Legal Insights

Credit where credit is due: changes are coming to the NSW Biodiversity Offsets Scheme

Samantha Murphy
and James Townsend

• 30 August 2024 • 3 min read

Following the 2023 independent review of the Biodiversity Conservation Act 2016 (the BC Act), the NSW Government has introduced into Parliament the Biodiversity Conservation Amendment (Biodiversity Offsets Scheme) Bill 2024 (the Bill), proposing a number of amendments to the Act.

Background

Independent Review of the BC Act

On 24 August 2023, the independent review of the BC Act by an independent panel, led by Dr Ken Henry, (the Henry Review) was tabled in Parliament. The Henry Review concluded that the objects of the BC Act, despite having only been in operation for five years, were already obsolete, with the focus on the principles of ecologically sustainable development no longer fit for purpose. It found that:

‘the natural environment is now so damaged that we must commit to “nature positive” if we are to have any confidence that future generations will have the opportunity to be as well off as we are.’

According to the Henry Review, ‘nature positive’ means that the environment is repaired and regenerated, as opposed to sustainably managed which, until now, has focused on mitigating the rate of biodiversity loss. The Henry Review recommended fundamental legislative reform to deliver nature positive outcomes.

NSW Government’s Plan for Nature

The NSW Government released its response to the Henry Review on 17 July 2024, titled ‘NSW plan for nature’ (the Plan). The Plan embraced the goal of nature positive, stating that:

‘[w]e must go beyond the aim of halting loss to one of achieving overall ecosystem gains. Central to this is amending the BC Act to remake its objectives and operations…’

Reforms committed to under the Plan included broad reform of the Biodiversity Offsets Scheme (the Scheme) in the BC Act, to improve biodiversity outcomes.

Proposed amendments to the BC Act

Set out below are some of the key recommendations of the Henry Review, and the amendments proposed to the BC Act in response:

Net positive
- Henry Review Recommendations 11 and 12
  - The Scheme’s objective should be amended to deliver a net positive biodiversity outcome.
  - This should be achieved by reconsidering the way credit obligations are calculated, for example, by requiring developers to retire credits equal to 120% of the calculated biodiversity loss.
- Proposed amendment
  - The Minister would be required to develop a strategy to transition the Scheme to deliver net positive biodiversity outcomes.
  - The strategy would need to ‘specify the actions required and include targets and time frames for the transition’.
  - The strategy would need to be developed as soon as practicable and be published publicly and reviewed annually.
  - While it is possible that the strategy may include a strategy for requiring consent authorities to impose conditions requiring the retirement of more than the amount of credits that reflect the residual impact of a development, this is not currently a requirement that is proposed in the Bill.

Avoid, minimise, offset hierarchy
- Henry Review Recommendation 22:
  - The BC Act should be amended to require a standard of genuine and demonstrable steps to avoid and minimise biodiversity impacts.
- Proposed amendment:
  - The Bill proposes to insert a definition of the ‘avoid, minimise and offset hierarchy’, as requiring “all reasonable measures” to be taken to avoid, and then minimise the impacts of a development, before offsetting or compensating for any residual impact under the Scheme.
  - This hierarchy would be recognised as a ‘key element’ to the Scheme.
  - Biodiversity development assessment reports and biodiversity certification assessment reports would be required to assess ‘genuine measures’ that a proponent has taken, or proposes to take, to avoid and minimise the impact of a proposed development.
  - Regulations would be able to prescribe ‘assessment standards’ against which the genuine measures would be assessed. The biodiversity assessment method would also apply.

Payments to the Biodiversity Conservation Fund (Fund)
- Henry Review Recommendations 29-30:
  - Payment into the Fund (in satisfaction of an obligation to retire credits) should only be permitted where like-for-like credits are not readily available and a developer has demonstrated that they have undertaken genuine steps to source appropriate credits, but were unable to.
- Proposed amendment:
  - The Bill would enable the regulations to set out circumstances in which payment into the Fund, in lieu of the obligation to retire credits, will not be accepted. We will have to wait for the amended regulations to know the scope of these circumstances.

Scheme transparency
- Henry Review Recommendations 15, 34-36
  - Publicly-accessible registers should be established to track approvals, compliance with ongoing credit obligations and projects with serious and irreversible impacts.
- Proposed amendment
  - Public registers maintained under the BC Act would be expanded to include:
    - decisions to exemption certain development from the Scheme
    - decisions on certain development that is likely to have serious and irreversible impacts
    - approval conditions requiring biodiversity conservation measures (which includes the retirement of credits)
    - measures identified in a biodiversity development assessment report (or imposed as a condition of consent) to avoid and minimise the impact of a development.

Conclusion

There is no doubt that the Scheme is undergoing considerable change. However, many of the details are still not yet known, including:

the net positive strategy;
the standards that would apply in assessing genuine measures to avoid and minimise impacts (before offsetting); and
the circumstances in which payments to the Fund will no longer be accepted in satisfaction of an obligation to require credits.