9.2 - Recommended reforms

9.2.1 - Clear law, a full regulatory toolkit and transparent decisions

Key reforms recommended by the Review, including simplifying the EPBC Act and setting clear and enforceable National Environmental Standards (Chapter 1 and Chapter 3), will assist with greater clarity of obligations to support voluntary compliance and the ability to better enforce provisions. These reforms should be supported by specific guidance for sectors in line with recommendations from the Craik Review. Combined, these efforts will improve the Department’s ability to convey regulatory obligations and improve the regulated community’s ability to understand them.

The compliance and enforcement powers in the EPBC Act should be overhauled. The Regulatory Powers (Standard Provisions) Act 2014 provides a standardised approach to setting out such powers, and these should be considered and potentially bolstered with specific arrangements to ensure that compliance and enforcement powers in the EPBC Act are fit for purpose. The compliance and enforcement functions should have access to a full ‘toolkit’, so that fair, consistent and proportionate action can be taken across different scenarios.

Changes to the compliance and enforcement provisions of the EPBC Act should include, but not be limited to:

• standardised powers to delegate authorised officers to undertake compliance, including to accredited parties
• incorporation of modern information sharing provisions – supporting collaboration with other parties
• improvements to coercive powers under the Act to facilitate greater intelligence capability, including using surveillance warrants.

Penalties must be sufficient to be an active deterrent, rather than a ‘cost of doing business’. A review of the adequacy of penalties and provisions should consider, but not be limited to:

• ensuring penalties across the EPBC Act align with the potential harm or benefit and provide a reasonable deterrence
• ensuring remediation orders that deliver restoration are used when monetary penalties are unlikely to provide adequate disincentive, due to the potential significant financial benefit from some areas of non-compliance
• ensuring appropriate use of criminal prosecutions in serious cases of egregious and irreparable damage.

There should be improved transparency of compliance and enforcement functions, including publishing all actions taken, and the outcomes of these actions in a timely manner. This should include directions, prohibition notices and improvement notices that have been issued.

To facilitate effective audits and improved transparency, adequate data on compliance and enforcement activities must be collected, provided to the EAC and published (Chapter 10 and Chapter 7).

A clear set of compliance priorities should also be published and reported in an annual compliance plan.

The compliance and enforcement function should set out a clear and strong regulatory stance. It remains important to be proportional, and to work with people where inadvertent non-compliance has occurred. However, the compliance and enforcement functions need to establish a culture that does not shy from firm action where needed. This is essential to providing community confidence and giving business a clear and level playing field.

Powers, penalties and transparency requirements should also be equivalent under any accredited arrangements. The Commonwealth needs to be assured that the accredited party has a clear and strong regulatory posture, and that any action undertaken under the arrangements is transparent and commensurate to the severity of the offence.

9.2.2 - A National Environmental Standard for compliance and enforcement

The key components that result in effective compliance and enforcement functions are integrity, consistency and transparency, to foster public trust in compliance and enforcement activities.

A National Environmental Standard for compliance and enforcement has been developed by the Review (Appendix B) and should be implemented.

This National Environmental Standard should apply to the compliance and enforcement of projects approved under the EPBC Act and those of accredited parties. The Standard requires compliance and enforcement functions to be delivered in a way that:

• is independent of actual or implied political interference
• deters illegal behaviour because the penalties for non-compliance are high
• ensures remedial orders that deliver effective restoration are used to rectify damage caused by non-compliance
• is proportionate to the seriousness of the non-compliance
• is transparent and accountable, including public registers of action.

This National Environmental Standard provides a consistent benchmark for achieving effective compliance and enforcement decisions made under the EPBC Act, or accredited arrangements. While there may be a diversity in the accredited parties, it is important that safeguards are in place to achieve a strong culture of compliance and enforcement across each of them. Some parties may need to change their arrangements in order to meet the Standards.

This National Environmental Standard should remain focused on ensuring independence, strong and rigorous surveillance, compliance and enforcement. It should not be concerned with specific institutional arrangements provided these outcomes are met.

The National Environmental Standard will form the basis against which accredited compliance and enforcement arrangements are audited and reported to the EAC.

9.2.3 - Delivering compliance and enforcement

Compliance and enforcement functions must be adequately resourced both in terms of funding and staffing, and resources sustained over the long-term.

In the short-term, appropriate systems and tools should be invested in to enable the independent compliance and enforcement functions to effectively deliver surveillance and risk-based compliance. This will help people comply with the EPBC Act and to assure the community that risks to the environment from non-compliance are identified and managed. Resourcing must support adequate surveillance and follow-up action to respond to issues as they arise. Proactive surveillance and investigation are needed to restore public trust in the system and to review and ensure actions that have occurred to date are meeting requirements and delivering for the environment.

Adjustments may be required to enable a party to meet the National Environmental Standard. A condition of accreditation must be that the party can sustain adequate compliance and enforcement capability.

9.2.4 - Independent compliance and enforcement functions

Compliance and enforcement functions should not be subject to actual or implied direction from political interference. This should address significant community concern about perceived conflict of interest, which is undermining trust in the EPBC Act.

Compliance and enforcement by the Commonwealth

Chapter 6 notes that the Commonwealth Environment Minister will always maintain responsibility for certain decisions under the EPBC Act (including some actions on Commonwealth land and where accredited arrangements are not in place). The Commonwealth will need to deliver compliance and enforcement functions for these decisions, and for legacy projects.

The legacy projects already approved under the EPBC Act must have appropriate compliance and enforcement. Approved activities often take years to complete and will continue to require careful management and oversight to ensure environmental protection is achieved over the long-term.

Strong, independent compliance and enforcement of Commonwealth decisions will provide confidence that, once conditions are set, they will be enforced to deliver the intended outcomes. This means institutional arrangements should ensure sufficient independence from the Commonwealth Environment Minister.

The Review recommends that independent powers for Commonwealth compliance and enforcement be provided to the Secretary of the Department of Agriculture, Water and the Environment as the statutory decision-maker. The Department’s compliance functions should be consolidated into an Office of Compliance and Enforcement, with staff assigned to work exclusively on the EPBC Act compliance and enforcement functions to support the statutory decision-maker.

The Commonwealth should also be required to meet the National Environmental Standard for compliance and enforcement. The independent Office of Compliance and Enforcement would report its adherence to this Standard to the EAC, and be subject to EAC audits (Chapter 7).

The combination of the recommended suite of powers, independence, strong culture and adequate resourcing will deliver strong compliance and enforcement of the law. The EAC will provide confidence that compliance and enforcement functions are effective.

Compliance and enforcement by accredited parties

An accredited party (such as a State or Territory) should be primarily responsible for surveillance monitoring, compliance and enforcement of approvals under and accredited arrangement, and activities that should have been the subject of an application for approval through that party. Reporting on accredited arrangements should include reporting on all potential breaches and the response taken.

Any accredited party would also be subject to the National Environmental Standard for compliance and enforcement and would need to report compliance against this Standard to the Environment Assurance Commissioner.

The Commonwealth should retain the ability to intervene in project-level compliance and enforcement, where egregious breaches are not being effectively dealt with by the accredited party.