Australia: Social impact assessment to be reinvigorated for State significant resource projects in NSW

New draft guidelines released by the NSW Government will increase the transparency and accountability of social impact assessment for State significant mining, petroleum production and extractive industry developments.

The likely social, environmental and economic impacts of a development are key matters for consideration in determining a development application under the NSW planning framework. Despite being an important determination factor for development assessment, a lack of transparency and no appropriate framework for social impact assessment in the development assessment process created uncertainty and inconsistencies in the process. In the past, this created particular complexities for proponents when preparing an environmental impact statement (EIS) for a project.

In late December 2016, the NSW Department of Planning and Environment took action to improve the social impact assessment process required for State significant development (SSD) resource projects. The Department released a public consultation version of the Social impact assessment: Draft guidelines for State significant mining, petroleum production and extractive industry development that outlined a clear framework, principles and overarching methodology for assessing social impact.

At this stage, the Guidelines will only apply to SSD resource projects, however the Department will consider an extension of the framework to other major projects (eg. State significant infrastructure). Further, the Guidelines will only apply:

  • to development applications for new SSD resource projects, where Secretary Environmental Assessment Requirements (SEARs) are issued after publication of the Guidelines; or
  • to modification applications for an existing SSD resource project, where the application is submitted after publication of the Guidelines and it may result in new or different social impacts when compared to what was assessed under the original development application.

Assessing social impacts of a project

Generally, social impacts are difficult to assess as the impacts created by one SSD resource project will differ at a local, regional, state and national scale. SSD resource projects create substantial social impacts on surrounding communities, including:

  • positive or negative impacts;
  • intangible impacts, (eg. local perception about the safety and future of a local community) or tangible impacts (eg. economic damage against property rights, the impact on quality and availability of air, water and food, as well as the exposure to dust and noise); and
  • direct, indirect and/or cumulative impacts.

These and other factors may stem from a SSD resource project and without a robust assessment of social impacts and astute risk management, issues may arise in the development assessment, approval and post-approval stages. Because of this, the draft Guidelines seek to inform proponents of how to properly assess the social impacts of a SSD resource project in order to understand various social impacts that may arise at each phase of a project.

We explore some of the key features of the draft Guidelines below.

Objectives of the Guidelines

The Guidelines seek to minimise negative social impacts and maximise potential social benefits associated with SSD resource projects in NSW. Several mechanisms are introduced under the Guidelines to achieve this objective. Key objectives include:

  • requiring the identification of social impacts from early stages of development planning;
  • providing greater clarity and certainty to proponents about the social impact assessment process;
  • clearly communicating community expectations to proponents;
  • facilitating effective community and stakeholder engagement, to discuss social impacts at each stage of the development assessment process, including pre-lodgement and post-approval;
  • improving the quality of information to be used by the consent authority when weighing up social impacts; and
  • improving the way social impact mitigation proposals are monitored, in order to create greater accountability amongst developers.

Development assessment process

Social impact assessment is a process requiring expert analysis and data input at every key stage of a SSD resource project, with every assessment building on the information gathered from prior stages. The draft Guidelines outline the following phases in assessing social impacts run alongside the development assessment process:

  • profile and scope the issues to establish an understanding;
  • analyse and assess the likely impact pathways;
  • develop mitigation and enhancement strategies and adaptive monitoring and management arrangements; and
  • implement the developed strategies and arrangements.

Typically, the key assessment of social impacts will be integrated into a preliminary environmental assessment (PEA) or EIS. For example, if the environmental impact of a project may result in losses quantified and captured in the economic assessment, the social impact assessment in an EIS may consider how these losses are experienced from a variety of perspectives, including cultural, community, political, personal and property impacts.

The combination of social, environmental and economic technical assessments form part of a comprehensive EIS for a SSD resource project. The draft Guidelines support an integrated approach for assessing such impacts and impose performance guidelines on the preparation of a PEA or EIS. For example, the draft Guidelines discuss a number of matters that should be addressed as part of an EIS, including:

  • a social baseline study for the existing conditions without the development, using qualitative and quantitative data;
  • use of expert advice to establish the most significant social impact risks and prioritise these risks for action and ensuring there is an appropriate response for significant impacts;
  • appropriate mitigation measures, including methods to measure and strengthen positive social outcomes; and
  • appropriate monitoring and adaptive management arrangements, detailing the frequency of monitoring and reporting.

The draft Guidelines warn against considering impacts in isolation and consider that any social impact assessment should leverage the output of other specialist studies.

Relevant factors for the determining authority to consider are also addressed. The draft Guidelines state that a consent authority may consider matters including the significance and overall acceptability of potential social impacts, any cumulative social effects, the suitability of mitigation and management measures and the acceptability of any residual negative social impacts. Ultimately, these matters may be managed under conditions of consent imposed by the consent authority when providing approval for the SSD resource project.

Significant social impacts and accountability

The assessment of significance of impact in the context of a project will consider factors such as likelihood, duration, extent, sensitivity and severity of social impact.

The draft Guidelines discuss that robust social impact assessments respond to significant impacts in an "action-oriented" manner and formulate practical, effective strategies that directly address negative impacts are identified by proponents. While proponents should at first consider avoidance strategies, the draft Guidelines also state that a range of factors should subsequently be considered if mitigation strategies must be formulated in the alternative (eg. Government policies).

To ensure proponents are held to account in effectively addressing social impacts, the draft Guidelines provide that an ongoing monitoring and management framework will include:

  • monitoring of predicted impacts;
  • research to reduce uncertainties;
  • periodic evaluation of the outcomes of implementation, followed by review and strategy revision, if required; and
  • periodic public reporting of results.

Next steps

Public exhibition of the draft Guidelines closed 3 March 2017. The Department will publish a report summarising the submissions received before release of the final Guidelines.

The Guidelines will affect all new developments and may impact existing developments. Once the Guidelines are finalised, proponents with a current or future SSD resource project should consider seeking advice on the new framework for social impact assessment before lodging an application. Proponents seeking to modify an existing SSD resource project should also seek advice as to whether there is a requirement to lodge a social impact assessment with a modification application.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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