Scientists and legal experts are raising alarm bells over federal government proposals to overhaul Australia's biodiversity offset system, warning they risk repeating catastrophic failures witnessed in New South Wales.
The Flawed Offset System
Environmental offsets allow developers to compensate for ecological damage caused by their projects by restoring habitat for affected species or ecosystems elsewhere. This balance-sheet approach was originally intended as a last resort after all avoidance and mitigation measures had been exhausted.
However, as revealed in Graeme Samuel's 2020 review of national environmental laws, offsets have become the default mechanism for approving developments with significant impacts on endangered species.
Rachel Walmsley, deputy director of policy and law reform at the Environmental Defenders Office, stated the proposals would replicate a flawed system at national level despite overwhelming evidence of problems in NSW and other jurisdictions.
NSW's Troubled Legacy
In NSW, developers can either secure offsets themselves, purchase credits on a biodiversity market, or pay into a fund managed by the Biodiversity Conservation Trust. A 2021 investigation by Guardian Australia exposed multiple failures in this system.
The state's auditor general found the government lacked any strategy to ensure the offset market delivered required environmental outcomes. Both the auditor and a parliamentary inquiry discovered that money paid into the trust fund was dramatically outpacing the supply of available offsets.
This created a situation where development harming nature continued, compensation money accumulated without being spent, and species moved closer to extinction.
Subsequent reviews by the NSW Independent Pricing and Regulatory Tribunal confirmed these findings, prompting the state government to limit circumstances where developers can use the payment fund.
Federal Reforms Under Scrutiny
The federal legislation includes establishing a restoration contributions fund where developers could pay money rather than finding suitable offset projects themselves. It would also overturn a ban on offsets in the federal nature market and relax like-for-like rules requiring environmental benefits for the same species harmed.
Dr Megan Evans from the University of NSW warned that pay-and-go offset schemes simply don't work. Development impacts continue to be approved while the state becomes liable for finding scarce, non-existent, or prohibitively expensive offsets.
Professor Brendan Wintle from the Biodiversity Council called the relaxation of like-for-like rules absurd, comparing it to trading koalas for land snails in Tasmania.
Another controversial provision would allow taxpayer funds to top up developer contributions when they fall short. Professor Martine Maron said this shifts the cost of environmental destruction from developers to the public.
Maron emphasised that some ecosystems and species are so endangered that offsetting becomes practically impossible, and the system should not facilitate further decline to irreversible levels.
While the Clean Energy Council supports the restoration fund for providing renewable energy developers with flexibility, critics argue the proposals fundamentally undermine environmental protection by making destruction easier to justify.
