7.2 - Recommended reforms

The EAC would provide permanent audit and oversight of the implementation of the EPBC Act and the National Environmental Standards (see section 7.2.5). The EAC should be supported by a dedicated standing, well-resourced, audit function within the Department of Agriculture, Water and the Environment that would conduct recurring scheduled audits and special audits or investigations of concerns. The EAC would ensure the rigour and integrity of the audit function. The EAC would provide advice and recommendations for action to the Commonwealth Environment Minister, where material issues of concern with accredited arrangements are found. The EPBC Act should require the Minister to publicly respond to the EAC’s advice and recommendations, within a reasonable time frame specified in the Act.

The EAC role is separate to that of the independent Office of Compliance and Enforcement which provides surveillance, compliance and enforcement (Chapter 9). The role is also distinct from that of the  Ecologically Sustainable Development Committee which monitors and reports on the effectiveness of the National Environmental Standards in delivering environmental outcomes (Chapter 4 and Chapter 11). All three roles are needed to provide confidence that the EPBC Act is being effectively and efficiently administered, and that it is achieving its objects.

The relationship between the EAC, the Environment Minister, accredited parties and the independent Office of Compliance and Enforcement is shown in Figure 7.

Figure 7 - Relationship between the Environment Assurance Commissioner, the Commonwealth Environment Minister, the Office of Compliance and Enforcement, and accredited parties

7.2.2 - A robust accreditation model

Accreditation is not about the Commonwealth handing away responsibility to the States and Territories. It is not a devolution of responsibility. Accrediting another decision-maker does not mean that the Commonwealth gets out of the business of environmental protection and biodiversity conservation. Rather, the recommended reforms would result in a greater focus at the Commonwealth level on setting the National Environmental Standards, accrediting others, providing oversight of the activities of others, and ensuring national environmental outcomes are being achieved.

Three key elements are required to provide confidence in the accreditation model:

1. Sound accreditation processes, based on National Environmental Standards (see section 7.2.3)
2. Transparent pathways to enable the Commonwealth Environment Minister to intervene in a proportionate and escalating way to ensure National Environmental Standards are upheld (see section 7.2.4)
3. Independent performance monitoring and audit of all regulators (see section 7.2.5)

The accreditation model recommended by this Review is shown in Figure 8.

Figure 8 - Recommended accreditation model 

7.2.3 - Accreditation processes to ensure parties meet National Environmental Standards

Sound and durable accreditation processes are required to provide the Australian Parliament and community with confidence that accredited parties have the capacity and capability to meet the National Environmental Standards.

The Review recommends that the accreditation process includes:

1. National Environmental Standards that define clear outcomes for matters of national environmental significance and for important processes, including:
   1. National Environmental Standards established in law, binding decision-makers, including accredited parties. The decisions of parties operating or accredited under the EPBC Act cannot be inconsistent with the Standards.
2. Accreditation assessment that allows parties to transparently demonstrate that their systems meet National Environmental Standards and can be effectively audited, including:
   1. transparent self-assessment of the party’s environmental management arrangement and/or regulatory processes to demonstrate they have the capacity to deliver the National Environmental Standards. The party should be required to provide evidence to demonstrate their competence to deliver the Standards. The self-assessment should be published and demonstrate:
      1. the proposed arrangement has capacity and capability to meet the National Environmental Standards
      2. the proposed arrangement is sufficient to enable effective performance auditing.
   2. a public comment period, including an opportunity for the party to adjust their self-assessment prior to seeking formal accreditation
   3. clear measures of accountability, including nominating the role with overall responsibility for implementing the accredited arrangement and cooperating with the Australian Government in its review, audit and reporting on arrangements.
3. Accreditation by the Commonwealth Environment Minister to provide accountability and legal certainty. Key steps are:
   1. the provision and publication of formal advice from the Environment Assurance Commissioner to give confidence that the proposed accredited arrangements can operate in a way that is consistent with the National Environmental Standards and can be effectively audited
   2. the opportunity for the Parliament to consider and disallow the arrangement that the Environment Minister proposes to accredit
   3. formal accreditation by the Commonwealth Environment Minister, including:
      1. transparent demonstration of how the advice of the Environment Assurance Commissioner was considered
      2. a signed accreditation agreement stipulating the obligations of all parties.

7.2.4 - Commonwealth intervention to ensure National Environmental Standards are met

There will be times when accredited arrangements are not performing well or fail

The performance of an accredited party in implementing the agreement will sometimes be cause for concern – for example, where capability changes, where interpretation of requirements changes, or where objective decision-making against the accredited requirements is compromised. This shouldn’t result in automatic revocation of accreditation.

Transparent pathways should enable the Commonwealth Environment Minister to intervene in a proportionate and escalating way when accredited arrangements are not performing well, or failing, or when there is serious risk of environmental harm. The pathways for escalation should be set out in the EPBC Act and include the ability for:

• the Commonwealth Environment Minister to step in to make a decision, where they are satisfied that a significant breach of the accredited arrangement or a National Environmental Standard is likely to occur, or to prevent serious or irreversible environmental damage. Depending on the level of concern this could include:
  • senior officer–level discussions on issues or projects of specific concern
  • formal notices of interest in a project or assessment that causes concern, with a requirement that the accredited party respond in a specified time frame
  • formal step in, to prevent a breach of the Standards or serious or irreversible environmental damage
• the Commonwealth Environment Minister to suspend or revoke the accreditation
• the accredited party to request the Commonwealth Environment Minister make a decision – for example, where they are unable to effectively manage conflicts – or to request Commonwealth consideration of a decision that contravenes the Standard.

The Commonwealth Environment Minister could step in unilaterally, following receipt of a complaint, on the advice of the Environment Assurance Commissioner (EAC) or following a decision of the courts.

It is reasonable to anticipate that escalation provisions would be used more frequently early in the arrangement, as the practice becomes established and the Commonwealth’s confidence in the implementation of the arrangements is built.

The EPBC Act currently contains provisions for the partial or temporary suspension or revocation of an agreement. These include provisions for consultation with accredited parties, notice of the intention to suspend or cancel and transparent reporting of the reasons for such decisions. These provisions should continue to apply to accredited arrangements.

The EPBC Act does not currently allow the Commonwealth Environment Minister to step in and make a decision where an accredited arrangement is in force. In the short term, ahead of amendment to the Act, these provisions should be provided for in accreditation agreements.

The law still applies where accreditation fails

Importantly, under the model recommended by the Review, the EPBC Act must still apply in the event of failure of an accredited arrangement. For example, if a project is approved by a State or Territory in a way that is not in accordance with the accredited arrangement, the project would continue to be subject to the ordinary referral, assessment and approval processes of the Commonwealth. Similarly, if a project is conducted in a way that is not consistent with the accredited arrangement (such as failure to implement conditions of an approval), the Commonwealth Environment Minister should have the power to intervene to enforce compliance with the requirements of the EPBC Act.

Provisions in the EPBC Act should make sure that other projects validly approved and enforced by the accredited party are not penalised by breaches elsewhere.

The Commonwealth should retain the unfettered right to make decisions

The Commonwealth Environment Minister should retain the unfettered right to make decisions, even where an accredited arrangement is in place and working well. To avoid unnecessary disruption, uncertainty or ‘forum shopping’, this right should be exercised only at key points early in the project proposal cycle – for example, when a project is registered, or when an accredited regulator issues its statement of environmental impact assessment requirements. This unfettered right is distinct from the Environment Minister’s ability to step in at any time before a decision is made to address situations such as a breach, or risk of a breach, of the accredited arrangement or the National Environmental Standards, or risk of serious environmental harm.

7.2.5 - Audit and reporting on decision-making

Independent and transparent auditing and reporting is a key function of the recommended EAC. The EAC oversees the audit of decision-making under the EPBC Act, including decisions made by the Commonwealth Environment Minister, the Office of Compliance and Enforcement or an accredited party. The EAC supports broader assurance through the transparent reporting of these arrangements.

Subjecting all types of arrangements to the oversight and audit of the EAC will provide community confidence that the National Environmental Standards are applied equally across Australia, regardless of jurisdiction or decision-maker.

The Review recommends the EAC’s oversight and audit functions include:

• recurring scheduled audits in accordance with an annual audit work plan
• special audits or investigations of concerns about the arrangements or the performance of the system
• investigation of complaints (including from the public) made regarding the performance of accredited arrangements or decision-makers.

All findings should be published. Where material issues of concern are found, the EAC should provide advice and recommendations for action to the Commonwealth Environment Minister. The EPBC Act should require the Minister to publicly respond to the EAC’s advice and recommendations, to the Parliament, within a reasonable time frame specified in the Act.

It is reasonable to anticipate that audits might be more frequent in early stages of accreditation, to ensure key arrangements are firmly established and implementation is effective.

Similar to the Commonwealth Auditor-General, the EAC should not be subject to direction from anyone in relation to:

• whether or not a particular audit is to be conducted
• the way in which a particular audit is to be conducted
• the priority to be given to any particular matter.

The EAC should identify priorities or topics for its audit program and publish these as part of an annual audit plan. These priorities should be set on the basis of risks to performance or service delivery. In identifying these priorities, the EAC should have regard to the audit priorities of the Australian Parliament and the Commonwealth Environment Minister.

To assist in fulfilling these audit functions, the EAC should have powers akin to those of the ANAO, which include wide access and information-gathering powers, including the power to obtain and handle information and documents, conduct interviews and access premises. The EAC should be provided with stable and reliable funding and resourcing over forward budget estimates, including administrative funds to support a team of dedicated audit officers within the Department of Agriculture, Water and the Environment.

In undertaking audits and reporting on parties and arrangements, the EAC should:

• establish processes for the receipt and management of allegations and for handling these appropriately
• in relation to allegations of project-level non-compliance, include processes to refer the complaint to the appropriate compliance and enforcement authority and to follow up to ensure the complaint is duly investigated
• in relation to complaints regarding decision-making or the performance of accreditation arrangements:
  • publish a resolution of no concern, where this is the finding
  • provide transparent advice and recommendations for action to the Commonwealth Environment Minister for escalation and dispute resolution.

The auditing functions should not:

• question the merits of the Government’s policy objectives
• provide an absolute assurance of the truth of agency information, or the effectiveness of internal controls
• enforce recommendations
• resolve individual matters of contention.

The EAC should itself be subject to the auditing provisions of the ANAO.