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9.1 - Compliance and enforcement is weak and ineffective

Effective compliance and enforcement is key to delivering the intent of the EPBC Act. This includes capabilities and systems for surveillance (that is, monitoring of compliance with project approval conditions and of illegal activities that have not been subject to approval), investigations, deterrence (including prosecution) and transparent public reporting. There is little reason for rules if they are not monitored and if failure to meet them does not result in appropriate compliance and enforcement action.

Strong surveillance, investigation, compliance and enforcement is essential to protecting the environment and building trust that breaches of the EPBC Act will be fairly, proactively and transparently addressed. It is also necessary to protect the integrity of most of the regulated community, who spend time and money to comply with the law. Those that do not play by the rules should face the consequences.

To ensure compliance and enforcement is delivered across the EPBC Act in a consistent way, strong arrangements must be in place that equally apply to all parties operating or accredited under the Act (for example, the Commonwealth and States and Territories). This is a core element of the Review’s recommended accreditation model that will rebuild public trust in the Act.

9.1.1 - Complexity impedes compliance and enforcement

The EPBC Act is long and complex (Chapter 3). The complexity of the legislation, impenetrable terminology and the infrequency with which many interact with the law, makes voluntary compliance and the pursuit of enforcement action difficult.

The EPBC Act primarily relies on self-assessment by proponents to determine whether they are likely to have a significant impact on a nationally protected matter. The Department provides some guidance material to assist with that process but submitters to the Review have highlighted that interpreting the Act remains a challenge due to its size and complexity.

Understanding is further strained where related State and Territory-based rules change, generating confusion about how local rules relate to national-level rules. For example, changes to Queensland and NSW land-clearing rules in recent years resulted in confusion about whether activities that could be legally conducted under new state requirements also needed to be considered under the EPBC Act, even though the Act requirements had not changed. For the person impacted by the changed requirements, it didn’t matter whose rules had changed, this just led to a new layer of confusion.

Most Australians will never need to interact with the EPBC Act. For some, interaction may be limited to a single circumstance. This contrasts with other broad and complex laws, where frequent interactions mean that the regulated community builds knowledge of their obligations over time. For example, most of the adult population engages with the Income Tax Assessment Act 1997 on an annual basis, and both employees and employers frequently engage with their obligations under employment laws.

The infrequency of interactions with the EPBC Act is further complicated because the circumstances in which the rules apply change each time lists of threatened species and ecological communities are added to or amended. Companies of reasonable scale have the capacity to deal with these adjustments, but compliance in this context is particularly difficult for individuals and small landholders. This was highlighted in the Craik Review as a challenge for the agricultural sector (Craik 2018).

9.1.2 - Limited and under-utilised compliance and enforcement powers

Enforcement provisions are rarely applied and serious action rarely taken, particularly related to Part 3 activities (requirements for environmental approvals). The penalties do not appear commensurate with the harm of damaging a public good of national interest.

There have only been 41 breaches of the EPBC Act that have been subject to compliance outcomes (DAWE n.d.(b)). Of these, 31 relate to requirements for environmental approvals (Part 3 or Part 9) with the remaining 10 being breaches of the wildlife trade provisions.

The largest penalty issued under the EPBC Act was via an enforceable undertaking with a company to regenerate 31.5 hectares of Central Hunter Valley Eucalypt Forest Woodland for a cost of $2.1 million. Although a suspended jail sentence has been handed down for failure to refer an activity for consideration under the Act, the evidence available to the Review to date suggests that a jail sentence has not been applied for a breach of a condition of approval.

Since 2010 a total of 22 infringements have been issued by the regulator for breaches of conditions of approval granted under Part 9, with total fines less than $230,000. In contrast, local governments often issue more than this amount in parking fines annually. For example, Dubbo and Orange Councils in New South Wales respectively issued more than $220,000 and $1.15 million in parking fines in 2018–19 (CWDN 2019).

Provisions are not fully utilised, but the regulator is also impeded by limitations in the powers at its disposal. The EPBC Act provides an incomplete and inconsistent set of regulatory tools that are spread across different parts of the Act. Some enforcement mechanisms apply only to specific contraventions of the Act. The Act lacks contemporary powers needed to monitor and address breaches of the law. This includes powers for information sharing and tracking. This can also lead to inefficient and mismatched pathways being taken. For example, the ability to issue an infringement notice under the EPBC Act is limited to instances where a breach of approval conditions has occurred. If a person cleared a protected habitat and wasn’t an approval holder, the regulator is limited to pursuing court or other actions even where a fine might be the most direct and appropriate way to respond.

9.1.3 - Inadequate transparency of compliance and enforcement functions

The transparency of compliance and enforcement under the EPBC Act, including proactive communication with the regulated community, is limited.

Compliance and enforcement reporting is limited to departmental annual reports. Some activities are reported online, but the lack of a mandatory requirement to do so under the EPBC Act results in incomplete reporting and the use of different approaches over time.

Submissions received by the Review indicate that the lack of transparency of current compliance arrangements is contributing to low public trust that appropriate action is taken. In the absence of transparency, a number of submitters to the Review highlighted their view that compliance actions may be subject to political interference.

Chapter 5 discusses the lack of trust in the EPBC Act, including the lack of transparency associated with decisions. There is a lack of a separation between compliance decisions and the Environment Minister, which could lead to implied political interference. A recent Australian National Audit Office (ANAO) report on referrals, assessments and approvals of controlled actions (ANAO 2020) found unsatisfactory monitoring and recording of offsets, and no conflict of interest register for staff working on the assessment processes and within the Compliance Division.

Most modern regulators have clear logs that include investigation of potential breaches and comprehensively list even minor notices that have been issued. The lack of thorough reporting for the EPBC Act makes it hard to find information. This fails to provide any disincentive to others not to breach the Act or confidence to the community that matters are followed up.

Improving data and information between decision-makers, compliance and enforcement functions and the recommended Environment Assurance Commissioner (EAC) will be important to allow adequate auditing of compliance and enforcement outcomes as part of the broader reform framework (Chapter 7).

9.1.4 - Compliance and enforcement activities are significantly under-resourced

The available resources for compliance and enforcement constrain the ability of the Department to deliver credible functions.

These functions of the EPBC Act are not supported by cost recovery arrangements. The Department’s staff also undertake compliance and enforcement of other Commonwealth environmental laws, constraining the pool of resources dedicated to the EPBC Act. The resources available are insufficient and the caseload continues to increase as more projects are approved.

A move toward risk-based regulation is far from complete and the full investment needed to deliver efficiency by the use of modern risk-based systems and analytics has not yet been made.

9.1.5 - The compliance and enforcement culture is weak

The Department has improved its regulatory compliance and enforcement functions in recent years but it does not have a strong compliance culture. Progress has included the establishment of a Compliance Division, the development of a regulatory framework and new compliance policies that identify priority areas for focus.

These are small steps forward, but the foundations of the Department’s regulatory posture focus heavily on a voluntary approach to compliance. The Department has positioned itself as a collaborative regulator, working to reach agreement with the regulated community.

The Department’s compliance policy describes its approach as ‘fair, reasonable, respectful, reliable’ (DoEE 2019c). This stance comes from good intentions of recognising that the majority of stakeholders work to be compliant. However, it is a passive approach that has contributed to a culture with limited regard for the benefits of using the full force of the law where it is warranted.

There is limited evidence of proactive compliance effort and the compliance posture of the Department is reactionary. Enforcement efforts often rely on a tip off from the public, rather than active surveillance driving enforcement activities. There is little active surveillance to provide confidence that conditions of approval are being met. Surveillance to confirm that environmental offsets have been secured and are delivering intended outcomes is limited (Chapter 8). There are insufficient resources dedicated to proactive compliance.