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Hunter Renewal review and recommendations - draft Mining Amendment (Royalties for Rejuvenation Fund) Regulation 2022 

Schedule 1 Amendment of Mining Regulation 2016

Part 9A, 89B Functions of Expert Panels—the Act, s 292X

The functions proposed are inconsistent with the objects of the Mining and Petroleum Legislation Amendment Bill 2022 Section 292W Royalties for Rejuvenation Fund, which is to:

 ‘alleviate economic impacts in affected coal mining regions caused by a move away from coal mining by supporting other economic diversification in those regions, including by the funding of infrastructure, services, programs and other activities’. 

As drafted, s 89B (at paragraph [2]) of the Regulation states that:

“an Expert Panel has the function of advising the Minister about the following matters—:

(a) the consequences and opportunities associated with moving away from coal mining, particularly in relation to the impact on employment and economic activity in the affected coal mining region

(b) alternative land uses of coal mining sites

(c) the outcome of public consultation about 

(i) options to support the economic diversification of the affected coal mining region in alternative industries, and

(ii) the affected coal mining region’s reliance on coal mining for employment and economic activity. “

The economic consequences and impacts of a move away from coal are well established, as is the fact that the coal industry will decline in coming decades. 

Per the Act, the Royalties for Rejuvenation fund and Expert Panels are tasked with supporting diversification, not focussing on and reiterating the plight of the coal industry. The Panel's primary purpose is to foster and support opportunities for diversification. 

Recommendation 1:  We recommend that the words “consequences” and “impact” should be removed from s 89B) a) (at paragraph [2]), so that it reads:  “the opportunities associated with moving away from coal mining, particularly in relation to employment and economic activity in the affected coal mining region”

The Act, Section 292W (5) specifies that the Minister must consider public interest and negative impacts on the environment before authorising a payment.

However, the draft Regulation makes no mention of these matters. It is essential that public interest and environment are considered by the Panel before providing advice or making a recommendation to the Minister. 

Recommendation 2:  We recommend the inclusion of these in 89B, so that it reads

the opportunities associated with moving away from coal mining, particularly in relation to employment and economic activity in the affected coal mining region, taking into consideration any negative environmental impacts and the public interest”

The current wording of 89B(b) enables the Panel to provide advice to the MInister on ‘alternative land uses of coal mining sites’.   There is a serious mismatch between this function and the panel membership (see below), who are not required to have any knowledge or expertise in mine rehabilitation.  Mining companies have strict legal requirements in relation to mine rehabilitation, and there are serious contamination and safety risks associated with sites post-mining.  However, there is no reference to this in the Regulations, which instead appears to give the Panel carte blanche to make recommendations without reference to the law or the science of mine rehabilitation. If the mining industry is included on this Panel, they have a vested interest in avoiding mine rehabilitation requirements and stand to save large amounts of money if those are reduced in pursuit of ‘alternative uses’.  

Recommendation 3:  We recommend that 89 B (b) be removed or amended to say ‘alternative land uses of coal mining sites subject to adherence with existing mine rehabilitation legal requirements and best practice mine rehabilitation standards’.

89B(c) refers to the outcome of public consultation but does not indicate who is responsible for conducting the consultation, nor when or how it should be conducted. This opens up the possibility that consultation is conducted by or with those who have a vested interest.  We recommend that the Regulation specifies that the Panel is properly constituted with expertise and mandate to conduct consultation.

89B(c)(ii) specifies that consultation and advice includes the affected coal mining region’s reliance on coal mining for employment and economic activity. Per our argument above regarding the object of the fund and panel, we recommend this clause be removed and replaced with (ii) other matters including community, public interest and the environment. 

Recommendation 4:  Remove current 89B c) ii) and replace with a new ii) which reads “other matters including community, public interest and the environment.”

Schedule 7A Constitution and procedure of Expert Panels - the Act, s 292X

Part 2 Constitution of the Panels

The guidance on panel membership seems designed to prefer the inclusion of economic interests rather than a broader representation from across community, environmental, and social interests. Without a diverse range of voices present, the agenda of the panel risks being dominated by commercial interests including those of existing mining companies. It is worth noting that the interim panel Hunter Expert Panel includes members from both the Minerals Council and the Upper Hunter Mining Dialogue. 

The current Panel also does not require that any of the people selected live in the region and does not specify local community or environmental organisations as qualifying for inclusion.  We consider this an extraordinary oversight, and note the very strong evidence from previous structural adjustment processes where local community involvement is absolutely crucial to success.  This process will fail if there is not valid community representation on this panel outside commercial interests.

It is particularly crucial that local community and environmental organisations are involved given that the draft Regulation proposes to make advising on alternative uses for coal mines as one the key functions of the Panel.

As drafted, the current Regulation states:

Part 2 (2) The Minister must not appoint a person unless, in the Minister’s opinion, the person has at least one of the following attributes— 

(a) knowledge of the economic or commercial activity of the affected coal mining region to which the Expert Panel relates, 

(b) represents the interests of a group likely to be affected by a move away from coal mining.

The wording suggests that it’s referring to groups negatively affected by such a move. 

Recommendation 5: We recommend 2(b) be changed to “represent the interests of a group likely to benefit by a move away from coal mining”, per the object of the fund. 

Recommendation 6:  We also recommend the addition of 2 c), ‘represents a local community or environmental organisation’ and 2 d) ‘represents local Traditional Owners in the region’ and 2 e) ‘has expertise in best practice mine rehabilitation or public consultation processes;.

Recommendation 7: We also recommend the addition of a new section 2A which specifies that “at least half, and preferably more, of those selected for the panel must reside in the region and there must be at least one Traditional Owner representative and at least one representative each from a local community organisation and local environmental organisation”.

Part 2 (4) c) makes a local councillor ineligible to be selected for a Panel.  This seems like a surprising prohibition, given that local councillors are local people who generally represent and have a close connection to their local communities.  

Recommendation 8:  We recommend that Part 2) 4) c) is removed, so that local councillors can be selected for Panels.

Part 3 Procedure of Expert Panels

11 Disclosure of pecuniary interests

Part 3 s3 defines what constitutes a pecuniary interest held by a Panel member and s 4) defines what does NOT constitute a pecuniary interest.  We believe these sections should be tightened to reduce the likelihood of actual pecuniary interests not being disclosed, which goes directly to the integrity of the Panel.  

Recommendation 9:  Amend what constitutes a pecuniary interest by adding a new section 3e) which states “holds an interest in a company or other body which has a pecuniary interest in the matter whether via shareholding, Board representation, membership, employment or contracting”

Recommendation 10:  Amend what is NOT considered a pecuniary interest to remove s 4) c), which currently states “on the basis the Panel member is a member of a company or other body that has a pecuniary interest in the matter, if the Panel member has no beneficial interest in the shares of the company or body”. 

Recommendation 11:  Remove Part 3, s(10) which states that failure to declare a pecuniary interest in a decision does not invalidate a decision, as follows “Contravention of this clause does not invalidate a Panel decision”.   The highest level of integrity and accountability is required in the administration of public monies, and the community would expect any Panel advice to be void if it does not meet those standards.

Major omission from the regulations

The primary function of the Panel within the Act is to provide advice to the Minister on provision of funds from the Royalties for Rejuvenation Fund.  However, the Regulation is entirely silent on that function and does not provide any guidance nor constraints to the Panel in that regard.  

This means that as currently drafted, the Panel could recommend that the R4R fund is used to fund mine rehabilitation that is the responsibility of mining companies, or to fund other mining-related activities.  

In addition, the Regulation fails to provide additional guidance to the Minister to ensure that monies are expended only for public purposes and to include safeguards in the public interest to prevent breaches of public trust arising.  This is particularly disturbing given the serious concerns raised recently by the NSW ICAC about the impacts of pork-barrelling on public trust and democracy more generally.

Recommendation 12:  The Regulation should make it clear that Panel funding advice ‘must be consistent with the objects of the Rejuvenation Fund’ and must take into account ‘the public interest and any negative environmental and social impacts’.

There are no requirements included in the Regulation relating to transparency.  As currently proposed, the Panel would be comprised of hand-picked commercial interests giving advice to the Minister without any public transparency whatsoever.  This is unacceptable, especially in light of recent issues raised by ICAC around pork-barrelling in NSW politics. 

Recommendation 13:  The Regulation should specify that all Panel minutes are made publicly available not more than 1 month after the Panel meets.  

Recommendation 14:  The Regulation should also require that all recommendations and decisions in relation to the Rejuvenation Fund, by the Panel and the Minister respectively, must be made publicly available.  

Recommendation 15:  Finally, the Regulation should put in place the strictest possible measures to safeguard the public interest in keeping with recent NSW ICAC consideration and commentary on the issue.