Parliament of Australia

Parliamentary Research ServiceBackground Paper

BACKGROUND ON RESOURCE SECURITY

Bill McCormickScience, Technology andEnvironment GroupParliamentaJy Research Service12 December 1991

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A. INTRODUcnON

CONTENTS

1

B. DEVELOPMENT OF TIffi CONCEPT OF RESOURCE SECURITY

c.

D.

E.

F.

G.

RECENT HISTORY

STATE RESOURCE SECURITY LEGISlATION

COMMONWEALTH RESOURCE SECURITY LEGISlATION

ARGUMENTS FOR AND AGAINST RESOURCE SECURITY

COMMENTS

3

9

11

13

15

REFERENCES

APPENDIX 1From "Building a Competitive Australia" March 1991

APPENDIX 2Main Features of the Forest Conservation and Development Bill 1991

17

BACKGROU:-iD 0'< RESOL:RCE SECURITY

A. lNTRODUcnON

This paper includes a discussion of the development of the concept of resource securitv.

a brief history of recent events. the background to resource security in the sphere of the

States, some arguments for and against resource security legislation and comments on the

Commonwealth's Forest Conservation and Development Bill 1991 and associated

Government policy on resource security.

The concept of resource security could be taken to mean the guaranteed access of an

individual or an industry to a specific resource; be it minerals, forests, fisheries, water,land or other natural resource. However, in recent years the concept has been narrowed

to the State and Commonwealth Governments guaranteeing large wood processing

projects. such as pulp mills. access to a specific volume of wood for the life of the project.The necessity, mechanism and natural resources for achieving these guarantees are thebasis for the debate on this issue.

B. DEVELOPMENT OF TIffi CONCEPT OF RESOURCES SECURITY

For many years there has been a perception by companies and government departmentsassociated with resource industries that new resource development projects are liable to

(i) delay or blockage by Commonwealth environmental and heritage powers and (ii)

restriction of access to existing resources after initial approval has been given.

The forest products industries want secure and long-term continuous access to significant

areas of public native forests in order for them to be able to make the necessaryinvestments in new processing plant and equipment to facilitate further processing of

forest products. They are concerned that their current forest resource base can be taken

away at any time by decision of the State or Commonwealth governments leaving them

with less wood resource to process in the future. They want the State Governments toset aside wood production zones in the public native forests in much the same way as

national parks are set aside for conservation purposes. They are concerned by the loss

of access to State Forests when:

areas of State Forests which could have been logged in the future have

been excised from State Forests and placed in national parks by State

governments~

1

2 Background on Resource Secun",y

areas of State Forests have been included in World Heritage areas which

has led to the Commonwealth Government prohibiting logging in those

areas;

the Commonwealth has used its export powers to restrict logging in some

areas of State Forests listed on the Register of the National Estate.

The Australian Heritage Commission Act 1975 has been identified by the forestindustries as a major hindrance to resource developments because of the continuing

addition of places to the Register of the National Estate and the use by conservationgroups of the registry of such places to justify opposition to projects intended for, or

actually operating in, those panicular areas. Over the past fifteen years unsuccessful

attempts have been made to have the Act amended so that its powers, which require

Commonwealth Ministers or Authorities not to take decisions that adversely affect areason the Register unless there are no prudent and feasible alternatives, could be

significantly reduced or eIi~inated altogether.

Conservation bodies such as the Australian Conservation Foundation (ACF) have pressed

for more areas of native forests to be included in national parks and, in the long term.

for logging in native forests to be phased out virtually entirely with the forestry industryutilising plantations as its sale source of wood and fibre. They have opposed the concept

of resource security because areas of native forests which they believe should beprotected as national parks would be included in the wood production zones and logged.

thus destroying their conservation values.

About two years ago, some resource industry bodies, e.g. the National Association ofForest Industries (NAPI), came to the conclusion that it was unlikely that the Australian

Heritage Commission Act 1975 was going to be amended along the lines that they

wanted. The concept of resource security was therefore proposed by the forest industries

to achieve de-facto amendment of the Australian Heritage Commission Act 1975 in order

to preclude what was perceived as the excessive and retrospective use of Commonwealth

powers. They wanted a mechanism to resolve environmental disputes concerning forestry

projects such as the Wesley Vale Pulp Mill, and to ensure that access to resources was

not revoked at a later date by the States or the Commonwealth. The resource industries

wanted resource security to have legjslative rather than administrative backing so that the

Commonwealth Government could not simply make a Ministerial decision to restrict their

access to resources.

C. RECENT HISTORY

October 1990

Background on Resource Security 3

The issue of resource security was given a high profile in October 1990 with newspaper

reports that the Commonwealth Resources, Environment and Industries Ministers were

involved in discussions about the issues surrounding the delaying and/or blocking of

resource development projects through the use of Commonwealth environmental,

heritage and aboriginal powers.1 An Inter-Departmental Committee had submitted a

report which proposed several legislative and administrative mechanisms to deal with

industry concerns that access to resources has been hampered by the need for regularconsideration under the Australian Heritage Commission Act 1975 and by shiftin'!

government views on the need for environmental protection.2 Originally the discussions

were related to all resource development projects but they soon became restricted tonative hardwood forestry projects, the issue of other resources industries being left aside.

A Cabinet Sub-Committee.. established to consider resource security, was composed of

the Minister of Industry. Technology and Commerce (Senator Button), the Minister for

Arts, Spon. Environment, Tourism and Territories (Mrs Kelly), the Minister for PrimaryIndustries and Energy (Mr Kerin), the Minister for Science and Technology (Mr Crean)and the Minister for Resources (Mr Griffiths).

The issue of resource security was discussed at the Special Premiers Conference on 30-31

October 1990. It was agreed to increase long term resource security "including by

complementary State and Commonwealth legislation where requested by a State andagreed by the Commonwealth"]

November 1990

During this time the forest industry represented by NAFI was strongly arguing for

resource security to have a legislative basis because, in the past, Commonwealth forestry

agreements with Tasmania and Victoria had been broken under pressure fromconservation groups.· Those same conservation groups were implacably opposed to any

form of resource security legislation. Phillip Toyne, Executive Director of the ACF, said

the environment movement could not afford to let the Government introduce a legislative

mechanism that would allow a hands-off approach to the development of industry and

the protection of the environment, possibly for decades.s

Minister Kelly proposed a non-legislative method of achieving Resource Security via aMemorandum of Understanding between the Prime Minister and the relevant State

Premiers as being preferable to the passing of Commonwealth legislation. According to

Background on Resourc~ Secun",'y

a confidential memorandum leaked to 'The Australian' of the 14 November 1990 the

Department of Arts. Sport, Environment, Tourism and Territories stated that the

legislative option "would fetter the Commonwealth Environment Protection mechanisms"

and would be seen by the public as "simply weakening the already weak environment

prOtection legislation".6

December \990

A Cabinet submission proposed an in-principle agreement in which all portions of wood

production zones would be guaranteed by State and Commonwealth legislation as

accessible to forestry operations after a thorough environmental, heritage, social and

economic assessment of the area. However, on 19 December 1990 Cabinet deferred

making a decision on the issue of resource security until the new year. A portion of

Cabinet supported the legislative option favoured by Mr Griffiths while anOther group

supported the administrative option proposed by Ms Kelly.'

The conservationists felt that this deferral essentially put an end to the issue. Phillip

Toyne, Executive Director of the ACF, claimed that the Prime Minister gave direct

assurances to him and Peter Garrett, President of the ACF, that there would be no

resource security legislation.8

Dr Robert Sain, Executive Director of NAFI, indicated his disappointment at the

deferral but was encouraged that the legislative option was still open. There was a clear

indication that many billions of dollars worth of potential investment in forestry

processing projects, including a new pulp mill in northern Tasmania and an expansion

of the existing pulp mill at Maryvale in Victoria, would not proceed without

Commonwealth legislation to guarantee long·term access to forest resources.9

January-February 1991

The pressure for resource security legislation was renewed in the new year but it

appeared unlikely that a decision to proceed with legislation would be made in the first

half of the year. This impression was reinforced when the Prime Minister was reported

as saying that "You don't need legislation in place for a process to be followed where a

State Government comes to an arrangement with a proposal to establish a [pulp) mill,

and comes to us in respect to our requirements." He said the Commonwealth

Government need do more than sanction an agreement between a State and a

proponent, and subsequently approve export controls.10 Justice Stewart, Resources

Assessment Commissioner, said he would be surprised if the Federal Government made

a firm decision [on resources security] without the information the Resources Assessment

Background on Resource Sfxurit.'1 5

Commission would provide through its forest inquiry,,1 The Resource Assessment

Commission was not due to submit its draft report until July 1991.

On 20 February the Prime Minister had discussions with the Tasmanian Premier (Mr

Field). who argued that resource security legislation was essential for the future of

forestry in Tasmania and felt that complementary federal legislation was necessary. The

Prime Minister argued against the need for federal legislation but sought a legal opinion

from the Solicitor·General on this matter. That opinion, delivered at the beginning of

March, caused the Prime Minister to change his stance on the issue. The legal opinion

has not been made public but Paul Kelly in 'The Australian' of 9-10 March 1991 quoted

a section: "You asked whether with no legislation the Commonwealth could make legally

binding agreements... the answer is 'No'. Such agreements could be made legally binding

only by means of new legislation."1Z This legal opinion proved crucial in the Cabinet

decision to establish resources security legislation as announced in the Industry Statement

of 12 March 1991 (see below).

Roben Bain, Executive Director of NAFI, claimed that the financiers of the forest

industries, Australia's three largest banks, had said they would fund nOthing in the

industry until such time as resource security legislation were passed.13

The Member for Denison (Mr Kerr) had proposed a non-legislative plan for resource

security in which the Commonwealth Government would act as a guarantor for

agreements between the State Governments and the timber industryY The

Commonwealth would guarantee the timber industry access to a set volume of wood

rather than what the forest industries and State Governments such as Tasmania wanted,

namely guaranteed access to specified areas of forests from which wood could be

harvested. This plan was not accepted as the Solicitor-General's opinion overtook events.

March 1991

On 7 March 1991 Cabinet agreed to introduce legislation which would guarantee forest

companies access to designated public native forests for large-scale forest projects.

The conservation groups were highly critical of the decision. Alec Marr of the Wilderness

Society said "It gives the green light for corporate Australia to go after the last old

growth forests."" As a protest Greenpeace and the Wilderness Society withdrew from all

the Ecologically Sustainable Development working groups.

On 12 March 1991 the Prime Minister announced details of the proposed resource

security legislation in the Government's Industry Statement.16 It was to be limited to

6 83ckground on Resource Secun",y

industrial wood processing projects with an investment of S100 million or more and

directed at exports or import replacement. There was a commitment to adhere to

environmental. heritage and aboriginal policy requirements. It would only occur where

the relevant State Government agreed to pass parallel resource security legislation. It

would guarantee an agreed volume of timber from a specified area of forest. The

objective was to phase out woodchip exports on or soon after the year 2000 and therewould be provisions to establish plantations to provide for long·term timber supply and

take pressure off native forests. The Commonwealth would nQ! provide financial

compensation for loss of access to forest resources though provision would be made tomake up this loss in kind. One thing to note regarding this legislation and theCommonwealth-State Agreement, is that the proponent of the project makes noagreement with the Commonwealth.

The Industry Statement included an outline of the proposed resource security legislationand of the five-stage process which forest projects would have to go through before theywould be subject to resource security by State and Commonwealth Governments. (seeAppendix \)

July \991

The Resource Assessment Commission submitted its draft repa" on forestry to theGovernment in July. The draft report included a chapter on resource security whichstated that "Proposals for resource security should be applied only if assessments indicate

that the national benefits exceed the costs." Such a costlbenefit analysis had not beenincluded in the details of the Industry Statement on resource security. The ResourceAssessment Commission went on to state that 'The Inquiry notes that neither theAssociation (NAFI) nor any other industry representative has guaranteed that theproposed investment will proceed if legislation is enacted. Representatives of companiesinvolved in the industry have stated that current capital costs and market conditions willprevent immediate investment.Ill'

August 1991

Following the March Industry Statement there were slight changes made to the proposals

covered by this process. Originally it was felt that only single projects amounting to a

$\00 million investment would be covered by this process and this would have essentially

restricted resource security to large pulp mills. Mr Griffiths (Minister for Resources)signalled a change to this policy when he stated in a speech at CSIRO Division of

Forestry on 2 August \991 that "For example, a project proposal which included a veneer

plant, world-scale sawmills, a flitch mill, a woodchip plant, and which collectively involved

Background on Resource Secun"l.v 7

a total investment of S100 million, and was directed at import replacement or export.would be considered an eligible project under the legislation."I! This fell short of therequest by the forest industries to apply resource security legislation to smaller projects.

September 1991

Early drafts of the resource security legislation were circulated and some were criticisedin the press:

James Johnson of the Environmental Defenders Office said that thelegislation was a return to the two section Acts of the 19705 where the realprovisions were made in the regulations or by orders. "But this is evenworse because here the mechanics are contained in a pair of privateagreements. They are saying trust US.,,19

There was a restriction of the Foreign Investment Review powers which inthe March Industry Statement was said to be unfettered but which in oneof the draft provisions its powers would be restricted to non·environrnentalmatters.~ Such changes would mean that a takeover of by a foreign buyercould not be used by the Commonwealth to impose new environmentalrestrictions or changes to operating conditions.

There was a commitment in the March Industry Statement to phase outwoodchipping by the year 2000 but the draft legislation, while ruling outwhole log or woodchip exports, permitted the export of these as asubsidiary use.::Z\

October 1991

Neither the forest industries nor the conservation groups were happy with the variousdrafts and in late October the Prime Minister reportedly received advice from hisdepartment that the proposal had earned universal condemnation and gained noassurances of new investment.l2 The Department of Prime Minister and Cabinetquestioned whether the Government should proceed with the legislation. TheDepartmental advice suggested that the Government should meet with North BrokenHill, proponents of a pulp mill proposed for Northern Tasmania, to see if they had anintention of investing in the pulp mill. That meeting was held and the Government wastold that the company required resource security legislation at State and Federal leveland could not make a final decision until environmental approvals were given and afeasibility study was completed. The Government was also advised that the pulp millinvestment was economically borderline.13

8

November 1991

Background on Resource Secun·,.v

On 5 November 1991 the Opposition suggested an alternative to the Government

proposal for resource security legislation. The Shadow Minister for Primary Industry (Mr

Lloyd) and the Shadow Minister for the Environment (Mr Chaney) said: "For very large

projects like pulp mills, Commonwealth environmental and other requirements should

be specified at the outset of detailed negotiations between the State concerned and the

proponents. Provided those standards are met, the Commonwealth should be prepared

to legislate to endorse the State/proponent agreement." This would mean separate

Commonwealth legislation for each project rather than a single Commonwealth Act, as

proposed by the Government, the conditions of which apply for each project by a

disallowable instrument. They went on to say: 'To cover the multiplicity of smaller

projects such as timber mills, which are not helped at all by the present draft legislation,

the Commonwealth should be able to give legislative backing to State or regional forest

strategies that are drawn up according to Commonwealth-approved procedures."Z-I

On 26 November the Tasmanian Parliament passed its version of resource security

legislation, the Public Land (Administration and Forest) Bill 1991.

On the same day, the Federal ALP Caucus approved Commonwealth resource security

legislation. This was introduced into the House of Representatives on 28 November 1991

as the Forest Conservation and Development Bill 1991.

There is no precise definition of resource security which is accepted by all parties in the

debate. It is all things to all people, a necessity to the forest industries and a disaster to

the conservation movement. However, the Commonwealth Government has described

conditions as to how it will operate. The Resources Minister, Mr Griffiths, has said,

"Resource security is the .finil stage in a comprehensive process to identify and protect

the environmental and heritage values of our forests and importantly, to enhance

employment through encouraging a secure, thriving forest products industry."zs The Prime

Minister has said "Resource security will involve undertakings, backed by legislation,

guaranteeing an agreed volume of timber supplied from an agreed catchment area."u

Background on Resource Security

D. SfATE RESOURCE SECURITY LEGISLATION

Background

9

State governments are the major forest owners in Australia and it is around these public

native forest resources that the issue of resource security revolves. Large wood processing

projects depend upon wood produced from State forests and the Commonwealth only

becomes involved if it is required to make a decision such as to issue export licences or

consider an area for World Heritage listing potential. In most States, the status of State

Forests tends to be the same as National Parks, in that once declared they can only be

revoked or reduced in size by some sort of proclamation that has to be tabled in StateParliament and which can be disallowed by either House of Parliament.

The concern of investors is that their access to forest resources is not secure and canchange over time. They want to know that they can depend on receiving a specificquantity of wood over an extended period of time. Changes to wood quotas have

occurred in the past due to three principal reasons:

a general move in the late 1970. and early 1980s by State Forestry

Authorities toward setting allowable forestry cut at sustainable levels.following the period after World War II when they permitted the forests

to be cut at rates significantly above sustainable levels;

inclusion of significant areas of state forest in new or existing NationalParks during the late 1970s and 1980s;

calculations of lower forest yields due to changing wood processing

technology and improved growth rate data.

Tasmania

The call for resource security has been greatest in Tasmania and it is in this State where

the first State Resource Security legislation has been introduced and the firstCommonwealth-State Agreement is likely to be signed over a world-scale pulp mill

proposed by Nonh Broken Hill inland from Burnie. There are several reasons why this

happened:

There are several Acts of Tasmanian Parliament. termed Concession Acts,

which have given sectors of the timber industry long-tenn rights of access

to BiJckground on Resource Secun'cy

to forest resources in specific areas of Tasmania. The present Tasmanian

Government wanted to abolish these concessions but needed to find a

suitable replacement mechanism 10 satisfy both the forest industry and the

Tasmanian Parliament that these Acts should be amended.

The Commonwealth had intervened in Tasmanian forestry when it initiated

the Helsham Inquiry into the World Heritage Values of Tasmania's Tall

Forests after signing a Memorandum of Understanding with the TasmanianGovernment relating to forests on the Register of the National Estate.

Significant areas of forests were subsequently included in the TasmanianWorld Heritage area and excluded from logging.

The failure of the proponents of the Wesley Vale pulp mill to proceed withthe project after the initial indication from the Commonwealth. later

reversed, that State assessment procedures would be adequate to allow for

fast tracking of the project. This has made proponents of future woodprocessing developments reluctant to commit themselves to large scale

investment, such as that proposed by Nonh Broken Hill in Northern

Tasmania, without secure access to sufficient levels of pulpwood resources

from State Forests.

It would seem that the removal of the Concession system is necessary to allow the

Tasmanian Forestry Commission to properly manage the State Forests. This. along with

the call from the forest industry to ensure that their access to wood resources could

continue into the foreseeable future. has resulted in the recent passage by the Tasmanian

Parliament of the Public Land (Administration and Forests) Bill 1991. This legislationestablishes 1.45 million hectares (ha) of multiple use forest (including a \.I million ha

wood production zone), a register of 600,000 ha of forest where logging will be deferredfor at least 10 years, abolition of all Concession Acts which presently cover 1.8 million

ha of forests, introduction of wood-supply agreements for sales of timber of more than

100,000 tonnes per year, a reduction in annual supply of sawlog and veneer logs from317.000 metres3 to 300,000 metres3, legislative protection of endangered species in private

forests and compensation of land holders. It establishes the Public Land Use Commissionto carry out the scientific assessment of the conservation and heritage values of areas in

the wood production and 'deferred' forest zones. The Commission can then recommend

that such areas be included in National Parks (subject to tabling in Parliament and thepossibility of rejection). This is the only mechanism by which multiple-use and 'deferred'

forests can be included in National Parks.

Alternative Procedures

&ckground on Resource Secun-t.v II

A State may decide to grant resource security to the forest industry via non· legislativemeans. An example of this is in Western Australia where the Forest Authority, the

Department of Conservation and Land Management, has adopted a system of allocating

sawlogs from State Forests to provide security of access to the resource. This involved

a change from an annual licence system to a system which allocates up to 80% of sawlogs

for periods of 10 to 15 years with a legally binding contract.~ There is no specified

catchment from which these sawlogs are sourced. The situation concerning the Macri and

Karri woodchip logs which are derived from the sawlog harvesting operations remains thesubject of legislation. The allocation of chiplogs between the WA Chip and Pulp

Company and the WA Government is determined by the Wood Chipping IndustryAgreement Act 1969 which refers to a specific forest catchment.

E. COMMONWEALTH RESOURCE SECURITY LEGISLATION

The Main Features of the Forest Conservation and Development Bill 1991 are shown inAppendix 2 prepared by Sarah O'Brien of the Law and Government Group of the

Parliamentary Research Service.

According to the Explanatory Memorandum:

'The objectives [of the Bill] are to identify and facilitate the protection offorest areas of significant environmental, cultural and heritage value andto facilitate investment by enterprises in major wood processing projectsto produce value·added products for import replacement and/or export.

To the maximum extent possible Commonwealth powers will be applied once andfor all in an integrated Commonwealth·State assessment of the environment.heritage, economic. cultural and social impacts of each eligible project proposal.Having been applied. the legislation will prevent the Commonwealth from usingthese powers again in respect of the same project, other than in exceptionalcircumstances described in the legislation.

The Bill is umbrella legislation and the intent is that the details concerningthe operation of a project will be included in the Commonwealth-State andState·enterprise agreement."Z7

There are a number of important points that should be raised in relation to the Bill and

the Second Reading Speech.

12 Background on Resource Secun·f.v

. Section 30 of the Australian Heritage Commission Act 1975 is specifically excluded from

the Commonwealth decision-making powers which can be used in the exceptional

circumstances outlined in the Bill;

- \Vhile the Second Reading Speech stated that the Bill will not affect Taxation or

Foreign Investment Review powers, Clause 26 states that the Foreign Investment review

powers cannot be exercised for the purpose of protecting the natural environment or

Australia's cultural heritage;

- The Bill will prevent the Commonwealth from nominating an area for World Heritage

listing which is located in the forest catchment of a project granted resource security;

- The Bill permits the export of WQodchips derived as residues from a project granted

resource security or as logs or woodchips from plantations. It is not clear whether these

residues will be from sawmills or whether they will also come from waste left on the

forest tloor after sawlog operations (sawlog residues) or from thinnings in regrowth

forests (silvicultural residues).

- The Agreements between the Commonwealth and the State, and the State and the

enterprise will be made public according to the Second Reading Speech but it is not clear

at what stage of the process this will occur.

. The comprehensive assessment process necessary before a project can be granted

resource security will take a substantial period of time, at least eighteen months and

probably more than two years, so this will definitely not be a fast track process.

- While the Agreements will be legally binding according to the Second Reading Speech

neither the Commonwealth nor the State involved will be liable for compensation if the

Commonwealth prohibits or limits the activities of the project.

- The Commonwealth can ensure compliance of conditions with the project set either by

the Commonwealth or by the State. It can monitor the State's performance of its

Obligation to enforce compliance of conditions imposed on the project.

- The Commonwealth can invoke its powers in exceptional circumstances. e.g. to prevent

an endangered species of fauna or flora from becoming extinct. A species will only be

declared as threatened after the Ministers are satisfied that an adequate scientific basis

exists, and only after appropriate consultation with the State and its views taken into

account. It is possible that the Commonwealth may accept a state's argument that the

Background on Resource Secun'ty 13

scientific basis for the declaration of a species as threatened or endangered should berefused due to economic reasons.

. The Commonwealth will offer a form of non·legislative resource security to projectswith investments of less than Sl00 million. It will apply where a Commonwealth decisionsuch as an export licence is necessary and will entail a comprehensive up-frontassessment of environmental, social, heritage and economic issues, State-Enterprisecontracts and a Commonwealth-State Agreement. The enterprise must involve value­adding investment or industry restructuring. Woodchip expons will be permiued on a

case-by-case basis after the year 2000 with the caveat that, subject to marketconsiderations, the woodchips shouJd be directed (Q domeslic use if so required. TheSecond Reading Speech could be interpreted as allowing a woodchip expon company tobe granted this form of resource security without having committed itself to furtherinvestment or carry out domestic processing of woodchips.

. The commercial plantations which are to be encouraged by the process of ResourceSecurity will provide the necessary feedstock to sustain the major developments proposedin Tasmania, Victoria and Western Australia.

F. ARGUMENTS FOR AND AGAINST RESOURCE SECURITY

Legislation for resource security can be supported on a number of grounds, including:

Large wood processing projects require a large supply of wood over a longperiod of time so investors will not make a commitment to establish suchprojects unless they know that wood supply is guaranteed. Both State andCommonwealth Governments have to give undenakings that the wood willbe supplied to a project and that the products can be exported. Withoutresource security legislation the State or Commonwealth Government couldeasily revoke the project's access to wood from public native forests orprevent the expon of the wood products;

The long-term policy of conservation groups is to phase out virtually alllogging in native forests. Resource security legislation could counter thepotential pressure for excluding logging in native forests by endorsing suchlogging as a valid resource use;

The comprehensive environmental assessment of the proposed forestcatchment area necessary before Commonwealth resource security can be

14 Background on Resoura Securit.v

granted to a project will provlde the opportunity to identify areas with high

conservation values which could be protected under the lerms of the

Agreements or in Nature Conservation Reserves;

There are a number of concerns and criticisms of resource security legislation, including:

It will encourage the removal of the remaining accessible old growth native

forests outside National Parks in the forest catchment areas servicing the

wood processing project;

Resource security should be about access to specific volumes of woodproducts, not access to specific forests. There is no reason to lock up

forests in wood production zones attached to a specific project, since 100g­

term contractual obligations between the State and the wood processorcould achieve the same end;

Resource security legislation will mean that it will be virtually impossible

to establish new National Parks in forests after they have been covered byresource security;

The legislation will severely restrict Commonwealth Acts such as the

Australian Heritage Commission Act;

There is no need for resource security over native forests when plantations

could be expanded to supply most of the pulpwood needed for the

pulpmills within the next 15·20 years;

The issue of unforeseen circumstances involving rare and endangered

species could be used by the Commonwealth as a mechanism to

circumvent resource security in the future.

Resource security legislation will have no provision for financial compen­

sation from the Commonwealth or the State for severely limiting or halting

the operation of the project;

G. COMMENTS

8:Jckground on Resource Securit.v 15

There is the question of the amount of resource security that will in fact be conferred on

a project by this legislation. This cannot be answered at present. However, Professor D

E Fisher made three points relating to the security provided under the legislation;

". the entrepreneur is not party to the Commonwealth-State agreement;. the agreement may be varied at any time if that is the consensus between theCommonwealth and the State;- the uncenain position of the entrepreneur in the event of breach of agreementby either the Commonwealth or the State,"lS

These views support the argument that there is no certainty that the legislation will

achieve what was wanted of it by the forest industries and by the Commonwealth and

State governments.

The impression may have been created that resource security legislation would guarantee

the future of billions of dollars of investment when in fact it only addresses one area of

commercial risk associated with forest projects, Other sources of risk include the cost of

other inputs such as energy and finance, the price of and demand for outputs, and

developments concerning competing outputs.

The granting of resource security will mean that the Commonwealth will agree to fetter

its decision·making powers in a forest area. This could affect how Australia implements

any future Treaty or Convention. The proposed Biodiversity Convention to be considered

at the UN Environment and Development Conference in Brazil in 1992, if signed and

ratified by Australia, may impose significant obligations on the Commonwealth to protect

biodiversity of our forests. The granting of resource security to a project in a particular

forest area may prevent the Commonwealth from meeting its international obligations

to implement a Biodiversity Convention where it does not fall within one of the

exceptiOns outlined in the Bill.

It is not clear whether the growth rate, and sawlog and pulpwood yield of the forest will

be considered in deciding the volume of wood to be made available to a project by the

resources security assessment process, since the legislation only refers to the volume of

timber to be supplied from the wood production lone. It is imponant that growth rate

and yield are considered, otherwise it could be implied that resource security is about

guaranteeing access to the existing standing timber rather than, as would be expected, a

renewable resource harvested on a sustainable basis over several rotations.

16 &ckground on Resource Secumy

There appears to be general consensus on the need to further process sawn timber and

pulpwood from Australia's native forests and plantations. However, there is debate as to

the size of the forest industry sector that is suitable for Australia; and whether it should

be aimed only at meeting our domestic needs or whether it should expand and become

a significant net earner of export income. The aim of Commonwealth resource security

is to achieve the latter by facilitating large-scale value-adding of native forest products.

An associated goal should be to phase out WQodchip exports and replace these with pulp

or paper exports.

While the need for Commonwealth resource security legislation has been justified by the

Government as a mechanism to achieve better protection for Australia's native forests

and to shift the forestry industry to export-oriented value~adding activities, it should also

be seen in a general sense as an endorsement of forestry as a valid use of Australia's

native forests to provide long-term productive employment in regional areas.

REFERENCES

Background on Resource Secun"rx 17

1. Garran. Robert and Power, Julie 1990, 'Kelly hits back over resource delay claim'.Australian Financial Review, 11 October

2. Garran, Robert 1990, 'GovtS seek to agree on laws over access to timber.resources', Australian Financial Review, 23 October

3. Communique Special Premiers Conference 1990, Towards a Closer Partnership',Brisbane 30/31 October

4. Taylor, Lenore 1990, 'Button bid to protect logging by legislation', The Australian2 November

5. Garran, Robert 1990, 'CSIRO finds Kakadu "richest area for mammal diversity''',Australian Financial Review 10 November

6. Taylor, Lenore 1990, 'Cabinet push to weaken greens',The Australian 14November

7. Seccombe, Mike, 'Loggers use projects to force GOVl'S hand', Sydney MorningHerald 22 December

8. Toyne, Phillip 1991, 'Cabinet agreement to pass resource security upsets greenlobby', 7.30 Report 7 March

9. Garran, Robert 1990, 'Deadlocked Cabinet defers logging decision to new year',Australian Financial Review 20 December

10. Hartcher, Peter 1991, 'PM. minister at odds over resources laws', Sydney MorningHerald 21 February

II. The Australian 1991, 'Timber promise "a first'" 13 February

12. Kelly, Paul 1991, 'Labor's changed priorities have provoked an explosion inCabinet', The Australian 9·10 March

13. Bain, Dr Robert 1991, 'Environment: Discussion of Current Issues', Couchman 27March

14. Taylor, Lenore 1991, "Timber legislation advised', The Australian 5 March

15. Woolford, Don and O'Connor 1991, 'Environment Groups Greet ResourceSecurity Decision with Anger', AAP 7 March

16. Hawke, Bob, Keating, Paul and Bulton,John 1991, BUIlding a CompetitiveAustralia Department of Prime Minister and Cabinet, AGPS Canberra

18 B3ckground on Resource Security

17. Resource Assessment Commission 1991. Forest and Timber Inquiry. Draft ReporrVolume I, July 1991 AGPS Canberra

18. Griffiths, Alan 1991, 'Australian forestry and forest industries: a vision for the1990's and beyond', Speech delivered at CSIRO Division of Forestry 9 August

19. Lamberton. Hugh 1991, 'Greens attack Bill', Canberra Times 25 September

20. Lamberton, Hugh 1991,'Govt switch on foreign investment', Canberra Times 27September

21 Lamberton,Hugh 1991,'Greens attack Bill', Canberra Times 25 September

22. Taylor, Lenore 1991,'PM told to scrap resource security', The Australian 30October

23. Taylor, Lenore 1991,'Hawke firm on resource proposal', The Australian 5November

24. Lloyd, Bruce and Chaney Fred 1991,'Opposition Suggests Alternatives onResource Security', Press Statement 5 November

25. Griffiths, Alan 1991, Towards a National Forest Conservation and DevelopmentStrategy - Getting the Process Right', Statement to 27th Meeting of the AustralianForestry Council Coffs Harbour 28 February

26. Hawke. The Han R J L 1991, 'Building a Competitive Australia' MinisterialStatement, House of Representatives Hansard 12 March

27. Explanatory Memorandum 1991, 'Forest Conservation and Development Bill(no.209) 1991', House of Representatives. The Parliament of the Commonwealthof Australia

28. Fisher, D E 1991. The Proposed Forest Resource Security Scheme: SovereignRisk or Resource Security. The Australian Law Journal Volume 65 August 1991pp 453-467

Appendix 1

From "Building a Competitive Australia' March 1991

RESOURCE SECUIUTI' FOR MAJOR NEW INDUSTlUAL WOODPROCESSING PROJECTS

The Government will establish I sc;hcme for (orest resource security bylegislation for major new mdustrial wood procnsing projectS is set out below.

A COMMITMENT TO LEGISL.AIE

The Commonwulth is prepared to lCgWllC to provide resource sec:u.rity formajor new ind.ustrial wood procusitia projeCtS iamc foUowing citcums\&DCCS:

(a) where the project involves I e.apital.intensivc value-addinl iDvcsDDeac ofS100 million or more and is ditcaed 10 impon replacement and/or c:rpon;

(b) where the proponent of the project:

(i) mWs a commiancDI to accept, and 1Cl in KCOrd&nce with. tboacparts of the five-mlc Forest Conservation aad Development Pro<:caoutlined in Section B below which art applicable to it; aDd

(ii) maltes a f11m commitment to proceed with the project subject tor(ceivins the ncccu&ry lovcmmcnt approvals;

(e) where the relevant State Govemment has c:ommilled the Stl1C:

(i) to accept and act in accordance with those parts of \he FowtCoruervauon and Development Process which arc applicable to it;Uld

(iQ to enact parallcl resoult" 5CCIlrily lesisbtion to apply to the projectin question within the Stile jurisdictiOll.

B FOREST CONSERVAl10N AND DEVELOPME!'rr PROCESS

StllC 1:

Fonnulation of a Project Development SUaleiY by thc State Government and theindustry proponent. indudinl:

(i) precise definilion of the proposed value.addins invu_.1, induQinSappropriaU: industrial relations amoseme...;

(ii) delineation of lbe resource to be spccifiully associaU:d wilh lhc projectin<luding:

(Q) ideDtiflCltian of the proposed ecoDamic wood supply catchmeDtarea; UJd

(1,.) esumation of the volume of wood to be supplied from within thatarca;

'-'6

(iii) provision 10 ....blish economically feasible hardwood and SOflwoodplantations m agreed areas and within agreed timeframes 10 provide forlong-term timber supply with the object of phasing out woodchip exporttlvaugh value.adding and to relieve pressure on native forests.

Stage 2:

lotegrated Commonwealth·SlJ,le Assessment of environment. heritage, c:ultuli.l.soaal ind economic issues. designed to comprehensively ideDUfy Ind resolve,prior 10 the commencement of the project, as many policy impedimentS is

possible.

l.a panicuw, the integrated assessment process will include:

(i) application of the EnYITONnent Prorecllon (l,"p4cI ofProposals) Act 1974;

(ii) application. to the extent that national estate questions are involved. of theAlUrrali4J1 He,ilage CommiuionAct 197$;

(iii) application to the extent that World Heritage questions are or may beinvolved. of the World Heritage Convention lnd the World HeritageProperries COlUe1'VGtiorrAct 1983· on the basis that no loging operationswill be pennissible in areas insaibed on the World Heril1ge List;

(iv) application. to the extent possible at that s(age, of protective provisions ofrelevant State or Federal Aboriliul or Torres Strait Islander legislation;and

(v) consideration of relevant outcomes from the forestry refereo" to theResource A.ssessment Commission and the ForestrY Workinl Group of theEcologically Sustainable Development process and the IntergovernmentalAgreement on the Environment

Stage 3:

Commonwealth·State Agreement. ratified by the respective GovernmentS. todefine the project and its associated resource as fmally agreed. 10 incorporate theoutcome of the integrated assessment process. and to provide for cenain relatedmlnen along the lines indicated below. Such Agreement would include amonaits provisioa.s:

(i) the identified wood supply calChment arel;

(ii) the agreed best estimate of the volume that would be supplied for theplOjeet from withiD the agreed arel;

(iii) forest management prescriptions. for both public and private forests, to beencompassed in Codes of Forest Pt1e:tice;

(iv) provision for periodic review of the operation of management andenvironmental protection practiCes under the A&reemenl;

SJ7

(v) safeguards 10 accommodate major unforeseeable contingencies (eg rareand endangered species);

(vi) provision to ensure that. where tbere is Commonwealth·State agreementior any reason to remove any area from that previously available for woodproduction. the lost resource will be made good through either:

(4\) the Scale making available new forest uea (other than reserve areasset aside by legislation for conservation purposes): and/or

(0 I forest productivity improvementS. including additional planu.tionsand intensive forest management;

(vii) agreement by the Commonwealth that • with the exception of theapplication of management plans or environmental monitoring regimespursuant to the Environment Protection (Im1J4C' of ProposaLs) Acr 1974 •the assessment processes conducted in Stale 2 pursuant toCommonwealth legislation would not be further applied by theCommonwealth Government. In particular. the CommonwealthGovernment would agree to take no lction under Section 30 of theAustraliQ" HcrilQgc Commus,on Act 1975 to limit wood supply below theagreed best eSllmate of the volume required for the projeCt in question;

(viii) agreement by the State government, in similar terms to (vii), in relation toany applicable State assessment processes;

(Ix) agreemen, by .he Commonwealth that i' would no" punuant 10 any o,berpower available to it (ea: to refuse expon licences or the acquisition ofland for Commonwealth purposes). prevent the project enterprise fromexponing. or using in Australia. aU wood made available 10 it by the Swepursuant to the Agreement;

(x) commiunentS by the Commonwealth and relevant Stale to legislate to theextent necessary to implement the terms of the Agreemenl; and

(xi) appropriate provision for tennination or renegotiation of lhe Agreement inthe event of breach by either side.

Stage 4:

Commonwealth Resource Security legislation. to implement as necessary thelerms of the Commonwealth,S'I,e Agreemen, (see Section C for funher detail1).

StageS:

lmplementation of the development and conservation process, pursuant to theCommonwealth·State Agreement and supportina leaislation.

5.58

C CONTE:'-ITS OF CO~MONWEALTH FOREST RESOURCESECURITY LEGISLATION

The genera! object of the legislallon will be 10 make it possible forCommonwealth obligations under Commonwealth·State agreementS tohave effect in relation to major new indusuial wood processing projects,pursuant 10 t.1e commitment described above in Section A and the processdescribed above in Section B.

The proposed form of the legislation is a series of provisions of general.but suspended. application. They will be made applicable to a pU1iculuproject (which would itself be the subject of il particularCommonwealth·S11te Agreement) by means of il prescribing regulalion ­which regulation would itself be subject, in the normal way, toParliamentary disallowance.

The content of the legislation would include, in relation to prescribedprojects:

(i) legislative authorisation for Ihe Commonwealth undertaking thatrelevant Commonwealth powers (eg to refuse expon licences or theacquisition of land for Commonwealth purposes) would not beexercised in any wlY thlt would:

(<l) prevcnl a SIl.. from making available 10 the prescribed projectenterprise all tbe wood specified in a State·enterprisearnngement that is acceptable 10 the Commonwulth; or

(b) prevent a prescribed project enterprise from exporting,. or usingin AUStralia. all the wood made available to it by the State undersudlan arrangement;

(ii) provisions making clear that existing environmental legislativeprovisions and inlernational obligations. and applicable Aboriginal orTorres Strait Islander legislltion. will not be fettered or overridden bythis legislation. with the exception of Section 30 of the Awstra/UanHeritage Commissio" Act 1915 which having been applied inassessment procedures under Stale 2 of the Forest Conservation andDevelopmem Process. would be deemed to have been satisfied;

(iii) provisioos making clcu thaI nothing in this legislation will fcncr oroverride the tuition and fareiaD invesuncnt review powers of theCommonwealth; aDd

(iv) a provision makina clear that. whatever other mechanisms there maybe in the Commonwealth-State agreements 10 make aood resourcelost as I result of unforeseeable continlencies. there will be nofinancial c:ompe:nsation.

5.59

Appendix 2

MAIN FEATURES OF THE FOREST CONSERVATION AND DEVELOPMENT BILL 1991

Sarah O'BrienLaw and Government Group

MAIN FEATURES OF FOREST CONSERVATION AND DEVELOPMENT Bill 1991

The basis of the legislation is two agreements:

1. AGREEMENT BETWEEN THE COMMONWEALTH AND THE STATE/S IN

WHICH THE PROJECT IS LOCATED.

These agreements are legally binding but neither the Commonwealth nor the

States are liable to pay damages for any breach (cI.9). (see discussion below).

The Commonwealth agrees not to exercise any Commonwealth decision

making power (except in limited exceptions) to prohibit or impose conditions

on a project (cI.15).

The State agrees to enter into an agreement with the enterprise to make a

volume of resources available and regarding undertakings as to conditions and

monitoring of the project (cI.13.14).

2. AN AGREEMENT BETWEEN THE STATE/S AND THE ENTERPRISE

The State/s agree to make a volume of resources available to the enterprise

over a specified time period (cI.14).

The Enterprise agrees to comply with certain conditions.

3. Ministerial responsibility

The Prime Minister will have overall responsibility for administration of the Bill. The

Governor-General will designate by gazellal various Ministers to be responsible for

various provisions of the Bill:

Prime Minister· clauses 10, 12(1), 19, 21

Primary Industries and Energy - clauses 11, 12(2)(b), 12, 14, 15, 16,20

Industry Technology and Commerce - clauses 11, 13-15, 20

Arts, Sport, the Environment, Tourism and Terrrtories - 11, 12(2), 13-15, 17 [excluding

17(6)),18,20.'

Explanatory Memorandum, pp. 3-4.

2

MAIN FEATURES OF FOREST CONSERVATION AND DEVELOPMENT BILL 1991

4. GRANT OF RESOURCE SECURIlY BY COMMONWEALTH INSTRUMENT

Where the Commonwealth Minister is satisfied that the five conditions specified have

been met the Minister must by written instrument declare that the Bill applies to the

project and specify for what length of time. This is known as "granting resource

security". Such instruments are disallowable by Parliament. (cl.l0).

4.1 Frve conditions for grant of resource seaJrity

The five conditions which must be satisfied before the minister grants resource

security are:

(a) the dominant purpose of the project is export or for import replacement; and

involves investment of more than $100 million (cI.11);

(b) the Commonwealth has completed an appropriate assessment process in co­

operation w~h the relevant Statels (cI.12). This assessment process must

include;

(i) giving the Australian Heritage Commission reasonable opportunity to

consider and comment whether action by a Commonwealth agency (as

defined in s.3O(1) AHC Act)2 would "adversely affect' any part of the

National Estate and whether there are "feasible and prudent a~ernatives";

(ii) compliance with the administrative orders made under the Environment

Protection (Impact of Proposals) Act 1974; and

2 Subsection 30(1) provides:Each Minister shall give all such directions and do all such things as.consistently with any relevant laws, can be given or done by him forensuring that the Department administered by him or any authoriry ofthe Commonwealth in respect ofwhich he has ministerial responsibilitiesdoes not take any action that adversely affects. as pan of the nationalestate, a place that is in the Register unless he is satisfied that there isno feasible and prudent alternative to the taking of that action and thatall measures that can reasonably be taken to minimise the adverse effectwm be taken and shall not himself take any such aCtion unless he is sosatisfied.

3

MAIN FEATURES OF FOREST CONSERVATION AND DEVELOPMENT BILL 1991

(iii) taking into account any environmental impact statement (EIS) or public

environment report (PER) and recommendations.

(c) the relevant State has enacted any laws necessary to authorise the State to

carry out its obligations between the Commonweanh and the State and

between the State and the enterprise(cI.13);

(d) the State has entered into an agreement with the enterprise to make available

a volume of resources for the project and the enterprise has agreed to comply

with certain obligations.(cI.14); and

(e) the Commonwealth and the State have entered an agreement where the

Commonwealth has agreed not to exercise any ·Commonwealth decision

making power" (see discussion below) contrary to c1.16; and the State has

agreed inter alia to make the volume of resources available to the enterprise

and enforce and monitor and allow the Commonwealth to monitor the

enterprises compliance with its obligations (cI.1S).

4.2 Non application of Australian Heritage Commission Act

Where a project has resource security s.3O of the Australian Heritage Commission Act

does not apply to the exercise of any Commonwealth decision making power relating

to the project (cI.16(1)). There do not appear to be any exceptions to this. However,

as noted in para 4.1 above. cl.12 of the Bill provides for the Australian Heritage

Commission to comment on compliance with s.30 during the assessment process of

the project.

4.3 Non application of other Commonwealth powers - subject to five exceptions

No other Commonweanh decision making power is to be exercised to prevent or

obstruct the availability of the agreed volume of resources, export of goods produced

by such resources or consumption of goods so produced in Australia except in five

circumstances:

4

MAIN FEATURES OF FOREST CONSERVATION AND DEVELOPMENT Blli. 1991

(1) where a major and unforseen environmental or cultural impact arises eg: threat

to a species of fauna or flora (cI.17);

(2) where a Commonwealth decision is required during the commissioning or

construction stage which could not have been made before completion of the

assessment process (cI.18);

(3) the designated Ministers can still make decisions on malters which were not

considered in the assessment process and which do not involve

environmental, cultural, heritage, social or economic issues arising from the

project (cI.19);

(4) where there has been a material breach of the agreement by the Statels or an

agreement made with the Commonwealth, or of an agreement between the

Statels and the enterprise and the breach cannot be remedied (cI.20); or

(5) where there has been a breach 01 a condition imposed as a resuij of the

assessment process (cI.21).

Before the Commonweaijh makes a decision under one of these exceptions rt must

consuij with the State and the enterprise and take all views into account (c1.15(c)(ii)).

5. No Commonwealth or S1ate rlability to pay compensation

Neither the Commonwealth nor any State are liable to pay compensation to any

person or body in connection with the Commonwealth making a decision that would

prohibit or impose conditions on a project that has resource security (sub-clause

23(1)) (except where Commonweaijh action amounts to an acquisrtion under s.51

(xxxi) of the constitution).

5

MAIN FEATURES OF FOREST CONSERVATION AND DEVELOPMENT BILL 1991

6. INTERACTION OF THE BILL WITH OTHER LEGISLATION

6.1 Assessment process

Before the Commonwealth Minister grants resource security to a project the

Commonwealth and State must have co-operated with:

(a) the Australian Her~age Commission within the general terms of the AHC Act

(b) Administrative Orders, Environmental Impact Statements (EIS) and Public

Environment Reports (PERs) under the Environment Protection (Impact of

Proposals Act

6.2 Commonwealth agrees not to exercise other decision making power

A fundamental basis of the Bill is an agreement by the Commonwealth with the State

not to exercise any Commonwea~h "decision making powers" to prohib~ or impose

conditions on a project where resource security is granted.

The Bill defines "decision making power" as decisions made pursuant to a power

conferred by a Commonwealth or State law including decisions of an administrative

character that would prohib~ or impose conditions on the project. This includes

administrative decisions under:

Aboriginal and Torres Strait Islander Her~age Protection Act 1984

Australian Heritage Commission Act 1975

Environment Protection (Impact of Proposals) Act 1974

Export Control Act 1982

World Her~age Properties Conservation Act 1983

6.3 Application of World Heritage Properties Conservation Ad

6.3.1 Nomination lor listing

Clause 4(1) (and cI.24(2)) of the Bill provide that Commonwealth decisions prohibiting

or imposing conditions under the WHPC Act inciuding:

6

MAIN FEATURES OF FOREST CONSERVATION AND DEVELOPMENT BILL 1991

the Commonwealth's power to make a decision that causes property

to be taken, for the purposes of subparagraph 3A(1 )(a)(ii) of that Act,

to be subject to World Herrtage List nomination.

Cannot be exercised in relation to a project ie the Commonwealth agrees not to

nominate for listing an area already granted resource security.

6.3.2 Already identified property

Clause 24(1) of the Bill provides however that this does not preclude the

Commonwea~h from exercising a decision under the WHPC Act to prevent a project

conducted on already identified property ie (Clause 24(2) repeats (from cI.4(1)) that

the Commonwealth's power to commence nomination for listing is precluded).

6.4 Foreign investment decisions

The Bill prohibrts the use of the Foreign Acguisrtions and Takeovers Act '10r the

purpose of protecting the natural environment or Australia's cu~ural herrtage.(cI.26)".

6.5 Extemal affairs power

The Bill initially precludes the Commonwealth from exercising a decision making power

under a law enacted under the external affairs power, in relation to a project, unless

the decision made under that law comes within one of the exceptions in the Bill.

For example, a project may be granted resource securrty and the Commonwearth may

subsequently ratify a Convention to protect biodiversrty which may have some

significance to areas used by that project. The Commonwearth might then pass a law

implementing the Convention. Because of the Commonwealth's agreement with the

State not to exercise any decision making power under any law made before or alrter

the commencement of the Bill (cI.4(1)) no Commonwearth decisions could be made

prohibrting, or imposing condrtions on, that project under a Commonwealth

Biodiversity Act except

7

MAIN FEATURES OF FOREST CONSERVATION AND DEVELOPMENT BIll. 1991

(a) in one of the five circumstances listed in clauses 17-21 of the Bill. In this case

for example, cI.17(1) which allows designated Ministers to exercise a power on

discovery of a major and unforseen environmental or cultural impact.

Were Australia to ratify a Convention in the Mure clause 12 of the Bill may need to be

amended to require that the assessment process take any Commonwealth law

implementing that Convention into account in assessing Mure projects.

Under international law the Commonwealth has a responsibility to ensure that

Commonwealth and State laws comply with obligations imposed by a Convention

ratified by Australia subject to any reservations made by Australia.

6.6 Other Commonwealth Acts

The Bill is overridden by other Commonwealth Acts only where the Commonwealth

Acts expressly provide.(cI.27).

6.7 Stale laws

The Bill does not affect State laws.(cI.28).

8

MAIN FEATURES OF FOREST CONSERVATION AND DEVELOPMENT BILL 1991

ISSUES

A. Legislative scheme of the Bill

The operation of the Bill is unusual as it is based on an agreement by the

Commonwealth not to use its decision making powers under any Commonwealth law

after the grant of resource security to a project (subject to five exceptions). (However.

several of these decision making powers are expressly used before the grant of

resource security in the assessment stage of the project.) This scheme raises issues

such as the feltering of statutory discretions.'

B. Will agreements between the Commonwealth and the Slate; and between the

enterprise and Slate be public?

The second reading speech states that agreements between the Commonwealth and

State and between the State and the enterprise will be public.

However, the Bill does not expressly provide that the agreements will be public or

must be tabled in parliament. Other significant actions and reports are not required

by the Bill to be made public. For example:

(a) Enforcement and monitoring of projects by the Commonwealth and the State(cI.15(1 )(b) and (c)).

(b) Information on breaches of conditions by an enterprise.

(c) Procedures and deliberations of the Commonwealth and State concerningwhether a decision making power is exercised pursuant to a specifiedcircumstance (cI.15(1 )(c)(ii) and (iii)).

(d) Procedures for the renegotiation and termination of the agreementc1.15(1 )(c)(iv).

, See discussion by Professor D. E. Fisher in "The Proposed Forest ResourceSecurity Scheme: Sovereign Risk or Resource Security?", 65 Australian Law Journal,August 1991 pp.461-3.

9

MAIN FEATURES OF FOREST CONSERVATION AND DEVELOPMENT BILL 1991

C. Status of the legally binding agreement between Commonwealth and State: no

damages and compensation fO( enterprise

Clause 9(2) of the Bill states:

The agreement is legally binding, but neither the Commonwealth norany State is liable to pay damages for any breach.

Clause 23(1) further provides that neither the Commonwealth nor any State is liable

to pay compensation to any body in connection with the Commonwealth making a

decision prohibiting or imposing conditions on a project. This means that an

enterprise cannot sue the Commonwealth or State for damages or claim

compensation.

But does the enterprise have any other legal course of action? If the Commonwealth

or the State breach the agreement the enterprise could seek a declaration andlor

injunction from the court.

Agreements may provide alternative arrangements on breach

It is possible that the agreement between the Commonwealth and the State and the

agreement between the enterprise and the State may make provision for a breach.

For example, provision may be made that if access to the agreed volume of resources

was prohibited or reduced the State (supported by the Commonwealth) will give

access to volume elsewhere.

D. FO(eign investment review

The Minister's second reading speech notes that the Bill "will not affect taxation or

foreign investment review powers".' However, Clause 26 of the bill does preclude the

exercise of a power under the Foreign Acguis~ions and Takeovers Act 1975 to protect

the natural environment or Australia's cu~ural heritage. The FAT Act does not

expressly provide that decisions could be exercised for that purpose but in some

cases could have been exercised for that purpose on the recognised criterion of

"national interesf'.

, Hansard, House of Representatives, 28 November 1991 p.3670.