The collapse of a government-declared priority project at the Olympic Dam mine in South Australia has prompted claims the Morrison government pursued an “opaque” process lacking evidence to select projects.
Mining giant BHP abandoned a proposed multibillion-dollar expansion at the mine last week after deciding it did not make economic sense. It came four months after prime minister Scott Morrison declared it a major project of national economic significance that would be fast-tracked.
The company learned its expansion was on the major project list – one of 15 projects the government earmarked for rapid approval – when Morrison made the announcement in a speech to the Committee for the Economic Development on 15 June.
Dave Sweeney, a campaigner with the Australian Conservation Foundation, said it raised questions about how and why the 15 shortlisted projects had been selected, and whether they could deliver the $72bn in investment and more than 66,000 jobs the government claimed they would.
He said it suggested Morrison had “prioritised the announcement over the outcome” by including BHP on the list, and that the process had been driven by “playing favourites and ideological wishlisting rather than talking with industry about what’s possible and what’s necessary”.
“It’s pretty extraordinary. A few weeks ago the PM thumps the podium and says ‘this is essential’ and now the company turns around and says ‘we’re not doing it’,” Sweeney said.
“It seems a compelling example of the politicisation of the environmental approval process. What has happened here is opaque, it seems to lack evidence, it seems to lack consistency and, in the case of Olympic Dam, it will profoundly lack delivery.”
Morrison’s announcement that 15 major projects would be “placed on the fast-track” for approval under bilateral deals between the commonwealth, states and territories came in an address focused on the government’s jobmaker agenda – part of its response to the economic shock of Covid-19.
The prime minister initially listed eight projects, including at least one in each state, that would have their final assessment times cut by 25%. He gave an estimate of the total economic value of all 15 developments, but a full list was not endorsed by the national cabinet and publicly released until late July.
It includes government-owned developments such as Snowy Hydro 2.0, large private proposals such as Woodside’s liquified natural gas (LNG) expansion in Western Australia and Santos’ Narrabri gas field development in northern New South Wales, and bundled packages of relatively small investments in roads and rail in WA.
Some projects, including Narrabri and the Marinus Link to transmit electricity between Tasmania and Victoria, are yet to confirm financial backing and years away from major construction. Others, such as the inland freight rail line between Melbourne and Brisbane, have begun building but will need further approval from governments to proceed.
Some appear open-ended. The list says Rio Tinto, which has been under pressure since destroying a 46,000-year-old sacred site at Juukan Gorge in May and which last year wrote to the government urging it to quickly transfer environmental approval powers to the WA government, will be able to fast-track the approval of “a significant expansion of mining operations at both new and existing iron ore mine sites”.
Some proponents, including Santos, told Guardian Australia they were not aware of the major project listing before it was announced and it was not something they had sought.
Senate estimates hearings last week shed little light on how the 15 projects were selected, but BHP’s announcement appeared to catch the government by surprise. In a response to a question on Tuesday, Mathias Cormann, the departing finance minister, said the Olympic Dam extension was “an incredibly important project of national significance” before being told by Greens senator Sarah Hanson-Young that it had been “dumped”.
Officials said the projects were chosen through an “iterative process” that began before Covid-19, though the pandemic drove the final decision to take them to national cabinet after they were signed off by the environment minister, Sussan Ley.
Estimates heard the government had allocated $8.8m in the budget to “expedite the approval” of major projects on the list. The Greens asked officials if this meant approval was guaranteed. They said it didn’t.
Hanson Young, the Greens’ environment spokeswoman, accused Morrison of using Covid-19 as “cover to fast-track environment-wrecking projects”.
“The environment department can’t answer basic questions about how projects came to be on the list, their merits for economic recovery or what environmental approvals they need,” she said. “When you’ve got BHP abandoning their plans for expansion it’s clear some of these projects aren’t ‘shovel-ready’.”
A spokesman for the prime minister did not respond directly to BHP’s decision or whether it would be replaced on the list. He said the government was prioritising projects that would boost economic recovery, and had made conservative estimates about the benefits they would deliver based on departmental advice.
“The usual due diligence of the projects will apply but the Commonwealth and states and territories have agreed to accelerate the projects’ approvals so they can be rolled out as quickly as safeguards allow,” the spokesman said.
Tim Beshara, manager of policy and strategy at the Wilderness Society, said it appeared the list had been “written up on the back of the envelope”. He said the process contrasted poorly with that in NSW, which was subject to the Independent Commission Against Corruption.
“When they decided to fast-track the approvals of some mining projects at least they sought advice from Icac,” he said. “Yet the federal environment officials can’t even explain the process they used to develop the list, let alone any safeguards they put in place to reduce the clear corruption risks.”
He said any projects handpicked through this process were likely to struggle for social licence. “In Australia, there is a history of special planning favours being bestowed to controversial projects of political mates, but that doesn’t mean that they go ahead” he said.
The fast-tracking approval process comes while the government is attempting to change the Environment Protection and Biodiversity Conservation Act to push more assessment responsibilities for developments to the states.
The Coalition has not said how it will address the central finding of a review of the act by the former competition watchdog head, Graeme Samuel: that Australia’s environment is in a state of decline and the current trajectory is unsustainable. Samuel’s final report is due to be handed to the government this week.