Greater coordination and higher levels of transparency are needed between the federal and state governments in resource exploration approvals, the Productivity Commission says in a report to be released on Friday.
The commission also calls for "evidence-based" controls over coal seam gas activity where controls have been in a state of "flux".
The report comes as explorers have been cutting spending amid declining commodity prices and rising economic uncertainty, with many operators complaining of the amount of "red tape" and duplication between state and federal governments when seeking exploration approvals.
And spending on new export gas projects in Queensland and northern Australia is close to peaking, prompting concerns this will lead to an economic slowdown. This, in turn, has put the focus on the exploration sector to begin picking up some of the slack.
Much of the duplication can be resolved if an earlier agreement by federal and state governments to coordinate in areas of "national environmental significance" is implemented.
"Progress towards achieving this reform has halted," the commission notes.
It also calls for an end to duplication in offshore exploration, with the National Offshore Petroleum Safety and Environmental Management Authority to be given full control over environmental assessment, instead of it being shared by two agencies as is the case now. State governments should also cede their control in this area to the agency, it says.
The commission highlights the need for an "evidence-based" approach in coal seam gas exploration. "Regulation of [coal seam gas] exploration activities should be directed towards maximising the economic, social and environmental benefit of the use of the land for the whole community," it notes, taking aim at those opposed to such developments.
"Scientific uncertainty should not lead to poor regulatory processes or decisions," the commission says. "A precautionary approach should be adopted where there is concern of substantial or permanent damage.
"A lack of certainty should not be used to justify a lack of action to mitigate or prevent such damage."
The report notes that after a period of poor community involvement, some exploration companies are now more than meeting government requirements in an attempt to gain the "social licence" to explore.
Twice as many people work in exploration now than a decade ago, the commission says, although the absolute number peaked in 2008 and declined after the global financial crisis, with growth resuming at long-term rates.