By Gerard Drew on behalf of South Gippsland Conservation Society
I write, on behalf of the South Gippsland Conservation Society, to object to the planning application 120388-1 made by Dandy Premix Quarries Pty Ltd.
Summary grounds for objection
1. Statutory endorsement of the Work Plan Variation does not comply with Mineral Resources (Sustainable Development) Act 1990 The Director of Statutory Authorisations (ERR) has provided statutory endorsement of the Work Plan Variation that is inconsistent with statutory referral authority advice. This breaches Section 77TD(2) of the MRSD Act. Southern Rural Water (SRW), the statutory authority for groundwater, advised that further work is to be undertaken on the impacts of sediment, chemicals and mine tailings (filter cake) in the groundwater. SRW advised that these should be completed prior to a Work Plan Variation approval.
2. Cumulative impacts of sand mining in the region not addressed The Bass Coast planning scheme requires consideration of the cumulative impact of land use on biodiversity (12.01-1s). Sand mining activities have increased significantly having a detrimental cumulative impact on the very limited remains of natural habitat in the region. This is not addressed by the applicant and is not yet addressed by state and local planning.
3. Destruction of habitat corridor between two nature conservation reserves Recognising the impact land clearing has had on native flora and fauna in the region the Planning Scheme seeks to protect and enhance habitat (21.04-3) and avoid fragmentation (12.01-1S). Council has made early plans to go beyond this and proactively rebuild biolinks with the Bass Coast Biodiversity Biolinks Plan. The current application proposes to remove 13ha which serves as the only habitat linkage between the Gurdies Nature Conservation Reserve and Grantville Bushland Reserve.
4. End of life rehabilitation plan is not adequately defined The concepts presented in the application do not amount to a rehabilitation plan. It is essential that a rehabilitation plan be fully defined and committed to from the outset. This is required to ensure Council and the community know and accept what is to be the final state of this land after commercial operations have ceased. This is also necessary to adequately define what is the appropriate rehabilitation bond and any deposit milestones.
5. Net economic benefit to the region not demonstrated Mining is a small contributor to the local economy and has a disproportionate negative impact on local amenity, character and the environment. Economic impacts presented by the applicant are clearly biased. The economic appraisal has overstated the benefits and no disbenefits have been considered at all. The net economic impact of this, and perhaps other, sand mine development may very well be
1. The Work Plan Variation should be recognised as having an invalid statutory endorsement. The WPV should therefore be returned to ERR to complete in accordance with statutory referral authority advice so that it complies with the MRSD Act and is not subject to future legal challenge.
2. A final decision on planning permit application 120388-1 should be delayed until the completion of the imminent DAL Statement of Planning Policy so that the cumulative impacts of this and other sand mines in the area can be considered as a whole - which is the only way to account for cumulative impacts.
3. The panel should advise the Minister to prioritise extractive sites which pose minimal threats to areas of high strategic biodiversity value, such as the northern end of EIIA 884122 and the southern end of EIIA 883998 or EIIA 884123 (Trafalgar).
4. The clearing of high quality habitat to allow the excavation of the CSEP should not be approved.
5. Land disturbance that can be reasonably expected to prevent the delivery of Section 173 obligations should not be approved.
6. If the Panel does approve the CSEP, a lower impact alternative should be investigated.
7. The rehabilitation plan should be reviewed against the recently updated ERR guidelines: Preparation of Rehabilitation Plans, Guideline for Extractive Industry Projects.
8. The rehabilitation plan “concept” should be defined as a clear legal obligation. This obligation should be specified as a Condition of Permit.
9. Register of a bond, determined with the updated bond cost calculator, and consistent with the fully defined rehabilitation plan (Recommendation 8), should be specified as a Condition of Permit.
10. The economic benefits of the proposal should be reviewed in order to determine if Bass Coast can expect a positive net benefit from the proposal.
11. A comprehensive environmental protection and recovery program, spanning the whole Heath Hill Fault / Westernport Woodlands region, should be considered by way of community benefit.
The ongoing targeting of the woodland corridor between Lang Land and Grantville for sand mining represents a serious cumulative threat to one of the last patches of natural heritage left in Bass Coast Shire. This natural heritage is important to local residents and visitors alike - not to mention the wildlife itself.
There is currently no comprehensive approach to considering the impact of this activity, only piecemeal decisions under the current planning scheme. This is inadequate. South Gippsland Conservation Society strongly advocates that sand mining be focused on the many areas, even within the local region, that can provide sand without the destruction of habitat.
South Gippsland Conservation SocietyThe South Gippsland Conservation Society (SGCS) is a not-for-profit organisation based in Inverloch, Victoria, Australia. The Society was founded in 1976, and promotes and preserves South Gippsland's natural heritage and encourages conservation education. For over 30 years the SGCS has successfully applied for grants to create walking tracks and boardwalks, revegetate areas of public land, and publish books, maps, posters and pamphlets. The value of these grants has been matched by hours of voluntary labour, on weeding, planting and constructing, writing submissions, and serving on committees and advisory groups. Members of SGCS regularly assist Parks Victoria in managing reserves in the region.
Aims of the South Gippsland Conservation Society:
To further the conservation of Australia's natural resources, in particular in the South Gippsland region.
To encourage and promote education about the local environment.
To preserve and promote the conservation and public knowledge of the local marine environment.
To preserve and promote natural indigenous flora and fauna, particularly within the South Gippsland region.
To inform members of the public about the various natural attractions in the South Gippsland region and the conservation of these areas.
To affiliate with peak and other conservation groups as appropriate.
To take such action as may be from time to time decided necessary to achieve the general aims of the Association
Despite the ongoing efforts and volunteer commitment to protect the natural heritage of the region, the habitat loss and species decline continues. Currently there is only approximately 2% of native vegetation remaining in Bass Coast Shire. Following the widespread destruction caused by forestry and agriculture, the current threats are residential encroachment and extractive industry. SGCS works with Parks Victoria to manage and improve reserves in the region and proactively engages with Council to improve outcomes for nature in the planning process.
The South Gippsland Conservation Society recognises that the chain of woodlands located between the Bass River and Western Port Bay is one of only two significant stands of vegetation in Bass Coast Shire providing habitat for diverse and endangered flora and fauna. This same chain of woodlands is also the target of an extensive program of sand extraction. After strongly advocating against sand mining in the area in the 1990s, members of the SGCS made important contributions to the Regional Sand Extraction Strategy to ensure the ecological values of this corridor were not destroyed by insensitive exploitation. The current planning scheme which aims to protect both biodiversity AND extractive resources is not able to adequately address the cumulative threat of extensive sand mining.
SGCS notes that there are extensive areas with sand resources in the region that do not require the further destruction of what little natural heritage remains.
Figure 1 Western Port Woodland corridor, Lang Lang - Grantville.
Figure 2 Extractive Industry Interest Areas (Red), Work Authorities (Yellow), Dandy Premix WA1488 (Cyan).
Bass Coast has paid a heavy toll from clearing for agriculture, stripping the region of around 98% of its pre-settlement vegetation (as can be observed in Figure1). The applicant Work Authority lies toward the southern end of a woodland corridor, one of only two significant stands of remnant vegetation in the region. This ecosystem is threatened by the ongoing cumulative impact of sand mining from Work Authorities, current and future, along the entire length of the corridor, clearing vegetation, stripping soil, breaking linkages, increasing heavy road traffic and industrial noise. This application, as with all others, must be considered in a cumulative context. The applicant Work Authority separates two significant reserves, the Gurdies Conservation Reserve and the Grantville Bushland Reserve, and currently provides the only linkage.
The applicant, Dandy Premix, proposes to:
expand their current pit and establish a new one on the site including removal of vegetation performing the role of biolink between two reserves;
deepen their pit below the water table;
establish a sand washing and dewatering facility on the site;
extract more underground water;
double truck movements from maximum 120 a day to a maximum 240 a day;
operate for longer hours – 6am to 2am on weekdays and 6am to 10pm on Saturdays;
install traffic lights on the Bass Highway to permit their trucks to make a right-hand turn from their quarry site towards Melbourne;
Convert parts of the existing Section 173 Agreement to a Section 69 Agreement pursuant to the Conservation, Forests and Lands Act 1987.
Figure 3 Proposed Dandy Premix sand mine expansion, illustrating land cross section, mine cut and water table to be exposed (Volume 1 Planning Reports, page 255).
GROUNDS FOR OBJECTION
1. Endorsement of the Work Plan Variation does not comply with Mineral Resources (Sustainable Development) Act 1990 The Director of Statutory Authorisations (ERR) has provided statutory endorsement of the Work Plan Variation that is inconsistent with referral authority advice. This breaches Section 77TD(2) of the MRSD Act. Southern Rural Water (SRW), being the statutory authority for matters relating to groundwater, have advised that further work is to be undertaken as to the impacts of sediment, chemicals and mine tailings (filter cake) in the groundwater. SRW have advised that these should be completed prior to the Work Plan Variation being approved.
The planning process for Work Authorities outlined in Planning Practise note 89 and neatly summarised by Figure 1 of PPN89 (below). Stage 1 clearly identifies the sequence required: draft work plan provided to ERR, this is provided to referral authorities, work plan is given statutory endorsement by ERR subject to responses by referral authorities. Only then can the work plan proceed to apply for a planning permit.
The statutory endorsement of draft Work Plan Variations (WPV) is governed by Part 6B of the MRSD Act. Of particular importance is s77TE where draft Work Plans are referred to statutory authorities to provide official advice to ERR on whether or not it objects, and any conditions that may be imposed. As per s77TD(2), ERR must not endorse a plan that is inconsistent with anything a referral authority advises.
This draft WPV required statutory referrals to Southern Rural Water, Melbourne Water, Country Fire Authority and DELWP (Tab 15). A number of conditions were advised by statutory authorities. The referral response from Southern Rural Water (SRW) requires the attention of the Planning Panel.
The proposal to dispose of filter cake tailings in the groundwater presented concerns for SRW. They were not satisfied that the supporting information addressed the risk of contamination of the groundwater. A specific condition of SRW was that a risk assessment on the disposal of filter cake in the groundwater was to be completed prior to the WPV being endorsed. The language in the response letter is unfortunately sloppy, stating that this should be completed before the WPV is “signed off and submitted to relevant Authorities for approval”. The phrase “signed off” is ambiguous in relation to the planning process, however, this is to be done prior to being submitted to Authorities for approval. In this context this clearly relates to the statutory endorsement that proceeds application for a planning permit.
This is an important condition because it clearly states that this risk assessment is to be completed prior to statutory endorsement (“sign off”). There is no evidence that this risk assessment has been completed. This makes the statutory endorsement of the WPV inconsistent with referral authority advice and therefore in breach of s77TD(2) of the MRSD Act. Whether or not a deliberate decision to expedite this “priority project”, ERR has misinterpreted this referral advice of SRW as a requirement “before commencement of any disposal works.” This is clearly inconsistent with SRW condition 7.
This WPV should not have been advanced to the planning permit application stage and the Planning Panel should not be considering the granting of a permit while the preceding endorsement is clearly in breach of the law.
Referral response issues by Southern Rural Water (Tab 15):
Recommendation 1 The Work Plan Variation should be recognised as having an invalid statutory endorsement. The WPV should therefore be returned to ERR to complete in accordance with statutory referral authority advice so that it complies with the MRSD Act and is not subject to future legal challenge.
2. Cumulative impacts of sand mining on biodiversity not addressed The Bass Coast planning scheme requires consideration of the cumulative impact of land use on biodiversity (12.01-1S). Sand mining activities have increased significantly having a detrimental cumulative impact on the very limited remains of natural habitat in the region. This is not addressed by the applicant and is not yet addressed by state and local planning.
The broad devastation that has been inflicted on indigenous vegetation in Bass Coast Shire is recognised as a major environmental issue in the Planning Scheme (21.04-3). As a result, a high priority is placed on habitat protection and enhancement including minimal disturbance to drainage & soil, as well as retention of top soil and habitat trees. This sand mine extension is in conflict with these high priorities.
To protect and conserve Victoria’s biodiversity, strategies articulated in Section 12.01-1S of the Planning Scheme describe a comprehensive approach to decisions that impact areas of high biodiversity significance. This includes:
The identification of areas of biodiverse significance
Development of strategic plans for these areas
Decision making to account for cumulative impacts and habitat fragmentation
Avoiding the impacts of development on important areas
While this is encoded in the current Planning Scheme, there is as yet no incorporated mapping of the areas of biodiversity significance, no corresponding strategic plan or framework for assessing cumulative impacts or habitat fragmentation. This makes it a great challenge to assess individual planning applications for their potential impacts; both for the proponent and Council. In such a vacuum, applications are decided upon without due consideration of these important issues.
Planning application 120388-1 made by Dandy Premix does not consider the cumulative impacts of sand mining throughout the area. The ecological impact assessments presented rely largely on EVC data that not only doesn’t consider the impacts of current, let alone future, Work Authorities in the region, they are out of date and wildly inaccurate. This is demonstrated in Figures 4 & 5 where EVC mapping is compared to the actual vegetation extents visible from satellite imagery, and subject to significant further reductions from current WAs in the area (not to mention any future WAs within the EIIA).
The important implication for this obvious inaccuracy is that this data informs the thresholds for threatened species habitat impacts. If ecological assessments are referencing data that overestimates the extent of EVCs then the estimated impacts are going to be underestimated - it is simple arithmetic. When the reference data is not reflective of even the current impacts of sand mining in the region then it is clearly not accounting for the cumulative impacts on the environment.
The Regional Sand Extraction Strategy, prepared a quarter of a century ago, provided some useful guiding principles for approaching the competing interests of extraction and biodiversity (amongst other issues). But this reference is out of date and does not adequately communicate to the Planning Scheme. It does not keep up with the increasing number of Work Authorities plaguing the area, there is no regard for time sequencing to moderate the harm of land clearing in close proximity, there is no preferencing of low impact resources over high and there is no comprehensive end goal to ensure that further sacrifices of nature in the short term are compensated by a long term improvement in status for the local environment. The opportunity to do this is imminent with the approaching DAL and SERA programs (briefly described below), both expected to conclude in 2021. It is the view of the SGCS that consideration of this application, and all others, should await the implementation of these policies.
SGCS notes that there are extensive areas with sand resources in the region that do not require destruction of the environment - in particular at the Northern and Southern ends of the EIIA.
Figure 4 Satellite image of actual vegetation cover, also indicating Extractive Industry Interest Areas (Red), Work Authorities (Yellow), Dandy Premix WA1488 (Cyan).
Figure 5 Overlay of Lowland Forest EVC and Heathy Woodland EVC maps (as per Ecology witness statement, TAB 158B).
Distinctive Areas and Landscapes (DAL) The Distinctive Areas and Landscapes legislation enables better management of the peri-urban areas around metropolitan Melbourne and Victoria’s regional cities, strengthening the process for protecting social, environmental and economic values in these key areas. The Act aims to:
Recognise the importance of distinctive areas and landscapes to the people of Victoria and to protect and conserve the environmental, social and economic value of these areas
Enhance conservation of the environment including unique habitats, ecosystems and biodiversity promote cross-government coordination by enabling the integration of policy development, implementation and decision-making
Recognise the connection and stewardship of Victoria's Traditional Owner communities.
The weight of the legislation applies to the protection of the qualities which make an area and landscape distinctive. It is also a vehicle to reconcile competing layers of planning, environment and economic policy.
The Bass Coast DAL was declared in 2019 and applies to the whole region.
The background information provided to the panel by DELWP is sadly lacking in any useful detail beyond the themes of the public discussion paper. The only DAL that has been completed so far is for the Macedon Ranges Shireand it is a useful reference to gauge the priorities and measures implemented by the policy. A key feature of the Macedon Ranges DAL SoPP is the region Strategic Biodiversity Values which are subsequently reflected in the region Framework Plan (Figure 8), where Significant Landscape Areas are, perhaps unsurprisingly, largely defined by the areas of high biodiversity value.
Because DELWP has not provided the panel any meaningful insight into the implications of the Bass Coast DAL, a map of the region applying the same data reference for biodiversity values is presented for the panel in Figure 6. This can be compared to the same information for the Macedon Ranges shire in Figure 7. This clearly shows the sorry situation for Bass Coast biodiversity which remains strong in only a handful of discrete oases in a green desert of dairy pasture. The woodland corridor between Lang Lang and Grantville one of these biodiversity oases.
A feature of the DAL is also the quarantining of natural resources such as sand in the case of Bass Coast. The DAL is not expected to rule out sand mining from the region, on the contrary it is expected to positively make allowance for it. However, the DAL provides the opportunity to define a comprehensive regional solution to the conflicting interests of sand extraction and natural habitat for biodiversity, a contemporary one that communicates directly to the Planning Scheme.
Strategic Extractive Resource Areas (SERA)This is essentially a zoning policy which identifies areas with a more direct path to development permitting. In isolation, SERA is a concerning planning instrument that removes public scrutiny (always a recipe for disaster). However, following a well considered DAL that demarks areas where impacts of extractive industries can be well managed, SERA could be an efficient pathway where proponents and the community have a pre-agreed understanding of rights and responsibilities.
Figure 6 Bass Coast Strategic Biodiversity Values, also showing EIIAs and Work Authorities.
Figure 7 Macedon Ranges DAL Strategic Biodiversity Values.
Figure 8 Macedon Ranges DAL Framework plan.
Recommendation 2 A final decision on planning permit application 120388-1 should be delayed until the completion of the imminent DAL Statement of Planning Policy so that the cumulative impacts of this and other sand mines in the area can be considered as a whole - which is the only way to account for cumulative impacts.
Recommendation 3 The panel should advise the Minister to prioritise extractive sites which pose minimal threats to areas of high strategic biodiversity value, such as the northern end of EIIA 884122 and the southern end of EIIA 883998 or EIIA 884123 (Trafalgar).
3. Destruction of habitat corridor between two significant nature conservation reserves Recognising the impact land clearing has had on native flora and fauna in the region the Planning Scheme seeks to protect and enhance habitat (21.04-3) and avoid fragmentation (12.01-1S). Council has made early plans to go beyond this and proactively rebuild biolinks with the Bass Coast Biodiversity Biolinks Plan. The current application proposes to remove 13ha which serves as the only habitat linkage between the Gurdies Nature Conservation Reserve and Grantville Bushland Reserve.
The proposed mine expansion shown in Figure 9 includes a second pit for coarse sand at the top of the ridge (CSEP). As is currently planned this will destroy 13 hectares of moderate to high quality Heathy Woodland (HZ 6, 6.7ha) and Lowland Forest (HZ 3, 5.5 ha). Apart from the inherent character of this vegetation zone it is recognised by both ecological reports supporting the application to provide an important linkage between two significant conservation reserves. While recognising extractive industries are excluded from native vegetation clearing restrictions in the Planning Scheme (52.09) this proposal is at odds with the broader intent of the Planning Scheme to protect and enhance the remaining native habitat in the region.
Figure 9 Proposed sand mine expansion plan (full extent).
The proposal seeks to mitigate this loss through biodiversity “offsets” and post extraction revegetation of the pit in accordance with the Area 5 requirements of the Section 173 title agreement.
Biodiversity offsets While there does exist a complex mechanism for regulating the removal of native vegetation to supposedly achieve biodiversity “net gain”, it is a pleasant paper fiction which masks the reality of only habitat loss as a result of these transactions. Consider this very case. Currently there is 81.3 hectares of native vegetation in the combined WA boundary and Deep Creek property to the north, all of which requires a “net gain offset” should it be cleared. At the conclusion there will be only 68.3 hectares. This is categorically a net loss of biodiverse habitat. The same calculus can be scaled to the whole of Victoria where this fiction is repeated over and over under the offsetting scheme, delivering only a reduction in our natural heritage.
It is accepted that the Panel is bound to act in accordance with the paper regulations, but the SGCS remains grounded in real world outcomes for the environment.
Section 173 revegetation A Section 173 title agreement to revegetate certain areas of the WA land and Deep Creek property to the north was formed as part of the current planning permit. This is a pre-existing obligation. The progression from phase 1 to the proposed phase 2 development of the sand mine does not feature any commensurate increase in land to be protected or revegetated. Rather, first party offsets sanctioned by the s173 are to be adopted. In considering this planning permit, the Panel should not confuse the revegetation associated with this s173 as incremental gains associated with this application. In fact, the proposed CSEP may prevent the obligations of the s173 from being achieved.
It is acknowledged that Clause 2.1.2 of the s173 notes that the title holder is not prevented from using the land, even for sand mining, before establishing the area as a native vegetation corridor. Notwithstanding the fundamental incongruence of these two objectives, the proposal to backfill the 40m deep pit with a mix of mine tailings and clay overburden has not been demonstrated to support the commitment for this area to be maintained as a vegetation corridor in future.
The WPV identifies that there is currently minimal overburden within the CSEP, just a soil layer above the coarse sand substrata. This forms part of the EVC character, providing a chemical and nutrient balance, compaction and permeability for root penetration, and a particular moisture retention behaviour. Just as clay and filter cake is no good for making concrete, the moisture barrier and compaction of clay and filter cake is also not suited to supporting Heathy Woodlands or Lowland Forest EVCs adapted to loose, well draining sandy soil and substrata. This issue was raised with the applicant ecology expert Mr Organ who indicated there was no guarantee vegetation required by the s173 would be able to be reestablished on these disposal materials.
The SGCS is involved in many land revegetation projects and one thing can be said with certainty. It is hard work to reestablish vegetation on degraded land (it must be said that planting is often the easy part, the ongoing losses and weed management presents most of the problems). This is also supported by the evident difficulties the applicant has encountered in its revegetation trials. These difficulties were encountered on land that still has its original soil and substrata, albeit degraded by many years of grazing. Imagine the increased challenge of attempting to revegetate on a dumpsite of overburden and filter cake tailings. Obligation 1.1.3 of the section 173 is to establish a vegetation corridor on Area 5 to be protected into the future. If near term activities are likely to prevent these long term obligations being realised then they should not be permitted.
CSEP alternativeIf the Panel decides to allow the CSEP, the following suggestion is made in the interests of harm minimisation. It is readily acknowledged that this is not informed by geotech or resources studies of the site. The vegetation to be destroyed by the CSEP includes a patch of moderate quality Heathy Woodland over the northern half, and high quality Lowland Forest over the southern half. To the north of the proposed CSEP is a significant patch of already cleared land.
With the qualifications previously stated, an alternative CSEP shown in Figure 10 is proposed which has approximately equal area but is essentially shifted northwards so cleared land is excavated instead of native vegetation. On the face of it this accesses the same amount of coarse sand but entirely avoids clearing 5.5 ha of high quality Lowland Forest EVC. Barring geotech constraints, this may also lead to some increased visibility of the CSEP however the SGCS considers this the lesser of two evils, particularly since the upper reaches of the FMSEP will lead be the source of most visual impact regardless.
Figure 10 Suggested alternative extents of CSEP.
Recommendation 4 The clearing of high quality habitat to allow the excavation of the CSEP should not be approved.
Recommendation 5 Land disturbance that can be reasonably expected to prevent the delivery of Section 173 obligations should not be approved.
Recommendation 6 If the Panel does approve the CSEP, a lower impact alternative should be investigated.
4. End of life rehabilitation plan is not adequately defined
The concepts presented in the application do not amount to a rehabilitation plan. It is essential that a rehabilitation plan be fully defined and committed to from the outset. This is required to ensure Council and the community know and accept what is to be the final state of this land after commercial operations have ceased. This is also necessary to adequately define what is the appropriate rehabilitation bond and any deposit milestones.
It is already noted that some areas of the site should not be mined considering the harm to the local environment. For those parts of the site that are mined, appropriate and complete rehabilitation is essential. There are other mining sites in the vicinity of Grantville that have been abandoned leaving ecological scars and dangerous landforms. It is essential the authority representing Bass Coast uphold the standards of site rehabilitation because it is evident that operators and the state regulator (Earth Resources Regulation) cannot be relied upon to do this.
I draw the attention of the Panel to the recently completed Victoria Auditor General’s Office (VAGO)review Rehabilitating Mines, tabled in August 2020. This report, investigating mines and quarries, must be reviewed by the Panel before considering the approval of this application. The audit found systemic failures in the regulation of mine and quarry rehabilitation, concluding:
VAGO Rehabilitating Mines, Page 1: DJPR is not effectively regulating operators’ compliance with their rehabilitation responsibilities. This exposes the state to significant financial risk because some sites have been poorly rehabilitated or not treated at all. If not addressed, these sites also present risks to Victorians and the environment.
Systemic regulatory failures encompass:
using outdated cost estimates
not periodically reviewing bonds for their sufficiency—including a four-year bond review ‘moratorium’ for which there is no documentary evidence that it was duly authorised
failure to assure that site rehabilitation had actually occurred before returning bonds
Further, while some changes to address conflicts of interest were made following Parliament’s Independent Inquiry into the EPA in 2016, ERR—the primary mining regulator—still resides within DJPR, which seeks to foster and develop the mining industry.
ERR acknowledges that it has not effectively discharged its responsibilities and is working to rectify identified issues. Following the recommendations of the 2014 and 2016 inquiries into the Hazelwood mine fire, ERR began improving its regulatory performance. However, its early reforms were broad, and it was not until mid-2018 that ERR started specifically addressing rehabilitation issues.
In light of the VAGO report the Panel must be especially vigilant in considering this planning permit application. The Panel should not take for granted that the work plan endorsed by ERR and corresponding rehabilitation plan is consistent with the MRSD Act or will be enforced. If the Panel is not is not able to verify this, the granting of a planning permit should be denied, or at least delayed until ERR has implemented process improvements and reassessed the proposal. It is worth noting that ERR concluded the work plan was satisfactory in May 2020, 3 months prior to the tabling of the VAGO report.
As part of its planning permit application Dandy Premix has submitted a Rehabilitation and Site Closure Plan (Volume 1, Appendix 10). This includes a description of the site in a rehabilitated form following extraction activities which give the appearance of being comprehensive. However, all of these detailed documents, diagrams and plans should be disregarded when the plan asserts that this is “conceptual” only. The final rehabilitation design is to be determined not for a quarter century or more.
These statements in the Work Plan Variation provide a convenient retreat for DPQ, as VAGO found is customary in the industry. Not only does this suggest the final site rehabilitation may be whittled down to a bare minimum landform stabilisation, but the site may yet be further exploited.
This aligns with the concerning findings of the VAGO report which found (pg 6):
Rehabilitation plans are approved by ERR without sufficient detail to ensure compliance with the law or estimate appropriate bonds
Only 28% of approved plans reviewed (by VAGO) were compliant with the law
Comprehensive and unambiguous plans are the first step to effective rehabilitation.
The rehabilitation plan provided to ERR, to Council and now to the Panel is ambiguous. Despite the apparent detail and charming concept sketches, this is a non-binding fantasy. The actual rehabilitation plan is deferred to negotiation in the distant future with a regulator that has an appalling track record. This makes it impossible to judge the merits of a final rehabilitation plan, to hold the operator to any standard in the intervening time, to determine an appropriate bond and with no guarantee of enforcement at the end of life.
This should be a concern to the Panel in light of further findings in the VAGO report:
ERR is unable to provide evidence of the extent to which operators comply with their rehabilitation obligations. (pg 7)
ERR cannot demonstrate it ensures a mine or quarry has been rehabilitated before returning bond to the operator (pg 4)
ERR monitors if operators submit annual reports but does not check if content is accurate or appropriate (pg 8)
The Panel should be under no illusions that this rehabilitation concept will be delivered out of the good intentions of a for profit enterprise when an easier or lower cost alternative is legally possible. That is naive. The final rehabilitation plan must be established as a legal obligation from the beginning.
ERR have just recently (March 2021) released a new guideline for the preparation of rehabilitation plans. The rehabilitation plan provided by the applicant should be reviewed against this updated standard. A notable change is that variations to work plans will require approval, not left to the cost cutting discretion of site operators.
Rehabilitation bond Financial securities are imposed on operators of extractive industries in the state to provide assurance that the necessary rehabilitation works will be undertaken if a mine or quarry is no longer commercial or if an operator becomes insolvent. Mine and quarry operators are exposed to cycles of boom and bust which increases the likelihood that an operator will encounter insolvency over the multi decade life of these sites. The purpose of bonds is to guarantee rehabilitation, not to coddle the working capital of quarry owners. If a quarry does not have the capacity to post an appropriate bond, it should not be permitted to operate.
As noted previously the administration of these bonds has been found to be failing. Separate to the administration of bonds is determining the appropriate value of bonds. ERR have been found by VAGO to consistently underestimate rehabilitation bonds. An extract from the VAGO Findings include (pg 2):
A quick estimate by ERR indicates $813m of registered bonds is $361m short of requirement (70%). This is considered to be an underestimate by VAGO.
1,239 sites (89%) have bonds <$200,000
526 sites (38%) have bonds <$10,000
578 sites have no bonds
ERR bond calculation method has not been updated since 2010. An update is due in December 2020.
We have been told the phase 1 rehabilitation works have been estimated to cost $250,000 (Tab 26, pg 25
supposedly already posted as a bond). At this time when there is apparently just two years to fully work out of the current DPQ Work Authority and no rehabilitation works have been initiated, we know from the ERR Interactive Bond Registerthat the WA1488 has a bond of only $90,000. We do not know for certain if $250,000 is indeed adequate to fully rehabilitate the site, but we do know for certain that the actual bond posted is only 36% of the supposed cost to rehabilitate. This is clearly not adequate and shows that ERR is not effectively administering rehabilitation bonds.
We have been told anecdotally by Mr Natoli that ERR reviews bonds throughout the life of mines and quarries so bonds reflect the progressive liability of a site. We can see from the current example that this process is not being administered effectively. The comprehensive investigation in the VAGO inquiry reveals that 91.7% of bond reviews are not on track, of which (pg 5):
68.6% are overdue for review by up to 23 years (9 years on average).
23.1% do not have a scheduled next review. ERR records suggest that nearly half of these have not been reviewed since their licences and work authorities were first granted between 1988 and 2015.
Given the uncertainty, it is impossible to determine if the rehabilitation bond will be adequate, when this will be determined, and then if this will go on to be administered through to the conclusion of rehabilitation. ERR have acknowledged the systemic failure in this regard and are actively working to correct these issues. In particular, an update of the bond calculation method is being workshopped with the industry in April 2021.
The determination of rehabilitation bonds is made by ERR and requires consultation with Council when this involves a Work Authority (ERR). It is simply not possible for ERR or Council, or the Panel to determine what is the appropriate bond when the rehabilitation plan is ambiguous, such as the one presented to the Panel. As stated by VAGO, “comprehensive and unambiguous plans are the first step to effective rehabilitation”. The next is determination of the bond.
The current ERR bond estimator was previously updated in 2010. An update has only just been completed by independent consultants. The rehabilitation plan for the WPV should first be made legally binding, and then the bond consistent with this rehabilitation plan should be determined with the updated bond calculator.
It is generally a sound principle to not duplicate regulation, and it is understood that the setting of bonds is the responsibility of ERR, as per PPN89. However, with knowledge of the “systemic failures” of ERR in administering rehabilitation, the Panel - on behalf of Council - should make follow up evidence of bond adequacy a condition of permit.
Recommendation 8 The rehabilitation plan “concept” should be defined as a clear legal obligation. This obligation should be specified as a Condition of Permit.
Recommendation 9 Register of a bond, determined with the updated bond cost calculator, and consistent with the fully defined rehabilitation plan (Recommendation 8), should be specified as a Condition of Permit.
5. Net economic benefit not demonstrated
The mining industry is a very small feature of the Bass Coast economy (ANSZIC 2006 Division). According to REMPLAN, it provides the smallest category of employment (Figure11), the least wages, the lowest gross output and the second lowest value add (Figure 12) to the region. Sand and gravel quarrying is a further subdivision of mining that is not separately reported.
In contrast to these lowest of positive economic contributions, the negative impacts of this industry to local amenity, character and the environment are entirely out of proportion. Sand quarrying introduces thousands of heavy vehicle truck trips to the roads and highways of Bass Coast every day. Much of the region’s high quality natural environment is inaccessible to the public, locked behind quarry fences. And this natural environment is daily degraded by the extractive industry, clawing away the very ground. The region pays a heavy price for the presence of this tiny industry.
In order to inflate a positive impression of the quarrying industry and the current application, a variety of misrepresentations have been made first to Council and then to the Panel. Some important ones are listed below:
The mining industry employment is conflated with that of construction to obscure the miniscule stature of the local mining industry (Tab 26, Table 2).
Direct and indirect economic contributions of the proposed quarry expansion have been inflated by multipliers of dubious credibility, and inappropriately accounted for. Combined these speculative values represent some 51% of the indicated total project value add.
No account has been made of the value erosion of the local sand resource associated with increasing supply competition.
Absolutely zero economic disbenefits have been considered.
The incremental cost of transport is significantly overstated.
There is also much unsubstantiated conjecture throughout the Economic and Social Impact Assessment and supporting witness statement.
Figure 11 Bass Coast industry of employment profile (REMPLAN).
Figure 12 Bass Coast industry value add profile (REMPLAN).
Indicated value add The economic benefit to the region is described within the Assessment as attributable to employment within the region. This is represented as direct employment (wages paid), indirect employment (local supply chain), plus employment associated with a consumption multiplier and a skills uplift multiplier. The contributions taken from Table 3 (Tab 26) are summarised in Table 1 below for convenience.
These components of employment should be considered as of decreasing reliability from Direct to Skills. The first are direct wages which are reliable, so long as the employer remains solvent. It is highly likely that there will be some Indirect payments to local service providers, but the value of this cannot be stated with certainty. Consumption multipliers infer a cascade of further value creation from the local spending of Direct and Indirect incomes - these should be considered with caution. Skills uplift multipliers are rather speculative assumptions of future earning capacity of the region as a result of jobs training. As noted by Dr Manning, there is uncertainty whether this materialises at all, and any effect delayed. The accounting for this effect did not reflect these uncertainties, but rather accounted for the full value right from the beginning of the project - a simplification Dr Manning described as a “mathematical convenience”. One wonders at what else may have been included, or excluded, for mathematical convenience.
The ABS, Productivity Commissionand Treasuryhave all cautioned against the “use and abuse” of economic multipliers. In 2001 the ABS discontinued the publication of Input-Ouput tables, the foundation of multiplier effects, due to known misuse and limitations, such as:
Lack of supply side constraints.
Fixed ratios for intermediate inputs and production.
No allowance for purchasers’ marginal response to change.
Absence of budget constraints.
Not applicable for small regions.
On the basis of the uncertainties noted it would be prudent to apply a significant discount to these multiplier benefits. It is suggested 50% would be reasonable for uncertain consumption benefits and a 100% reasonable for skills uplift (this really is a tenuous element). This is summarised in Table 2.
We can consider this a reasonable “uncertainty adjusted” gross value add from the proposal. To determine the net value add requires accounting for economic disbenefits attributable to the project. Unfortunately none of these were considered in the applicant analysis so we must make some estimates of them ourselves.
Erosion of local resource valueIt is stated by Dr Manning that the increased supply from the DPQ expansion would avoid price increases for sand resources. We must take this is as an elementary assumption of supply demand dynamics as no economic supply equilibrium analysis is apparent in the Economic Assessment. The obvious flip side of this observation is that without this mine expansion, sand from the other quarries in the region would enjoy marginally higher prices. It is therefore fair to ask what is the net benefit of slightly more volumes of sand at lower prices, compared to less sand at higher prices.
Without requiring great study, it simply follows that if DPQ became 10% of local supply, it would only require a 10% price restraint to completely offset all gains from the new extension. The proportions follow no matter the actual contribution of DPQ. Lowering prices for all operators in the region reduces local incomes and also reduces their resilience to market disturbances - such as a construction sector bust.
Further economic disbenefits When asked if any economic costs were considered as part of this assessment, Dr Manning declared there weren’t any and laid the challenge to name one. There most certainly are economic costs, the local resource value erosion previously introduced being only one. Some others are listed below:
Road hazard from heavy vehicle traffic.
Unsafe landforms in close proximity to a township.
Increased greenhouse gas emissions.
Depressing impact on local land value.
Loss of biodiverse habitat.
Degraded regional character.
Opportunity cost of alternative land use.
Opportunity cost of lost tourism potential.
Many of these items would require serious work to quantify in any meaningful way. This won’t be attempted but it is clear that there are real economic costs that flow from the presence of sand mining in the region, including the proposed expansion. If the panel was to ask others from the local community they are likely to add to the list above. One simple example is outlined here relating to the potential impact on the local land value.
The housing stock of Grantville is valued at approximately $220m (520 dwellingsx $420,000 mediumhouse price). If the presence of industrial sand mining in the region was to restrain the capital appreciation of the housing stock by just 1% p.a. over the 40y life of the proposed mine extension, this would lead to a capital value approximately $100m lower than without this restraint. This would entirely offset the “uncertainty adjusted” value add from the proposed mine extension. This is in addition to any value erosion of the local sand resource and any value ascribed to the other items in the list above.
While the actual impact of economic disbenefits is not accurately known, there are negative impacts to the local community that have been disregarded. Perhaps for “mathematical convenience”, perhaps to overstate and distort the benefits of the proposal.
Cost of transport overstatedThis item is somewhat peripheral to the economic impacts of the proposal on the local region, but so much is made of the cost of transport, and why the Heath Hill deposit must be exploited to avoid prohibitive costs of trucking from the next closest deposit, that it simply must be addressed. For example, it is stated in the Economic Assessment that resorting to the alternate deposit in Trafalgar (EIIA 884123) “has the potential to raise the price per tonne of sand delivered to Dandenong and the greater MSA by as much as 50 per cent, primarily driven by increased freight costs” (Tab 26, pg 19). This is a significant overestimate.
Consider the simplified example:
The gate price of sand is stated to be $22/t.
This cost of transport indicated in the Economic Assessment $0.2-0.25/km (Tab 26, pg 18. Based on information provided by DPQ)
Let’s take them at the word.
The distance from Grantville to Dandenong is 72km
The distance from Trafalgar to Dandenong is 96km
This modest cost increase is significantly lower than the 50% suggested. This could be expected to be even smaller considering the direct access to the M1 freeway from Trafalgar. Not only this but the Trafalgar resource is located in open rural land already cleared. There is also construction grade sand and gravel resources identified at Tynong North (EIIA 884125), almost half the distance to Grantville and indicatively 20% lower cost.
The proximity advantage of sand in the Heath Hill Fault deposit is simply overstated in every document supporting the Victorian Government Extractive Resources Strategy. And every derivative document parrots the same falsehoods without any independent rigour.
Overall biased representation of economic impactsThe sum total of all the small and large misrepresentations of economic impacts combine into a biased picture of what Bass Coast stands to experience from the proposed sand mine expansion. It is simply not good enough to show only one side of the ledger. It is important that development in the region delivers net economic gain. If it does not, then why should the community, and the Panel on their behalf permit it to go ahead.