DRAFT

Cost Recovery under the

Environment Protection and Biodiversity Conservation Act 1999

DRAFT COST RECOVERY IMPACT STATEMENT

(December2012 – June 2017)

MAY2012

The proposed cost recovery arrangements documented in this draft CRIS are subject to final Government’s approval before the introduction of cost recovery

Version Control

Version / Author / Date / Comments
0.1 / The Department of Sustainability, Environment, Water, Population and Communities / Initial draft for consultation.
0.2
0.3
0.4
0.5
1.0

Table of Contents

1.OVERVIEW

1.1Australian Government Cost Recovery Policy

1.2 Background to cost recovery under the EPBC Act

1.3 Purpose of this document

1.4Description of activities

1.5Stakeholder consultation

1.6Amendments to the EPBC Act and regulations

2.DESIGN

2.1Design of cost recovery arrangements

2.2Who pays the fees

2.3Basis of charging – Fee or Levy

3ENVIRONMENTAL IMPACT ASSESSMENT

3.1Policy authority

3.2 Legal requirements for the imposition of charges

3.3 Commencement of charging for environmental impact assessments

3.4Users and stakeholders

3.5Cost recovery model

3.6 Description of activity

3.7 Cost components

3.8 Schedule of fees and charges for environmental impact assessments

3.9 Changes in cost base

3.10 Volume and/or demand assumptions

3.11 Exemptions and waivers (environmental impact assessments)

4WILDLIFE TRADE PERMITS

4.1 Policy authority

4.2 Legal requirements for the imposition of charges

4.3 Commencement of revised and new wildlife trade fees

4.4 Users and stakeholders

4.5 Existing fees for wildlife trade permits

4.6 Description of activity

4.7 Cost components

4.8 Costs and fees for activities proposed for cost recovery

4.9 Changes in cost base

4.10 Volume and/or demand assumptions

4.11 Exemptions and waivers (wildlife trade)

5STRATEGIC ASSESSMENTS

5.1 Policy authority

5.2 Legal requirements for the imposition of charges

5.3 Commencement of fees

5.4 Users and stakeholders

5.5 Policy rationale for strategic assessments

5.6 Description of activity

5.7 Cost components

5.8 Schedule of fees and charges

5.9 Changes in cost base

5.10 Volume and/or demand assumptions

5.11 Exemptions and waivers (strategic assessments)

6PROJECTED EXPENSES AND REVENUE FOR THE CRIS

6.1Projected expenses and revenue

7MONITORING MECHANISMS

7.1Monitoring mechanisms

7.2Stakeholder consultation

7.3Periodic review

8COST RECOVERY LINKS

APPENDIX A: SCHEDULE OF FEES

Glossary

ARI / Approval on Referral Information
Cost Recovery Guidelines / Australian Government document outlining the principles and criteria for cost recovery activities
CA / Controlled Action
CITES / Convention on International Trade in Endangered Species of Wild Flora and Fauna
CRIS / Cost Recovery Impact Statement
COAG / Council of Australian Governments
Complexity Matrix / Tool used to determine additional costs for complex environmental impact assessments
Consultation Paper / The EPBC Act Cost Recovery Consultation Paper (September 2011)
EIA / Environmental Impact Assessment
EIS / Environmental Impact Statement
EPBC Act / Environment Protection and Biodiversity Conservation Act 1999
ERC / Expenditure Review Committee of Cabinet
Fee Point / The point in the assessment or application process that a fee is charged.
‘Free-Rider’ Effect / Where a party can avoid costs by waiting for another party to pay a fee and seek approval first (i.e.: ‘free riding’ on the approval of others)
Matters of NES / Matters of National Environmental Significance
NCA / Not a Controlled Action
NCA/PM / Not a Controlled Action, provided the action is undertaken in a particular manner
Post approval / Functions that occur subsequent to an approval under Chapter 4 of the EPBC Act. E.g. Assessment of management plans
Stop clock / Suspension of the statutory timeframe of an EPBC Act referral or assessment by the Minister/delegate
The department / The Department of Sustainability, Environment, Water, Population and Communities

Staffing classifications

APS 4 / Permit Officer / Project Officer / Permit Officer
APS 5 / 6 / Assessment Officer / Project Manager / Permit Manager
EL 1 / Assistant Director / Team Manager / Permit Team Manger
EL 2 / Director / Section Manager
SES 1 / Assistant Secretary / Senior Executive Staff / Delegate of the Minister


1OVERVIEW

Note Concerning Decision by Council of Australian Governments Regarding Accreditation of State and Territory Environmental Assessment and Approval Processes

The Commonwealth currently undertakes assessments of projects that impact on matters of National Environmental Significance (NES) through a range of environmental impact assessment (EIA) approaches outlined in the Environment Protection and Biodiversity Conservation Act 1999(EPBC Act).

The Council of Australian Governments (COAG) communiqué of 13 April 2012 reaffirmed

COAG’s commitment to high environmental standards while committing to reducing duplicative environmental assessment and approval processes for business and industry. In support of this commitment, governments will be working to accredit states assessment and approval processes.

COAG acknowledged the Commonwealth’s existing final approval responsibilities for projects within its current jurisdiction affecting world heritage sites and specific areas of action, including nuclear actions, defence development and developments affecting Commonwealth waters.

Cost recovery approaches discussed in this draft Cost Recovery Impact Statement (CRIS) will only apply to work undertaken by the Commonwealth. state and territory charges are matters for those jurisdictions and the Commonwealth will clearly not charge for any work undertaken by states and territories.

As states and territories increasingly undertake environmental assessments and approvals on behalf of the Commonwealth, there will be a corresponding reduction in the amount of work undertaken by the Commonwealth to which this CRIS applies. The department is also committed to reviewing fees as efficiencies are realised.

1.1Australian Government Cost Recovery Policy

In December 2002, the Australian Government adopted a formal cost recovery policy to improve the consistency, transparency and accountability of its cost recovery arrangements and promote the efficient allocation of resources. The underlying principle of the policy is that agencies set charges to recover all the costs of a product or service where it is efficient and effective to do so, where the beneficiaries are a narrow and identifiable group, and where charging is consistent with Australian Government policy objectives. The Cost Recovery Policy is administered by the Department of Finance and Deregulation and is detailed in the Australian Government Cost Recovery Guidelines (Cost Recovery Guidelines).

The Cost Recovery Guidelines apply to all Financial Management and Accountability Act 1997 (FMA Act) agencies and to relevant Commonwealth Authorities and Companies Act 1997 (CACAct) bodies. In line with the policy, individual portfolio ministers are ultimately responsible for ensuring agencies’ implementation and compliance with the Cost Recovery Guidelines.

1.2 Background to cost recovery under the EPBC Act

TheEPBC Act is the Australian Government's central piece of environmental legislation. It provides a legal framework to protect and manage nationally and internationally important flora, fauna, ecological communities and heritage places. The Department of Sustainability, Environment, Water, Population and Communities(the department) is responsible for administering the regulatory functions of the EPBC Act. Further detail is available at:

On 24 August 2011, the Australian Government announced the reform of the EPBC Act. The whole of the reform package is about taking a more effective and efficient approach to environmental protection and biodiversity conservation, being more proactive, and using strategic approaches to address the complex issues that pose the greatest threat to Australia’s environment. Cost recovery is a key element of the EPBC Act reforms. Cost recovery will improve the department’s ability to meet statutory timeframes and respond to changes in demand for its services. It will also provide incentives to industry to undertake early engagement and incorporate the most environmentally acceptable outcomes into their business planning, as this may reduce the level of assessment required and therefore the costs payable. Further detail on reform of the EPBC Act is available at:

On 16 September 2011, a consultation paper on cost recovery under the EPBC Act was released (the consultation paper). The consultation paper outlined potential cost recovery models for a range of regulatory activities under the EPBCAct, and included targeted questions for stakeholders on how the proposed changes would impact them. Key stakeholders and individuals, including peak industry bodies and non-government organisations, provided comments on the consultation paper. The consultation period closed on 31 October 2011. The department published 79 non-confidential submissions received during consultation, which can be found with the consultation paper at:

Discussion on the outcomes of the public consultation process is at section 1.5 below.

1.3Purpose of this document

Following public consultation on the EPBC Act cost recovery consultation paper, the Australian Government decided to introduce cost recovery arrangements for selected regulatory activities under the EPBC Act. Specifically, the government granted policy authority to costrecoverthe following activities:

  • EIAs (full cost recovery arrangements);
  • wildlife trade permits (partial cost recovery arrangements); and
  • strategic assessments (full cost recovery arrangements on a case-by-case basis[1]).

A CRIS is required where cost recovery exceeds $5 million per annum. A Department of Finance and Deregulation circular (Finance Circular (2008/08) further advises that a CRIS with receipts greater than $10 million per annum will be referred to the Expenditure Review Committee of Cabinet (ERC) for consideration. The current forecast for annual receipts isestimated to exceed $10 million per annum. As such, review by ERC will be required prior to implementation of cost recovery arrangements.

The purpose of this draft CRIS is to document cost recovery arrangements for the regulation of specified activities under the EPBC Act, and transparently demonstrate their compliance with the Cost Recovery Guidelines. This draft CRIS also demonstrates thatthe proposed fees reflect the efficient delivery of services and do not introduce cross-subsidisation between cost recovered and non-cost recovered activities under the EPBC Act.

Stakeholder comments on the draft CRIS are sought during a six week consultation period concluding 21June 2012. Following consideration of stakeholder comments and any refinements to the proposed cost recovery arrangements, the final CRIS will be considered by ERC and published on the department’s website prior to the introduction of cost recovery arrangements, which is expected in December 2012.

1.4Description of activity

The cost recovery activities documented in this draft CRIS areEIAs, wildlife trade permits, and strategic assessments. Full description of these activities isprovided in chapters 3, 4, and 5 of this draft CRIS.

These activities are deemed appropriate for cost recovery as they meet the following criteria:

  • the activities deliver a clear benefit for a particular beneficiary;
  • charging for these activities does not deliver a ‘free ride’ for other proponents;
  • charging for these activities is consistent with policy goals under the EPBC Act; and
  • it is efficient to implement cost recovery arrangements on a ‘fee for service’ basis, as the department can determine costs of its services, attribute these costs to particular proponents and recover them atthestatutory decision points.

1.5Stakeholder consultation

Beforefinalising this CRIS, the department will continue to consult with stakeholders that may be potentially affected by the new or amended cost recovery measures.The steps for stakeholder consultation on the introduction of cost recoveryare outlined below:

  • publication of a consultation paper on proposed cost recovery measures under the EPBC Act in September 2011 (80 submissions received);
  • correspondence seeking comment on the department’s consultation paper sent to repeat referrers and parties engaged in wildlife trade under the EPBC Act, peak industry bodies, relevant non-government organisations and relevant state and territory departments and agencies;
  • consultation with Commonwealth agencies;
  • publication of this draft CRIS in May 2012 with a six week consultation period;
  • correspondence seeking comment on this draft CRIS sent to repeat referrers and parties engaged in wildlife trade under the EPBC Act, peak industry bodies, relevant non-government organisations and relevant state and territory departments and agencies; and
  • consideration of all written submissions and verbal feedback to inform the preparation of the final CRIS.

Summary of key issues from public consultation to date

The following is a summary of key stakeholder issues arising from the 80 submissions received during the public consultation period for the consultation paper.

  • Some stakeholder groups remain concerned by the imposition of a fee for service. Most stakeholders, however, are willing to pay for improved service, streamlined assessments and increased transparency in the system.
  • Stakeholders generally agreed that cost recovery should be accompanied by service level standards, and some stakeholders considered that fees should be refunded if standards are not met.
  • Stakeholders are broadly supportive of the reforms to the relevant regulatory activities thatcost recovery will enable, in particular, tailored guidelines on referrals and assessments, consistent national standards for the listing of threatened species and ecological communities and online tracking for assessments and permit applications.
  • Many stakeholders commented that full cost recovery could create a disincentive to refer projects or seek appropriate wildlife trade permits.

Proposed changes to the EPBC Act cost recovery model following consultation in 2011

The department has given thorough consideration to the range of verbal and written stakeholder feedback received during the consultation period. As a result of this feedback, the following changes have been made to the proposed cost recovery arrangements:

  • Environmental impact assessments
  • The proposed business improvement charge has been removed;
  • Fee exemptions for EIAs will be offered to small business[2];
  • Ministerial consideration of fee waiver applications will be considered in limited circumstances[3]; and
  • Cost recovery of post-approval audits is no longer being considered.
  • Wildlife trade permits
  • Fees will increase to double the current level, however this will still be below full cost recovery level;
  • Annual fee indexation will be introduced to ensure that fees are increased in line with increases in costs of delivering the relevant services;
  • Cost recovery of wildlife trade operations, captive breeding programs and aquaculture programs is no longer being considered as cost recovery is not considered efficient; and
  • The proposed business improvement charge has been removed.
  • Strategic assessments will be delivered under two separate funding streams - budget funded or full cost recovery. Details of the costs that are likely to be incurred in strategic assessments that are considered appropriate forcost recovery are contained in chapter 5. Costs and revenue for cost recovered strategic assessments will be determined on a case-by-case basis and hence, are not included, in the costs and revenue presented in this draft CRIS.

The department is committed to providing a high level of service. The department’s highest priority in improving services will be to improve compliance with statutory timeframes. Service level standards will be developed and made available before 1 December 2012. The department will also be seeking to establish ongoing engagement through an industry reference group to assist in the continued improvement of performance, including service delivery. Details of these ongoing arrangements will be developed as part the EPBC Act reforms.

Further discussion of the appropriateness of cost recovery of EIAs, wildlife trade permits, and strategic assessments is contained in the consultation paper. The consultation paper also outlines the regulatory activities under the EPBC Act that were determined inappropriate for cost recovery.

1.6Amendments to the EPBC Act and regulations

Amendments to the EPBC Act and regulations will be required before commencement of proposed cost recovery arrangements. The necessary legislative amendments are expected to be introduced into Parliament in 2012, with amendments to the regulations made after the Parliament’s passage of the legislative amendments.

The amended regulations are expected to include the commencement date for implementing cost recovery charges and a broad structure for the proper and efficient administration of cost recovery services. The regulations will provide for, but not be limited to:

  • administrative requirements for submissions and processes for payment;
  • themanner and timing of fee payments, and the requirement for full payment of relevant fees as part of statutory processes;
  • definitions and limitations for exemptions and waivers; and,
  • administrative review options for decisions relating to cost recovery.


2DESIGN

2.1Design of cost recovery arrangements

For each cost recovery arrangement documented in this CRIS, the department applied the following key principles in theirscoping and design:

  • costing model to drive efficiency for both stakeholders and the department;
  • charges to reflect ‘efficient costs’ as based on ‘best practice’ scenarios;
  • aligning regulatory effort undertaken with statutory charging points; and
  • compliance with the Cost Recovery Guidelines.

2.2Who pays the fees

The proponents/applicants of the activities subject to cost recovery include private entities, individuals, and government agencies (including both inter/intra governmental charging). Some applications may be eligible for exemptions and waivers. Should this be the case, costs of these services will be met through the department’s annual appropriation (i.e. taxpayer funded). Further information on exemptions and waivers is provided in sections 3.11, 4.11 and 5.11. Funding of exemption and waivers through appropriation ensures equity in the cost recovery model and avoids cross-subsidisation between proponents/applicants.

2.3Basis of charging – fee or levy

Cost recoverycharges under the Cost recovery Guidelinesinclude:

  • Fees that charge individuals or firms directly for the cost of the service; or
  • Levies on a group of individuals or firms (legally a form of taxation). A taxation Act is required to collect levies[4].

The Cost Recovery Guidelines stipulate that where appropriate, charges should be based on fees. The department determinedthat a fee for service is an appropriate cost recovery charge for regulatory activities under the EPBC Act. There are two types of fees that are proposed to apply under the EPBC Act: 1) fees set in regulations; and 2) fees determined on a case by case basis such as for strategic assessments. Figure2.1 below shows where set fees or case-by-case fees will apply.Further information on the fee levels and process for setting fees is contained within chapters describing cost recovery activities.