintain that federal environmental legislation is sometimes the only thing that prevents pro-development state governments from giving bulldozers the green light. "All the big environmental wins of recent history have been when the federal government stepped in to protect an area from development the state government had approved," Queensland Greens Senator Larissa Waters pointed out.
Waters is right. Federal legislation is generally the last line of resort for blocking big projects that impinge on sensitive habitats or threatened species, but which have been waved though by state authorities. The experience of Tasmania shows how, in a small state, the interests of a powerful industry can often subvert the interests of the broader environment, as happened when regulatory approval the Bell Bay pulp mill proposed by Gunns was rammed through parliament with little due diligence. It was the Commonwealth that stepped in protect the Franklin in the early 1980s, and the Commonwealth that stepped in to protect Coronation Hill. More recently it is the Commonwealth that has provided world-leading benchmarks for no-fish zones in the Great Barrier Reef.
If you want to see what happens when the states are left to themselves to manage environmental policy, look no further than the Murray-Darling Basin, a textbook case in what happens when vested interests and local greed trump the sensible regulation of shared resource for the good of all. The parlous state of the Murray-Darling is largely the fault of the states. It was the state that parcelled out huge and unsustainable water allocations to irrigators in the 1970s, 80s and 90s. Queensland was one of the worst culprits. The loser was South Australia, which had no control on what the upriver states were doing. As a result, the Murray mouth silted over and much of the lower Murray started to die.
The interesting thing about environmental regulation is that it often benefits the companies that complain most about it. Without strong environmental regulations, companies are always tempted to cut corners and dump the costs of their pollution onto citizens, the environment and future generations. BHP found the lax regulations in Papua New Guinea much to its likings, until the environmental vandalism from its Ok Tedi mine became so outrageous that the company was forced to abandon it, costing it billions and badly damaging its reputation. The situation in the Gulf of Mexico with BP’s Deepwater Horizon is a similar case in point. Stricter regulation might prevented the accident, which ultimately would have saved BP tens of billions.
Regulation also drives innovation. Companies shouldn’t need an incentive to save energy costs, but the melancholy truth is that resource companies rolling in dollars often need to be forced by mandate or higher prices through a pollution tax to take energy efficiency more seriously. The end result is good for everyone: workers, shareholders and the environment.
Taxes on pollution also force companies to better account for their activities, for instance by doing pollution audits and hiring more environmental engineers. The end result is not necssarily bad for the bottom line. Often the extra regulation creates new opportunities for new products, services and processes within companies.
In other words, regulation drives innovation. And innovation inside firms is an area where Australia does particularly poorly. If you really want to address Australia’s productivity crisis, perhaps what we need is more regulation and higher prices for pollution.
Try explaining that the business lobby, though.
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