Monitoring the environmental impacts of industry is a core function of government, and the vital work should be the responsibility not of an arm's-length agency but of the province itself, says Alberta Environment Minister Shannon Phillips.

The minister announced Tuesday the government will disband the Alberta Environmental Monitoring, Evaluation and Reporting Agency, created two years ago under the Conservatives.

Under the new system, the province will retain AEMERA's independent scientific review panel, but that panel, now headed by a chief scientist, will report directly to the department.

The panel will advise the chief scientist about what to monitor and how often to do so, and will report on its performance.

"In the past there have been questions about the credibility and transparency of this work," Phillips said. "Environmental monitoring will now take its place alongside public safety and public health as part of the core business of government."

Outsourcing the work created duplication and wasted money, said Phillips, who had some harsh words for the Tory government her party replaced last spring.

"Certainly, the previous government, there were many instances in which they didn't take these matters seriously at all," she said. "Which led, in many ways, to the tarnishing of our international reputation."

The announcement came hours after a review called AEMERA a "failed experiment" and said its work should be rolled back into the government.

The report said AEMERA was needlessly expensive, poorly co-ordinated and split by bureaucratic infighting.

"It is hard to escape the conclusion that AEMERA is a failed experiment in outsourcing a core responsibility of government to an arm's-length body," wrote report author Paul Boothe, director of the Lawrence National Centre for Policy and Management at Western University's Ivey School of Business.

"Three years and tens of millions of dollars later, the results are an organization that is still struggling to get established, dysfunctional relationships with its two key partners ... and a failure of all three parties to realize the promise of the ... plan to bring critically needed, world-class environmental monitoring to Alberta's oilsands."

New structure met with support

The agency was founded in 2012 after years of criticism about how Alberta was keeping track of the environmental impacts of the then-rapidly expanding oilsands.

The plan was to bring provincial scientists together with resources from Environment Canada to jointly co-ordinate the study of how the industry was affecting the region's air, land and water.

The Wildrose supports the government's move to dissolve the agency and bring environmental monitoring in-house again.

"I think what we want most is world class environmental monitoring," said Todd Loewen, environment critic for the Wildrose.

Liberal leader David Swann said he will have to wait and see whether the NDP is able to provide better transparency than the previous government.

"In the past government there was no credibility about what the government was doing in-house," Swann said. "It remains to be seen now whether this government will provide the credibility in-house."

PC leader Ric McIver, whose party created AEMERA, said during question period at the legislature that industry should not have to put money toward monitoring that is no longer arms-length.

"This is taxation without representation," he said.

Industry pays $50 million to the agency, while the province contributes another $28 million to fund the expansion of environmental monitoring across the province.

Phillips said that will not change under the new structure.

'Bureaucratic infighting'

The agency's research plans have been hailed as a dramatic improvement and numerous scientific papers have been published from its work. But Boothe, a former Environment Canada deputy minister, said the organization itself never gelled.

Boothe's report points out the funding agreement between government and industry expired a year ago and has never been renewed, "in part because of AEMERA's unwillingness to accept (Environment Canada) as an equal partner in oilsands monitoring."

How the agency was supposed to work with the provincial Environment Department and who it was accountable to was never made clear, he wrote.

The transfer of provincial scientists to the agency made it hard for the government to fulfil its other environmental responsibilities. The agency's reluctance to allow for a federal role restricted its use of Environment Canada resources.

Andrew Read, a policy analyst from the Pembina Institute, said even though AEMERA was considered arms-length, there was still political interference.

"Some of our concerns at the onset of AMERA was that there was still a check with the environment minister for the release of any environmental information," Read said. "That will not be the case in the future and that is a positive step."

A steep price

It also cost more than it should.

"In part, the higher costs come because its governance and administrative structures duplicate structures that already exist, at lower cost, in the public sector," wrote Boothe. "In addition, costs are higher because AEMERA has chosen private rather than public sector salary and benefit comparators."

Boothe outlined several options for Alberta Environment Minister Shannon Phillips. But his preferred path is to return the agency's work to her department with clear lines of accountability to the minister.

"This option has the benefit of consolidating scarce scientific expertise in one location in Alberta," he wrote. "The administrative structure of this option is likely to be the least costly to operate."

His concerns were presaged in February by a scientific peer review, which found the agency's work was poorly focused and co-ordinated. The Canadian Association of Petroleum Producers also expressed concerns about the need for more integration, analysis and coherence.

Boothe concluded the agency failed because it was based on a false belief that the public didn't trust Alberta's environmental monitoring because it was done by government. Instead, he said, the public didn't trust it because it was bad monitoring.

The new monitoring structure will be in place by summer 2016. The auditor general will review how it's working within two years.