Environmental Management of Commonwealth Land

CHAPTER 2: ISSUES ARISING FROM THE AUDIT REPORT

The Development of a Commonwealth Policy

2.1 The development of a Commonwealth policy on the environmental management of Commonwealth land was a key recommendation of the audit report. The absence of a clear Commonwealth policy was viewed by the Australian National Audit Office (ANAO) as a major constraint on departments and land managing entities seeking to establish priorities and actions in line with best practice.

2.2 The ANAO noted that the primary responsibility for policy development on contaminated sites rested with the Commonwealth Environment Protection Authority (CEPA). A policy position had been under consideration since 1993 but had not reached conclusion. Consequently, the ANAO recommended:

... that the Commonwealth Environment Protection Agency should, as a matter of priority, develop a proposal for consideration by Ministers to clarify the Commonwealth's policy position on Commonwealth contaminated sites. [1]

2.3 The ANAO included a paper on the development of better practice as an appendix to its report. A senior ANAO director suggested to the Committee that, given the better practice guide they had provided and the work already undertaken by officials, the effort required to develop a policy proposal to be put to ministers would be minimal:

The EPA has done quite a lot of work in the area already, and our view at this stage is that it really would not take a great deal more to actually finalise the policy. [2]

2.4 The ANAO regarded the development of such a policy as an important first step in improving the environmental management of land:

As we have said throughout the report and indicated in the attachment which covers the better practice guide, a clear Commonwealth environmental policy is the first stage to assist agencies in managing their environmental responsibilities. So it really is a key issue. [3]

2.5 The ANAO took the view that the role of the CEPA was to make recommendations to help the Government come to a policy position on the environmental management of Commonwealth land. It did not consider that the CEPA's role was to monitor the day-to-day practice of land managing agencies, as it did not have the resources or the technical expertise to act as a watchdog.

The response of Environment Australia and other departments

2.6 The CEPA initially agreed with the ANAO's recommendation and in a letter to the auditors in June 1996 indicated that it was appropriate for the draft audit report to have identified the need for a formal policy to guide Commonwealth land management entities in addressing environmental management issues. [4] In that letter, however, the CEPA warned that resource reductions might prevent it from carrying out the responsibilities and tasks recommended by the ANAO. The CEPA subsequently told the Committee that the auditors' recommendation would not be implemented:

In practice the EPA [Environment Protection Agency] is unable to undertake the tasks recommended in the report following recent changes to the EPA priorities. ... Continued EPA work on contaminated sites was given a relatively low priority, given the strong land management responsibilities of the states, and the primary responsibilities of land managing agencies for Commonwealth contaminated sites. [5]

2.7 In October 1996 the CEPA, along with other environment units within the Department of the Environment, Sports and Territories, was incorporated into the newly created Environment Australia. The CEPA's functions are now discharged by the Environment Protection Group within Environment Australia. It is now a matter for Environment Australia to respond to the recommendations put by the ANAO.

2.8 An officer of Environment Australia suggested to the Committee that the development of a National Environment Protection Measure (NEPM) on contaminated sites by the National Environment Protection Council (NEPC) would negate any role that Environment Australia might play in implementing the audit recommendation:

Assuming that the ... [National Environment Council] ... decides at some time in the reasonably near future to develop a measure, in some sense the role that is envisaged for my organisation in this report would be one that is perhaps no longer needed because the rules under which the Commonwealth agencies that own land would have to operate would be established by that measure. Therefore, the role that is envisaged here would be less crucial.

... the gap that might be created by my own agency stepping back from an active role in this area will ultimately be filled, I think, by the development of a national environment protection measure. [6]

2.9 Environment Australia explained that it had been involved with the contaminated sites issue since 1993 in two separate areas. Firstly, it was an active participant with the Australian and New Zealand Environment and Conservation Council (ANZECC) and the National Health and Medical Research Council (NHMRC) in revising the 1992 Australian and New Zealand Guidelines for the Assessment and Management of Contaminated Sites. Secondly, Environment Australia has also chaired a committee with other ANZECC agencies to develop guidelines for attributing financial liability for contaminated sites. However, the representative of Environment Australia told the Committee that his organisation lacked technical expertise to provide any leadership on contaminated sites issues:

... there would be limitations ... on the kind of leadership advice we could offer ... much of the time the kind of advice that would be needed would be technical advice on how to address a particular problem at a particular site. By and large, we would be unlikely to have the depth of expertise that would be needed to provide that kind of advice ... [7]

2.10 The audited departments supported the recommendation that the CEPA develop a policy position on contaminated sites. [8] The Department of Defence claimed that, although the department itself has significant capacity in relation to contaminated sites, it is advantageous to be able to consult with Environment Australia about environmental issues and to have some input into environmental assessments. [9] The Department of Transport and Regional Development (DTRD) agreed with the recommendation for a Commonwealth policy but noted that the development of NEPMs would outline agreed national objectives. [10]

2.11 The Government of New South Wales in its submission to the Committee did not specifically discuss the possible role of Environment Australia, but it did strongly support the development of a national policy and guidelines for the environmental management of Commonwealth land. The submission noted that the Commonwealth has endorsed the Intergovernmental Agreement on the Environment (IGAE) and the NEPC, but 'has proven unwilling to operate its facilities within NSW on a level playing field with State and private sector operators'. [11] The Committee considers that this commitment to a policy of cooperation, but failure to cooperate in practice, is a contradiction in the Commonwealth's approach. This may reflect a lack of coordination between the areas involved in policy development and the agencies involved in land management. The approach advocated by the ANAO could help overcome such contradictions.

2.12 The New South Wales Government concluded that it would be desirable for the Commonwealth Government to develop a more systematic approach to environmental management of all types of Commonwealth facilities. [12] The Government of South Australia also supported the development of a framework and direction for the application of best practice principles in the environmental management of Commonwealth land. [13] Similar views were expressed by the Governments of the Northern Territory and the Australian Capital Territory. The Northern Territory Government was concerned about the apparent lack of a common environmental policy or regulatory regime for Commonwealth activities, [14] and the Australian Capital Territory Government stated that the lack of a clear Commonwealth policy in managing environmental matters on Commonwealth land has a special impact in the ACT. [15] The Victorian Government also supported the development of a Commonwealth policy:

The lack of Commonwealth legislation or formal policy on its contaminated sites has, in Victoria's experience, led to inconsistent approaches to the management of contaminated sites by Commonwealth departments and entities. [16]

2.13 The Victorian Government supported the move by Commonwealth entities, including some of the audited agencies, to adopt and implement environmental management systems. However, the Victorian Government explained that one of the key commitments assumed by an organisation under environmental management systems is to comply with all environmental standards and other regulatory requirements. It considered that a comprehensive and integrated policy framework is essential if the standard of Commonwealth environmental management is to improve. [17]

2.14 The need for a clear Commonwealth policy was also identified by Local Government bodies. The Local Government Association of Queensland supported the need for the Commonwealth Government to develop a policy position in relation to Commonwealth contaminated sites. [18] The Western Australian Municipal Association suggested that 'the need for a national Commonwealth policy for effective environmental assessment, planning and management on its land emerges as a clear priority'. [19]

2.15 It appears that there is support from all levels of Government for a coordinated Commonwealth policy. Given the difficulties Environment Australia sees in implementing the ANAO's recommendation, it is necessary to consider alternative approaches to the development of a consistent Commonwealth approach to land management. The Committee is disappointed that this need has arisen when it appears that a policy could be finalised without much more work. The broad options include processes that do not require Environment Australia to take the policy leadership role envisaged by the ANAO, and the adoption by the Commonwealth Government of approaches developed by the States and Territories.

Alternatives to Environment Australia developing a policy

a) Australian and New Zealand Guidelines for the Assessment and Management of Contaminated Sites

2.16 The Australian and New Zealand Guidelines for the Assessment and Management of Contaminated Sites [20] (ANZECC/NHMRC Guidelines), which were published in 1992, form the basis for action in relation to Commonwealth contaminated sites. Many Commonwealth and State agencies follow these guidelines to assess and manage contaminated sites. For example, the Australian Maritime Safety Authority (AMSA) stated that it takes into account the ANZECC/NHMRC Guidelines while waiting for a Commonwealth policy to be adopted. [21]

2.17 The ANAO considered that the ANZECC/NHMRC Guidelines were useful in providing guidance once contamination had occurred, but broader environmental management systems were needed to help to prevent pollution from occurring:

Although guidelines for the assessment and management of contaminated sites provide officials with a broad framework for addressing contamination once identified, Commonwealth land managing entities would benefit form a well-developed environmental management system to prevent pollution in the first place. This includes the need to enhance the disclosure of site contamination information consistent with public sector accountability requirements. [22]

b) ISO 14001

2.18 The International Standards Organisation (ISO) 14000 series of environmental management standards describes the elements of an environmental management system. The standards are voluntary and set out a process rather than performance standards. A representative of the ANAO explained:

My understanding of ISO 14000 is that essentially it is a management model rather than necessarily a prescriptive standard. So it gives a sense of how you should go about it and a guide to management systems. My understanding is that it is based on good management principles. It is does not actually specify a degree of resource allocation. I guess a very diligent agency might decide that it is risk averse and put in an enormous amount of money; another agency might put in a lot less to address the problem. Without some sense of guidance, agencies are really flying by the seats of their pants in terms of what standards they should be aiming for. [23]

2.19 An environmental management system is defined by ISO 14001 as the organisational structure, responsibilities, practices, procedures, processes and resources for implementing and maintaining environmental management. [24] Some Commonwealth agencies are considering developing environmental management systems that comply with ISO 14001. Australia Post's environmental management system is within the framework of ISO 14001 and it is considering applying for certification of its environment management system. [25] Telstra has substantially completed implementing an environmental management system that is based on ISO 14001. [26] The Department of Defence has called for tenders to develop a corporate environmental management system framework. The supplier will be developing the framework in accordance with the ISO 14000 series. [27]

c) National Environment Protection Council

2.20 The IGAE was signed by the Ministers of Commonwealth, State and Territory Governments and by a representative of the Australian Local Government Association in 1992. The IGAE provides a statement of the principles and policies that should be followed in the administration of environmental matters and in negotiating arrangements between these bodies. It is, however, not a legally binding document.

2.21 Schedule 4 of the IGAE covers the establishment of the NEPC, which is a ministerial council made up of State and Territory environment ministers and chaired by the Commonwealth Minister for the Environment. The NEPC is charged with developing NEPMs which under Section 5 of Schedule 4 of the IGAE, can provide general guidelines for the assessment of site contamination. The Commonwealth National Environment Protection Council Act 1994 and mirror State legislation establish the NEPC and empower it to make NEPMs which, through complementary legislation, will apply as valid laws in each jurisdiction.

2.22 At its first meeting in June 1996, the NEPC agreed to develop national guidelines for the assessment of contaminated sites. It noted that the ANZECC and the NHMRC had established a Contaminated Sites Technical Review Committee to review existing ANZECC/NHMRC guidelines. As the review would be relevant to the NEPC proposal, the NEPC decided to await the release of the ANZECC/NHMRC review which was expected in first half of 1997. [28]

2.23 One of the reasons given by Environment Australia for withdrawing from its leadership role in relation to contaminated sites was the establishment of the NEPC. Environment Australia saw the NEPMs developed by the NEPC as having the potential to provide clearer guidance to land managing agencies in dealing with contaminated sites than it could. Environment Australia considered that the States should be the leaders in the development of NEPMs:

It would be my judgement that the development of a measure in this area, which has a high technical component, is probably something which is best suited to states and territories rather than the Commonwealth purely because of that technical component where the states have much more hands-on activity involved in the day-to-day regulation of matters to do with contaminated land and are, therefore, more expert in things like the setting of the levels of concern and things of that kind. [29]

Meanwhile, it was envisaged that Environment Australia would participate in discussions related to NEPMs; the Commonwealth would not completely absent itself from their development.

2.24 The ANAO considered that the NEPC could provide a valuable forum to address outstanding site contamination issues and facilitate a national approach to best practice. [30] The Department of Defence was aware that the operations of the NEPC could have an impact on its environmental management practices, particularly in the area of contaminated site assessments. The department stated that it is committed to complying with the NEPMs when they are developed. [31]

2.25 The development of NEPMs under the auspices of the NEPC may go a long way to overcoming the problems caused by the lack of Commonwealth policy and guidelines. This will not, however, be a total solution. The New South Wales Government noted the limitations in this approach:

The primary role of NEPC is to develop goals, standards, protocols and guidelines. In relation to contaminated sites matters, it is constrained legislatively to dealing only with guidelines for the assessment and management of contaminated sites. In general, it does not provide an appropriate forum for addressing outstanding Commonwealth-State polices or programs relevant to site contamination or broader environmental management of Commonwealth land. [32]

d) Conclusion

2.26 The Committee views the alternative approaches discussed in this section as important initiatives, but considers that they do not fully address the need for a Commonwealth approach to the management of contaminated sites and pollution prevention. There is still a requirement for an overarching national policy on the environmental management of land.

Commonwealth - State Cooperation and Coordination

Commonwealth compliance with State and Territory legislation

2.27 Section 52 of the Constitution confers on the Commonwealth the exclusive power to make laws concerning Commonwealth places, and effectively prevents the States from making laws that would regulate activities of the Commonwealth on Commonwealth land:

The Parliament shall, subject to this Constitution, have exclusive power to make laws for the peace, order, and good government of the Commonwealth with respect to -
1. The seat of government of the Commonwealth, and all places acquired by the Commonwealth for public purposes;
2. Matters relating to any department of the public service the control of which is by this Constitution transferred to the Executive Government of the Commonwealth;
3. Other matters declared by this Constitution to be within the exclusive power of the Parliament.

2.28 Section 109 of the Constitution determines that Commonwealth laws will override those of the States:

When a law of a state is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid.

2.29 The Commonwealth Places (Application of Laws) Act 1970 provides that State laws apply to Commonwealth places, unless those places are exempt from State laws under section 52 of the Constitution or are in conflict with section 109 of the Constitution. The result is that the application of the Act in a particular case is uncertain. For the purpose of its audit, the ANAO took the view that State environmental legislation does not apply to Commonwealth land, unless Court decisions or legal opinions obtained on a case-by-case basis indicate otherwise. [33]

2.30 Most States have environment protection legislation in place which is usually administered through State environment protection agencies. Examples of environment protection legislation are South Australia's Environment Protection Act 1993, and Queensland's Contaminated Land Act 1991 and Environmental Protection Act 1994. The Northern Territory is developing a Waste Management and Pollution Control Act which will be the primary legislation for controlling the environmental management of land, site contamination and pollution. It is also expected to be the vehicle for the implementation of NEPMs when developed. [34] The Victorian Government claimed that environmental management systems are a cornerstone of the Victorian accredited licensee system established under the Environment Protection Act 1970. The Victorian Act also establishes an independent audit system for both contaminated land and industrial facilities. [35] Equivalent environmental legislation relating to site contamination and pollution prevention on Commonwealth land does not exist, except for environmental assessments under the Environment Protection (Impact of Proposals) Act 1974.

2.31 Within the constraints of the Constitution, however, the Commonwealth can legislate to confirm or forfeit its immunity from State and Territory laws. Commonwealth agencies that are exempt from State and Territory laws indicated to the Committee that they seek to observe the intent of State and Territory laws whenever possible.

2.32 Australia Post is an example of a Commonwealth Government business enterprise (GBE) that has been subject to State legislation since its corporatisation in 1989. Representatives of Australia Post claimed that, although this has imposed additional obligations on its property managers, they have coped more than adequately with these obligations and have found the State EPAs cooperative. [36] Australia Post is faced with different requirements in each of the States and Territories. It has responded by adopting its own procedures, with standards set at such a level that they conform with the most stringent of the various State or Territory requirements:

... our environmental vision and mission statement commits us to pursue best environmental management practice in our type of service industry, and so when we came to develop the environmental procedures based on our legal obligations, we made the conscious decision that, wherever possible, we would pick the strictest of any of the state requirements and make that our national procedure. ...

It is not always possible because there are a large number of requirements that are absolutely state-specific, particularly relating to communication between the entity and the EPA. But, wherever possible, we took the highest common denominator. [37]

2.33 An example of a provision that confirms immunity from State legislation is the Telecommunications (Exempt Activities) Regulations 1991 which exempts carriers from having to comply with certain State and Territory laws for specified activities. Telecommunications carriers, however, must comply with the Telecommunications National Code when carrying out exempt activities. The Environment and Natural Resources Committee of the Victorian Parliament (Victorian Committee), which conducted an inquiry into the environmental impact of Commonwealth activities and places, recognised the merit of a national code. It was concerned, however, that many of the requirements of the code are substantially weaker than those of State laws. The Victorian Committee recommended that the Commonwealth repeal the Telecommunications (Exempt Activities) Regulations 1991. [38] The Department of Communications and the Arts (DCA) did not agree with the Victorian Committee because it was considered inappropriate that Telstra should be placed under more legal obligations than other telecommunications carriers. However, the department considered that it was in Telstra's own interests to have regard to State and Territory laws in terms of its corporate image and its ability to dispose of property in the future. Consequently, 'Telstra endeavours to have full regard to State and Territory environmental regulations at all times practical and certainly when human health is suspected or identified'. [39]

2.34 The Federal Airports Corporation Act 1986 confers immunity from State environment protection and planning laws on the Federal Airports Corporation (FAC). The Victorian Committee recommended in its report that the FAC's immunity be removed. [40] The FAC considered that the broad regulatory framework established by the Airports Act 1996 enables the Commonwealth to continue to regulate environmental management at the major airports, even after they have been leased to airport operators. The latter Act requires airport lessees at each airport to submit proposed environmental strategies to the Minister for approval, after public comment and consultation provisions have been complied with. The Act also enables the Commonwealth Government to develop regulations that establish environmental pollution standards and provides for the enforcement of these standards. [41]

2.35 Defence activities are generally not subject to regulation by State and Territory legislation, although the situation is in some doubt. The New South Wales Government submitted that the law is not clear in relation to defence facilities and suggested that in some cases State law applies but in other cases it does not. [42] The Victorian Government implies in its submission that because the Department of Defence activities are not subject to State law these activities have had significant adverse environmental impacts in Victoria. [43] In its submission Defence claimed that it seeks to 'observe the intent of relevant State and Territory legislation wherever possible and practicable' as part of its practice to adopt a good neighbour policy. [44] However, it pointed out that there are some activities associated with the defence of Australia that it would be inappropriate to place under the control of State legislation. [45]

The views of the States and Territories

2.36 It was submitted by States and Territories that the Commonwealth should comply with their environment and planning legislation. [46] The South Australian Government claimed that 'the adoption by Commonwealth agencies of policies which bind them to State environmental legislation is vital to the achievement of consistent environmental protection throughout Australia'. [47] The Victorian Government considered that the Commonwealth should subject all bodies within its jurisdiction to the entire regime of State environment protection laws. [48] The New South Wales Government explained that its aim is to see that the environmental regulation of Commonwealth activities is improved, either through State environmental legislation or by the Commonwealth itself. [49]

2.37 The Northern Territory Government was also concerned at the lack of a common environmental policy or regulatory regime for Commonwealth activities. In this regard, compliance with Northern Territory legislation would ensure consistency in environmental management. [50] The Victorian Committee concluded that the Commonwealth should abide by State laws:

The failure of the Commonwealth to ... comply with the requirements of state environment protection and planning laws, the lack of equivalent such laws in many cases at the Commonwealth level, and the inability of the Commonwealth to implement and enforce effectively the controls that it does have in place, means that the only effective alternative to ensure adequate protection and planning of the environment ... is by Commonwealth legislation to require Commonwealth compliance with such state laws. [51]

2.38 Local Government authorities also supported the view that the Commonwealth should abide by State and Territory legislation. For example, the Western Australian Municipal Association maintained that, until the Commonwealth develops legislation or policies, the Commonwealth should be required to meet relevant State and Local Government legislation. [52]

2.39 The ANAO found that the States can become frustrated with Commonwealth agencies which are not required to comply with State standards:

We consulted quite extensively with state EPAs. Some of them have been fairly unhappy with having to provide advice. From their perspective, they felt they were having to provide free advice to Commonwealth agencies who, at the end of the day, could agree or not agree to comply with those standards. [53]

2.40 The Committee understands the concerns of the States and Territories and considers that the Commonwealth, the States and the Territories should all be conforming to the same legislative requirements and environmental standards with respect to the prevention and remediation of site contamination and to the disposal of land. However, a uniform approach will not be achieved by the Commonwealth simply complying with different regulations and standards in force in each jurisdiction. The different approaches of the Commonwealth, States and Territories will have to be harmonised.

Review of Commonwealth-State roles and responsibilities for the environment by the Intergovernmental Working Group

2.41 During the inquiry, the Committee's attention was drawn to the current review of the Intergovernmental Committee on Ecologically Sustainable Development's (ICESD) Working Group on Commonwealth-State Roles and Responsibilities for the Environment. As part of its review, the ICESD Working Group will be examining the issue of Commonwealth immunity from State and Territory environmental and planning legislation.

2.42 The ICESD Working Group is chaired by Roger Beale, AM, Secretary of the Commonwealth Department of the Environment, Sport and Territories and includes representation from each State and Territory and the Australian Local Government Association. The Working Group's report is expected to be presented to the Council of Australian Governments in mid 1997.

2.43 The Committee considers that the work of the Working Group is fundamental to the resolution of the problems caused by the lack of harmonisation in environmental regulation and the need for better coordination and cooperation between the Commonwealth and the States on environmental management. In the light of this ongoing work, the Committee does not consider it appropriate to take its own inquiries any further in this area.

Liability for costs of remediation

2.44 The differing standards and legislation across jurisdictions causes uncertainty about the issue of who pays for the costs associated with the remediation of contaminated sites. There is limited legislation to address liability for contaminated Commonwealth sites and existing State legislation is inconsistent.

2.45 The ANZECC released a paper on financial liability for contaminated site remediation in April 1994. [54] The paper builds on the approach of the ANZECC/NHMRC Guidelines and sets out agreed national principles 'for attaching financial liability for the remediation of contaminated sites'. The paper states that 'ANZECC Ministers are committed to adopting these basic principles within which individual ANZECC members may establish administrative and legal frameworks appropriate to their jurisdictions'. [55] Environment Australia was an active participant in the development of the guidelines, and claimed that the issue of financial liability in addressing contaminated sites was a key one:

... a strong, consistent and clear liability regime is probably the single most important preventive step in the contaminated site area. If someone knows that they are going to be held liable for anything they do to a bit of land, that is a very good way of making them take great care of their asset in terms of preventing contamination. [56]

2.46 The ANZECC paper examines the question of who is responsible for the costs associated with remediation activities. Recommendations four and five attribute financial liability to the polluter:

4. Governments should ensure that the polluter, where solvent and identifiable, ultimately bears the cost of any necessary remediation.

5. Where the polluter is insolvent or unidentifiable, the person(s) in control of the site, irrespective of whether that person is the owner or the current occupier, should be liable, as a general rule, for the costs of any necessary remediation. [57]

2.47 The New South Wales Government has adopted the ANZECC paper on liability for contaminated sites and has made legislative proposals consistent with recommendations in the paper. It agreed with the polluter pays principle adopted in the ANZECC paper:

Where past or current uses have caused contamination of Commonwealth land, the Commonwealth, as "the polluter", should be held responsible for cleaning it up where this is required. [58]

The Australian Capital Territory Government is also moving to apply the polluter pays principle and anticipates that the Commonwealth would pay for remediation on land that it has polluted:

Where a contaminating or polluting activity is undertaken, in relation to either affected Territory land, or land which is to become Territory land, the ACT Government expects that the Commonwealth will accept the financial and management responsibility to restore the affected land to an appropriate state. [59]

2.48 The FAC described its view of liability for remediation and the polluter pays principle:

Under the approach in the airports regulations there would be a hierarchy. If somebody takes on a lease of a site and they pollute it, they are the polluter. It is a polluter pays clean-up; that is fairly clear. If the polluter cannot be found then the current land-holder ... the person who has ownership of or who controls the land at the time tends to be the next person that you look to. Then there is the hierarchy that we will work through right down to the owner of the site,airport lessee. [60]

2.49 The polluter pays principle can only be applied in this context when the polluter is identified early in the land transfer process. The South Australian Government highlighted the issue of liability for the remediation of land, the ownership of which is to be transferred. It maintained that, prior to any land being transferred by the Commonwealth to the State of South Australia, there needed to be a clear understanding about the environmental status of the land and agreement on the appropriate level of and responsibility for remediation. [61] The Municipal Association of Victoria took the same view. It also stressed the need for Local Government to be kept informed about the environmental condition of Commonwealth land, to allow municipalities to reconsider land use planning strategies and to evaluate the full range of future land uses. [62] The ANZECC paper noted the importance of an open approach to exchanging information about sites when financial risks are involved:

Where a subsequent owner has purchased a site on the basis of full disclosure as to the contaminated status of the site, the financial risk associated with the contamination should be accounted for by the parties explicitly in the transaction. [63]

2.50 In practice, it appears that Commonwealth agencies adopt a variety of approaches. The policy of AMSA, in relation to lightstation properties, is to recover the cost of remediation from the purchase price paid by the State. At the lighthouse stations the level of contamination generally is quite low. The arrangement that AMSA makes with the States with respect to which of them will remediate the site depends on the nature of the contamination present. [64]

2.51 The FAC claimed that a due diligence process is undertaken to identify the assets and liabilities of an organisation prior to the sale of a property. [65] The Department of Administrative Services assesses land contamination before selling its land and seeks to make a return to the Commonwealth:

Within the industrial and special purpose estate, that estate comes back to us from agencies when it is no longer surplus. We look to do a contamination assessment on that property before it is sold, again in line with its future usage and remediate it where possible. We try to seek a balance between the return to the Commonwealth on the sale of the property and the cost of remediation. [66]

2.52 The Committee considers that the Commonwealth should work to limit its liability to remediate contaminated land. As part of the property disposal program, the Commonwealth should seek to gain the highest possible return from its sales. A coordinated risk management approach to the environmental management of contaminated land and the transfer of land would help limit contamination and confirm liability arrangements. As the ANAO stated, such an approach:

would assist to maximise the return on surplus land scheduled for disposal, maximise the flexibility of the Government to dispose of surplus property at times suitable for budgetry purposes and minimise avoidable costs to the budget from the remediation of contaminated land. [67]

The Environmental Management of Land Occupied by Government Business Enterprises

2.53 GBEs account for 40 per cent of the total value of Commonwealth land. The DCA and DTRD have coordination and oversight responsibilities over GBEs including Telstra, Australia Post, Australian National and the FAC, as set out in the Accountability and Ministerial Oversight Arrangements for Government Business Enterprises. These guidelines state that:

Ministers responsible for the oversight of GBEs exercise strategic control consistent with their accountability to the Parliament and the public, while Boards develop the business strategies and handle the day-to-day management policies. [68]

2.54 The ANAO asserted that the primary mechanism by which departments fulfil their GBE monitoring responsibilities is to examine the objectives of GBEs contained in corporate plans. The ANAO believed that corporate plans provide a good means to highlight key environmental issues. The FAC and Telstra included references to environmental issues in their corporate plans but Australian National and Australia Post did not. Australia Post, however, referred to an environmental strategy in its 1994-95 annual report.

2.55 The ANAO found that departmental oversight of GBEs in terms of managing environmental risks was patchy and inconsistent. It considered that departments responsible for overseeing GBEs should provide clear advice about Government expectations in relation to environmental management and reporting. The ANAO made the following recommendation:

As part of GBE accountability and oversight process and in absence of any other oversight mechanisms, Departments become more proactive in overseeing GBE operations that impact on the environment (with particular reference to contaminated sites) that are likely to affect the achievement of GBEs' financial and environmental targets or expose GBEs or the Commonwealth significant risk. [69]

2.56 Although DTRD agreed with the ANAO recommendation, it considered that the day-to-day managing and monitoring of environment issues is the responsibility of individual GBEs.

We, particularly, support in principle that part of the recommendation which seeks reinforcement between Departments and portfolio GBEs .... . (however) the day-to-day managing and monitoring of environment issues is clearly the responsibility of the individual GBEs. They are best place(ed) and best qualified to perform these functions. [70]

The department recognised that if there was a need for improvement in environment standards in line with best practice, it would have greater involvement with GBEs. However, the department's normal role was not to try to second-guess day-to-day operations. [71]

2.57 DTRD agreed that the relationship between the Government and GBEs is based on the corporate planning process.

We try to see corporate plans as the tip of the iceberg in the sense that they are driven by considerations in the environment of the organisation, not just commercial considerations. If we felt that a factor in the environment in a general sense, not the environmental management sense, had been left aside and had not been considered properly in putting together that plan, it would be incumbent upon us to go back to the GBE and say, `You have left something out.' [72]

DTRD also claimed that GBEs bring environmental matters to the Government's attention in annual reports, and its officers who oversight the GBEs are in regular contact with the GBEs. [73]

2.58 DCA stated that both Australia Post and Telstra had been asked to keep the Minister informed of any environmental issues which are likely to affect their financial or environmental targets, or to expose them or the Commonwealth to significant risk. Australia Post asserted that, because it is subject to State and local government legislation and has accountability mechanisms in place under the Australian Postal Corporation Act 1989, there is no need for an increased oversight role for the Department. [74] Telstra is also responsible for ensuring that it abides by environmental legislation, except where it has exemptions, and by the National Telecommunications Code.

2.59 As noted above, GBEs advised that they are either subject to State laws or endeavour to meet State requirements. Given the potential risk to the environment and the possible extent of Commonwealth liability, the Committee considers that the latter approach is not sufficient and greater external scrutiny is required. As specified in the Accountability and Ministerial Oversight Arrangements for Government Business Enterprises, Ministers are accountable to the Parliament, and are therefore accountable for the environmental management of land occupied by GBEs. This accountability depends on monitoring by portfolio departments which, the Committee considers, should maintain regular contact with GBEs and provide information and assistance regarding Commonwealth best practices in environmental management. Corporate plans and annual reports are good avenues for monitoring GBEs' actions with respect to environmental management.

The Management of UXO Contamination

2.60 The Commonwealth's policy on unexploded ordnance (UXO) is governed by the Commonwealth Policy on the Management of Land Affected by Unexploded Ordnance. The policy was endorsed by the then Prime Minister in 1990 and issued to all State Premiers and Chief Ministers in that year. The main aims of the policy are to protect the public from the hazards associated with UXO and to increase public awareness of these hazards.

2.61 The ANAO considered that the Department of Defence had been reactive rather than proactive in its handling of UXO issues. Given the number of UXO affected sites in Australia, the ANAO believed that the resources devoted to achieving the Government's UXO policy objectives were inadequate:

In this area the Commonwealth does have a policy, but as a result of the audit we were not convinced that defence resources allocated to these issues are sufficient to achieve the Commonwealth government's unexploded ordnance policy within a reasonable time frame. [75]

The ANAO recommended that the Department of Defence:

(a) review the priority given to addressing UXO contamination of non-Commonwealth land;

(b) develop strategic and operational plans for dealing with UXO issues that set site assessment priorities based on appropriate criteria, allocate sufficient resources and include timetables for completion; and

(c) develop and finalise administrative procedures with state jurisdictions for site assessments and agreed hazard reduction operations. [76]

2.62 The Department of Defence made the following response to the ANAO's suggestion that the department was being reactive rather than proactive with regard to UXO issues:

With the nature of the issue, that is going to happen. Circumstances will arise for which we did not have sufficient records. We are learning as we go along. It is just the nature of the issue, quite frankly. It is a bit reactive. But we are trying to improve our information and the relationship with the various states so that it is less reactive and more informative. I think we are getting there. [77]

2.63 The Commonwealth policy states that the Department of Defence is to maintain a comprehensive record of sites confirmed as or suspected of being contaminated by UXO. Defence claimed that the identification of UXO contaminated sites is often impeded because few records were kept of training activities on non-Defence land during World War II. However, Defence has been building up its knowledge and records relating to UXO sites since 1990, and it maintains a register of all known or suspected UXO sites in Australia.

2.64 A program of UXO site assessments is currently being developed by Defence in consultation with the Queensland Department of the Environment. Defence also intends to develop a coordinated national approach to the management of information which will assist in the assessment process used to ascertain the nature and extent of UXO contamination, the options for remediation works, and to advise on the future use of affected lands. [78] The ANAO supported this approach, as did the South Australian and the Australian Capital Territory Governments. [79]

2.65 Because of the concentration of military activity in Queensland in World War II, UXO is a major site contamination issue in that State. At the time of the audit, there were 403 possible UXO contaminated sites in Queensland, which according to the Queensland Department of Environment equated to 9 848 individual lots of land. One officer (an army Major) has been allocated full-time by Defence to assess UXO sites in Queensland. At the time of the audit, only two Queensland reports had been finalised. The ANAO claimed that at current resource levels, it will take more than twenty years to complete reports on all currently known UXO sites in Queensland. [80]

2.66 The Local Government Association of Queensland claimed that adequate strategic operational plans had not been developed to ensure site assessments are undertaken in an expeditious manner; this was thought to be indicative of the lack of resources provided by the Defence to fulfil this responsibility. The Association considered that 'as a matter of priority an urgent survey should be undertaken of the remaining sites by the Department of Defence to confirm the status of a possible UXO site'. [81]

2.67 The problem extends beyond Queensland, and the Victorian Government submitted that the priority given by Defence to addressing UXO contamination is inadequate. [82] Both the New South Wales and the Northern Territory Governments indicated that the uncertainty about the number and areas with UXO contamination causes dilemmas for planning the development of land. [83] Defence explained that it intends to provide adequate information to the States:

.. we have been building up our records with a view to providing information to the states, assisting them with their future land use requirements,given that the states are responsible for changes in land use. The intent is to improve our records, on the one hand,that is an ongoing process which we are doing now,and also to ensure that that information is conveyed to the right authorities in the various states. [84]

2.68 The Commonwealth policy on UXO limits the Commonwealth's liability for costly and time consuming operations to reduce the hazards of contamination. The policy states that the Commonwealth is under no legal obligation to commit resources to reduce known hazards associated with UXO contamination where it never had, or has disposed of, a legal interest. The Commonwealth may, however, determine that the level of UXO contamination is to be reduced, depending on the extent of operations needed, cost sharing arrangements and legal liabilities.

2.69 The costs of UXO hazard reduction operations are heavily dependent on the nature and extent of UXO contamination, the terrain of the affected land, and the extent to which it is necessary to reduce UXO hazards. Defence explained that the Commonwealth has taken the position of not cleaning up sites known to be contaminated because the same position would have to be taken with all sites throughout Australia; the downstream cost could be enormous. [85] Also, the department stated that the general position taken by the Commonwealth has been that, if compensation for UXO contamination of an area has been paid in the past, no further compensation will be paid to present owners. [86]

2.70 Defence noted that extensive expertise for the management and clean up of UXO contamination can be made available from the private sector and that developers should carry the costs of remediation:

There is a legitimate case to suggest that if you are looking at the real value of the land, it is the developer's responsibility, given the profits that he is going to make. I would see it being the same as having fault lines in the ground or rocks in the foundations. It is all the liability associated with the developer. [87]

2.71 The Committee considers that the resources allocated by Defence to assess UXO contaminated sites has been inadequate. The Committee supports the intention of the Department of Defence to develop a national approach to the management of information to assist in the assessment process. This approach may require that further resources be allocated to assessing UXO contaminated sites.

Criticisms of the Audit Report

2.72 Concern was expressed by the Department of Defence about the manner in which opinions obtained from the Attorney-General were handled by the ANAO. The legal advice dealt with the question of the Commonwealth's liability for UXO contamination, and was passed on to Defence at the time that a draft of the audit report was made available to Defence. Defence objected that neither its Facilities and Property Division (responsible for preparing the portfolio's response to the ANAO report) nor the Inspector General's Division (the main auditing arm within Defence) were aware of the existence of the Attorney-General's opinion until then. It was disappointed that the ANAO did not make the information available to it during the process of the audit. [88] The ANAO told the Committee that they told Defence about the Attorney-General's opinion at the same time as they gave Defence the draft audit report. The ANAO saw no reason to pass the opinion on to Defence any earlier. However, it was available on request and provided when the request was made. [89]

2.73 The Department of Defence also referred to the use of photographs in the audit report. Defence claimed that the photographs had been included with little explanation of their context and background, and as a result, did not give sufficient information to enable informed judgments to be made. The Facilities and Property Division of Defence was not aware of the photographs until they appeared in the audit report. [90] Defence also believed that the choice of photographs used in the audit report lacked balance and was not demonstrative of the Defence portfolio's land management and waste disposal activities. [91]

2.74 The ANAO found Defence's criticism surprising given that the photographs were provided by Defence's own internal audit branch. The ANAO considered that the photographs were representative and their inclusion in the audit report was reasonable and objective. It is the ANAO's policy to include photographs in its reports where they can cast some light on the issue under consideration. [92]

2.75 The above points indicate to the Committee that there were a number of breakdowns in the internal communications of the Department of Defence. The Committee was concerned that the Facilities and Properties Division, which is responsible for the issue of contamination, was not aware of Defence's internal audit report. The Committee considers that the ANAO has the right to use photographs which are representative of the issues that they are reporting on. However, the ANAO should work cooperatively with the departments that it audits. It should ensure that illustrative material is representative, is presented in an appropriate context, and does not seek to sensationalise the issues.

2.76 The Committee considers that further investigations into Defence's criticisms of the audit report are not warranted as the issues appear to have been resolved. However, the Committee does take the view that the ANAO could have advised Defence as soon as it received legal advice that had a bearing on Defence activities.

Footnotes

[1] Australian National Audit Office, Audit Report No. 31 1995-96, Environmental Management of Commonwealth Land: Site Contamination and Pollution Prevention, p 11.

[2] Transcript, 2 December 1996, p 93.

[3] Transcript, 2 December 1996, p 93.

[4] Letter from Mark Hyman, Waste Management Branch, CEPA, dated 6 June 1996 (copy attached to submission from CEPA)

[5] Commonwealth Environment Protection Agency Submission (No 3), p 2.

[6] Transcript, 4 November 1996, p 34.

[7] Transcript, 4 November 1996, p 35.

[8] Department of Administrative Services Submission (No 4), p 4; Department of Communications and the Arts Submission (No 5), p 1.

[9] Transcript, 7 November 1996, p 48.

[10] Transcript, 4 November 1996, p 4; Department of Transport and Regional Development Submission (No 1), p 1.

[11] New South Wales Government Submission (No 9), p 1.

[12] New South Wales Government Submission (No 9), p 4.

[13] South Australian Government Submission (No 7), p 1.

[14] Northern Territory Government Submission (No 10), p 3.

[15] ACT Government Submission (No 11), p 4.

[16] Victorian Government Submission (No 13), p 2.

[17] Victorian Government Submission (No 13), p 3.

[18] Local Government Association of Queensland Submission (No 8), p 1.

[19] Western Australian Municipal Association Submission (No 12), p 2.

[20] Australian and New Zealand Environment and Conservation Council (ANZECC), National Health and Medical Research Council (NHMRC), Australian and New Zealand Guidelines for the Assessment and Management of Contaminated Sites, 1992.

[21] Department of Transport and Regional Development Submission (No 1), p 3.

[22] Transcript, 2 December 1996, p 92.

[23] Transcript, 2 December 1996, p 95.

[24] Ian Ireland, 'An international passport to doing business', Current issues briefs, Parliamentary Library, April 1996, p 5.

[25] Transcript, 2 December 1996, p 89.

[26] Department of Communications and the Arts Submission (No 5), p 2.

[27] Department of Defence Submission (No 2), Submissions Volume, p 9.

[28] Environment Business, November/December 1996, p 4.

[29] Transcript, 4 November 1996, p 37.

[30] Australian National Audit Office, p 14.

[31] Department of Defence Submission (No 2), Submissions Volume, p 26.

[32] New South Wales Government Submission (No 9), p 2.

[33] Australian National Audit Office, p 9.

[34] Northern Territory Government Submission (No 10), p 2.

[35] Victorian Government Submission (No. 13), p 3 & 10.

[36] Transcript, 2 December 1996, p 88.

[37] Transcript, 2 December 1996, pp 88-89.

[38] Parliament of Victoria Environment and Natural Resources Committee, The Environmental Impact of Commonwealth Activities and Places in Victoria, November 1994, p 112.

[39] Department of Communications and the Arts Submission (No 5), p 7.

[40] Parliament of Victoria Environment and Natural Resources Committee, p 63.

[41] Transcript, 4 November 1996, p 13; Department of Transport and Regional Development Submission (No 1), p 2.

[42] New South Wales Government Submission (No 9), p 2.

[43] Victorian Government Submission, (No 13), p 4.

[44] Department of Defence Submission (No 2), Submissions Volume, p 26.

[45] Transcript, 7 November 1996, p 71.

[46] Correspondence from Premier of Tasmania, dated 18 October 1996; Northern Territory Government Submission (No 10), p 3; ACT Government Submission (No 11), p 2.

[47] South Australian Government Submission (No 7), p 1.

[48] Victorian Government Submission (No 13), p 9.

[49] New South Wales Government Submission (No 9), p 1.

[50] Northern Territory Government Submission (No 10), p 3.

[51] Parliament of Victoria Environment and Natural Resources Committee, p 142.

[52] Western Australian Municipal Association Submission (No 12), p 2.

[53] Transcript, 2 December 1996, p 96.

[54] Australian and New Zealand Environment and Conservation Council (ANZECC), Financial Liability for Contaminated Site Remediation, April 1994.

[55] ANZECC, p 2.

[56] Transcript, 4 November 1996, p 36.

[57] ANZECC, p 2.

[58] New South Wales Government Submission (No 9), p 3.

[59] ACT Government Submission (No 11), p 3.

[60] Transcript, 4 November 1996, p 15.

[61] South Australian Government Submission (No 7), p 4.

[62] Municipal Association of Victoria (No 6), p 1.

[63] ANZECC, p 8.

[64] Transcript, 4 November 1996, p 22.

[65] Transcript, 4 November 1996, p 7.

[66] Transcript, 4 November 1996, p 25.

[67] Australian National Audit Office, p 16.

[68] Australian National Audit Office, p 66.

[69] Australian National Audit Office, p 70.

[70] Department of Transport and Regional Development Submission (No 1), p 1.

[71] Transcript, 4 November 1996, p 4.

[72] Transcript, 4 November 1996, p 11.

[73] Transcript, 4 November 1996, p 10.

[74] Department of Communications and the Arts Submission (No 5), p 5.

[75] Transcript, 2 December 1996, p 92.

[76] Australian National Audit Office, p 49.

[77] Transcript, 7 November 1996, p 63.

[78] Department of Defence Submission (No 2), Submissions Volume, p 24.

[79] Australian National Audit Office, p 41; South Australian Government Submission (No 7), p 4; ACT Government Submission (No 11), p 3.

[80] Australian National Audit Office, p 47.

[81] Local Government Association of Queensland Submission (No 8), p 2.

[82] Victorian Government Submission (No 13), p 6.

[83] New South Wales Government Submission (No 9), p 4, Northern Territory Government Submission (No 10), p 3.

[84] Transcript, 7 November 1996, p 53.

[85] Transcript, 7 November 1996, p 61.

[86] Department of Defence Submission (No 2), Submissions Volume, p 23.

[87] Transcript, 7 November 1996, p 61.

[88] Department of Defence Submission (No 2), Submissions Volume, p 30.

[89] Transcript, 2 December 1996, p 101.

[90] Department of Defence Submission (No 2), Submissions Volume, p 29.

[91] Transcript, 7 November 1996, p 70.

[92] Transcript, 2 December 1996, pp 102-4.

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