The Invisible Hand. The force that leads to socially beneficial outcomes through the actions of selfish individuals... and it’s not the Jedi.
You can read Adam Smith's The Wealth of Nations to find out more, but in summary, the invisible hand is a metaphor for the interaction of self-interested individuals in a free market to produce what is socially necessary, even though they care only about themselves.
“The market will take care of it.”
Critics of the theory point out that markets are not perfect and, therefore, market intervention is a necessity. The contaminated land market is certainly not perfect, especially when the costs on the red side of the ledger are environmental and largely borne by the community, not by individuals. The pollution we deal with is rarely in your face; that stuff gets cleaned up before it does much damage.
Is it a good plan to rely on the market to achieve the best environmental outcomes?
The Queensland Government recognised the need for regulation of the management and use of contaminated land more than 30 years ago and more recently, to shift the cost of regulation from the general community to a user pays system, have implemented an independent certification framework. Independent certification is not an absence or deferral of regulation, it is just a different way of making it happen.
There are necessary ingredients for success
1. a trigger to use it,
2. a clear framework for the certification, and
3. a process for checking the certifiers and the system.
In theory, the ingredients are all there, but sadly over the past decade they have been gradually diluted, being replaced by that favourite filler [cheaper, easier] “the market will take care of it”.
State Government triggers for land development to enter the certification process have been watered down so much that they are rarely operable. Our estimate is less than 1 in 50 contaminated land investigations are independently reviewed and certified as meeting appropriate guidelines. Local governments attempt to fill the gaps and protect their communities, but they have no power or expertise with which to operate. We have a certification framework, but it's loose and open to interpretation. We have a system to check the checkers, but it's not transparent and enforcement action is scarce.
What does that mean for Queenslanders?
In dealing with contaminated land, the Queensland Government relies upon people doing the right thing and complying with their general environmental duty.
Who knows how that’s going (I wrote about self-regulation in another post here)? Pollution is hard to see, and it might only affect a few at some time in the future... there are rarely immediate consequences. Why pay now when someone else can pay in the future?
Some argue that the market will sort it out. Shonky operators will get caught out; their insurance premiums will put them out of business. That takes time and relies on the fact that someone has suffered a preventable loss. Premiums go up industry wide and we all lose.
I plan on digging into the metrics across Australia to see if Queensland’s system is healthy. We all operate in a similar market and the volume of transactions involving contaminated land must be similar, or perhaps there is something special about Queensland that means we don't need to be concerned with contamination?
I am a big believer in the government getting out of the way, but sometimes it makes sense, especially when a few profit and everyone else’s cost. Operable triggers, a clear, well-defined framework, and regular check-ups lead to a strong industry, high standards, and better outcomes for the 99.99% of Queenslanders who have no idea what we're talking about.
One of my favourite sayings is, “If things don’t change, they’ll stay the same.”. Seems obvious. You have to make change happen. Make a comment, spread the word, and speak to your local industry body like the QLD ACLCA to get involved.
Christian Atkinson is a contaminated land auditor and a suitably qualified person for contaminated land assessment in Queensland with more than 25 years of experience. Any discussion is general and does not consider your specific circumstances. If you are considering acting on any matters discussed, you should seek advice from qualified and experienced professionals.
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