The real test after the Hazelwood inquiry

GDF Suez has been found to have failed the community yet the inquiry into the toxic fire has made no recommendations on enhancing the key preventative measure – namely, expensive mine rehabilitation.

The report from the Hazelwood Mine Fire Inquiry is in – and the verdict was clear: GDF Suez failed the community and was responsible for a disaster that shrouded Morwell in toxic smoke for six weeks.

The state government didn’t get off the hook, either, with the Board of Inquiry identifying clear failings in mine regulation and the government-led emergency response.

The report contains 12 recommendations to the state government and six to the mine operator, GDF Suez. The government has essentially accepted all the recommendations. GDF Suez is still considering its full response but it's mostly being asked to update internal policies. Neil Comrie has been appointed by the government to oversee the implementation process, reprising his role as the Implementation Monitor for the Bushfire Royal Commission.

But what are we to make of the 432-page report?

Firstly, both the government and GDF Suez should have done more to prevent the fire. The fire was preventable and foreseeable, which is revealing about both the pre-existing attitude of GDF Suez and the hands-off approach of the government regulators.

Secondly, there can no longer be any doubt that burning coal has a terrible effect on nearby communities. The recommendation to extend the long-term health study to 20 years is welcome but, to appreciate the specific effect of the fire, the study will also need to understand the baseline problems of living near coal-fired power stations. Indeed, ongoing air pollution there is deserving of an inquiry in its own right.

Thirdly, while the inquiry accepted evidence on the value of rehabilitation as a fire prevention measure, it made no recommendations on two of the points most contested by GDF Suez; the importance of urgently accelerating mine rehabilitation to reduce the risk of future fires, and a review of the rehabilitation bond (which is currently far too low).

While the inquiry’s report was strong on improving the cure (i.e. responding to a fire once it starts) it largely dropped the ball on requiring prevention. Rehabilitation involves covering exposed coal with soil or clay and returning the land to a comparatively natural condition; this was agreed during the hearings to be the gold standard of fire prevention. Delaying rehabilitation leaves the community exposed to the risk of future fires.

Rehabilitation bonds exist to create an incentive on mine operators to complete the rehabilitation works at each mine in a timely fashion, yet bonds for all Victorian coal mines are currently so low ($15 million) that they fail to create any incentive whatsoever – in GDF Suez’s eyes, it may be better to forfeit the bond and avoid the costs of rehabilitation. With the inquiry hearing evidence from GDF Suez itself saying that rehabilitation could cost around $80 million, the $15 million bond is demonstrably inadequate.

The board acknowledged the various arguments on the amount of the rehabilitation bond but decided that recommending an appropriate balance between the competing interests was beyond its terms of reference.

What would not have been beyond their terms of reference, however, is to recommend that the Auditor-General’s office conduct an assessment of the potential financial liability on the public purse should GDF Suez, and other mine operators, fail to meet their obligations to rehabilitate the site. This is a significant weakness in the inquiry’s report.

Finally, while the inquiry did a fine job of conducting the hearings and unearthing the evidence, a noticeable theme in the recommendations is that the government and GDF Suez should review plans and plan reviews. In short, no guarantee of decisive action.

It was a rather hurried process (compared with the year-long Bushfires Royal Commission) with very limited resources. It can be difficult for such an inquiry to make explicit policy recommendations, beyond telling the bureaucracy to figure out how to do it better.

The problem with this lies in differing opinions about what is an appropriate outcome.

For context, the electricity grid operator, AEMO, is now saying that 2000MW of supply could be removed from Victoria immediately with no added risk of blackouts. Retirement of at least one large coal-fired power station in Victoria is, therefore, a question of ‘when’ – not ‘if’.

Yet through both its actions and words, the Napthine Government appears committed to supporting the coal industry through thick and thin, keeping its head in the sand on even the medium-term future of the industry.

'Recommendation Four' instructs the government to acquire the expertise to regulate coal mining but it is not clear that the government has the motivation to regulate properly, since that regulation may threaten the dominance of coal in Victoria's electricity supply.

With less than three months to the state election, rehabilitation will be a clear issue in the seat of Morwell. Anyone wanting to win the electorate – currently held by Nationals MP, and energy minister, Russell Northe – will need to assure the community that rehabilitation of mines will begin immediately, that no new coal mines will be approved (given the, now obvious, health effects) and that no stone will be left unturned to stop the long string of disasters at existing coal mines.

Dr Nicholas Aberle is Safe Climate campaign manager with Environment Victoria, a not-for-profit advocacy group. 

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