By Vannessa Hearman
A report published by the Australian Manufacturing Council last month, The Environmental Challenge: Best Practice Environmental Regulation, demands relaxation of environmental regulations which are alleged to be inhibiting the ability of Australian manufacturers to compete in international markets.
The report presents the manufacturing sector's view that government should encourage, but not enforce, compliance with environmental regulations and promote environmentally sound technologies in manufacturing. It recommends that regulatory agencies should not "stifle" business initiative but should merely act as a support system since "leading edge businesses" are already responding to the pressures of international competition and environmental concern by implementing Best Practice Environmental Management (BPEM).
In the past, says the report, environmental legislation has not taken into account the impact on development and industry. It complains that dealing with regulatory bodies has involved long delays and recommends that the number of these bodies should be reduced.
The AMC report, like most such industry reports, criticises existing regulation as prescriptive and preoccupied with "sanctions" or "command and control regulation". The alternative preferred by the AMC, predictably, is a mixture of "market-based measures" and self-regulation. International case studies of what the report calls "innovative approaches to regulatory control" are cited as examples towards which regulators should strive.
For example, the report cites, with approval, the trade in pollution credits by which companies buy and sell the right to emit sulphur dioxide on the Chicago Board of Trade.
It also applauds the Swedish scheme in which companies
were offered financial incentives and guaranteed purchase orders for the development of an energy efficient fridge-freezer. The winning company, Electrolux, obtained a guaranteed order of 500 units of the appliance, subsidisation of an additional 500 units and a "bonus" amount per unit if electrical consumption did not exceed 0.9 kwH/litre per year.
Further case studies cite government concessional funding of pollution projects and the reduction of fines for infringement, with redirection of the funds to the implementation of pollution control measures. The US EPA, for example, dealt with a chemical manufacturer who had contravened the Toxic Substances Control Act by giving it an 80% discount on the fine for the breach and requiring it to use the funds for an attempt to reduce its emissions of ozone-depleting substances and a probable carcinogen.
The thrust of the case studies is clearly to bolster support for financial incentives and assistance for companies who pollute.
The report also calls for a new approach by environmental regulators, called "regulators' customer focus". Under this approach, regulators would provide information, funding, research and assistance to industry.
The document stresses that the impact of environmental regulation must be "appraised within the cost framework". Regulators need to give " due consideration to the cost effectiveness of regulation and adopt a collaborative relationship with industry" as well as giving business a freer reign to "pursue its own initiatives", it asserts.
Coopers and Lybrand, consultants commissioned by the AMC, has developed 10 principles for "Best Practice Environmental Regulation" (BPER). These include certainty, flexibility, practicability, cost- effectiveness, consultation and efficiency. The AMC report recommends that this 10-point framework be used by regulators to evaluate current regulatory tools, and by business as an instrument to gauge the impact of regulations.
Finally, a "benchmarking" process by which firms can
compare themselves to competitors and increase their competitiveness is advocated. Most significantly, this process is to be applied to environmental regulation to ensure that Australian environmental regulation is in line with international standards so as not to disadvantage business or to give foreign firms an edge where the environmental regulation is lacking.
The main premise of the AMC report has been lifted from the official objectives of the federal government's environmentally sustainable development (ESD) process — a "robust, internationally competitive, export-oriented manufacturing sector".
The contradiction that exists between the drive for international competitiveness and saving the environment worldwide was not faced up to in the ESD process. It was assumed that as business upgrades its technology to maintain a competitive edge it will necessarily seek out environmentally sustainable processes. However, according to the AMC report, "this change cannot be at the expense of economic growth". It goes on to warn that lack of economic growth produces horrendous environmental outcomes.
As environmental controls are tightened in some countries, large businesses can choose to relocate parts of their production to countries with little environmental regulation, usually third world countries. The AMC report warns that some countries are using this lack of environmental regulation as a competitive advantage.