Red Tape Reduction – A Great First Step

The MCA applauds the delivery of the Red Tape Commissioner’s first tranche of reforms to reduce business costs without compromising regulatory performance.

Many regulatory requirements placed on the minerals industry are archaic and deliver no beneficial outcomes; they are simply a dead weight compliance cost.

The MCA actively engaged with the Commissioner to identify practical opportunities to cut red tape and four of the 36 Red Tape Reforms will directly benefit the minerals industry:

  • Crown land used for vegetation rehabilitation – native vegetation offsets are a key licence requirement for any mineral development but the industry has until now been prohibited from sourcing offsets on Crown land. In many cases, mining companies have had to search for appropriate land to rehabilitate hundreds of kilometres from the licence area even though degraded Crown land exists nearby. Opportunities to improve the health of Victoria’s native vegetation should not be hindered by simple land tenure. If providing that rehabilitation is above and beyond the capabilities of the Crown land manager, then allowing the industry to undertake the rehabilitation will benefit the State and local communities whilst reducing unnecessary costs to businesses.
  • Bonds for land rehabilitation by instalment – rehabilitation bonds represent a significant up front cost for new developments at a time when accessing capital to start a development is difficult, the area of land disturbed is minimal and thus any liability for rehabilitation is small. This reform provides tangible benefits for new developments however further reforms to the rehabilitation bond system are required to remove the assumption that all current and future licence holders will fail to rehabilitate as well as increase the range of allowable financial instruments for providing financial surety beyond bank guarantees which have a 2-3% annual administration cost.
  • Return of bonds for land rehabilitation – When mining developments are approaching the end of the mine life, rehabilitation is significantly ramped up – this requires access to large quantities of money to undertake the decommissioning, demolition, earth works and landscaping. Significant bonds (some up to tens of millions of dollars) can mean that mining companies have limited borrowing capacity to undertake this rehabilitation and it is therefore critical that as rehabilitation progresses, the amount of money locked up in a bond is reduced in line with the remaining liability. Following final rehabilitation, the return of the residual bond will therefore be simplified and completed rapidly.
  • Mining information online – the Victorian minerals industry has been burdened by a paper based system for longer than other Australian jurisdictions. In a modern electronic age, being able to lodge licences, prepare work plans, and provide annual reports online is critical. This not only saves time and money it enables both a licence holder and the Regulator to ensure that documentation is able to be amended in real time.

These red tape reductions are a great first step. Numerous further reforms are readily achievable without reducing regulatory performance, including those outlined in the Recommendations of the Parliamentary Inquiry into Greenfields Exploration and Mineral Development in Victoria, which would provide cost savings to both the Government regulators and the minerals industry.

Download complete article