This Digest is prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments.
This Digest was available from 25 June 1996
Date Introduced: 19 June 1996
House: House of Representatives
Portfolio: Environment, Sport and
Commencement: Royal Assent
To establish a Natural Heritage Trust of Australia Reserve, with
some of the proceeds of the partial privatisation of Telstra, which
will fund certain environmental projects.
The environment provides social, economic, scientific, cultural,
recreational and aesthetic benefits to all humans. Environmental
issues have continued to grow in importance and prominence, with
problems such as Climate Change, Ozone Depletion, Deforestation,
Salinity and loss of Biodiversity finding their way on to the
international and domestic political agenda. Environmental problems
are a concern of humankind because Earth has only one air system
and one water system and therefore, eventually, all environmental
problems affect all people.
Australia is a party to a number of international instruments
that attempt to protect aspects of the environment from further
destruction. These include:
- Convention for the Protection of the Ozone Layer
- Convention on Biological Diversity
- Convention on the International Trade in Endangered Species of
Wild Flora and Fauna (CITES)
- Convention on the Transboundary Movement of Hazardous Wastes
and their Disposal
- Convention on the Law of the Sea
- World Heritage Convention
- Framework Convention on Climate Change
- Convention to Combat Desertification
- Convention on Wetlands of International Importance especially
as Waterfowl Habitat (Ramsar)
Australia has obligations under international law (by virtue of
being a party to the above treaties) to protect and conserve the
environment and to utilise environmental resources in a sustainable
manner. The international law recognises a concept of
intergenerational equity, in that future generations have a right
to inherit an environment that is at least as good as the one that
we are living in and that meets their economic, social, cultural,
recreational and aesthetic needs.
Australia's environment is unique and Australia is the only
developed megadiverse country in the world. Aspects of Australia's
influence in environmental protection have received international
praise. For example, the International Association for Impact
Assessment presented the federal Environment Protection Agency with
its 1995-96 institutional award of excellence for 'demonstrated
leadership in, and commitment to, environmental assessment'.(1)
However, Australia has not always had an exemplary environmental
record. For example, Australia failed to meet the agreed timetable
for interim measures to reduce greenhouse gas emissions (to limit
emissions to 1990 levels by the year 2000) under the Climate Change
Convention. This is due in part to the fact that Australia relies
heavily upon fossil fuels. Nevertheless, Australia's greenhouse
emissions record on a per capita basis has been claimed to be the
worst in the world(2).
Even though Australia was one of the countries instrumental in
bringing the Biodiversity Convention into existence, in practise
Australia has a poor record on loss of biodiversity. Of Australia's
258 known species of mammal, already 138 species are either
extinct, endangered or potentially vulnerable(3).
In the pre-election policy document entitled 'Saving our Natural
Heritage', it was announced that:
- A Coalition government will establish a $1 billion Natural
Heritage Trust of Australia which will be devoted to protecting and
rehabilitating Australia's natural environment; and
- This Trust will integrate the joint interests of environmental
protection and sustainable development(4).
The document went on to announce funding measures in the order
- $318 million over five years to the National Vegetation
- $32 million over five years to the National Land and Water
- $163 million over five years to the Murray Darling 2001
- $85 million over five years to the National Rivercare
- $100 million over four years to the Coasts and Clean Seas
- $80 million over four years to the National Reserve System to
preserve Australia's biodiversity(5)
In addition, smaller financial commitments were made to programs
such as the National Wetlands Program, the Endangered Species
Program, the World Heritage areas, the National Weed Strategy,
waste management programs and measures designed to combat air
pollution. Commitments were also made, among other things, to the
implementation of the National Forest Policy Statement and to the
phasing out of export woodchips from areas other than Regional
Forest Agreement areas by the year 2000(6).
The initial funding for the Natural Heritage Trust of Australia
is to come from the proceeds of the partial privatisation of
Telstra. The Telstra (Dilution of Public Ownership) Bill
1996 was introduced into the House of Representatives on 2 May
1996 and passed on 9 May 1996. It was introduced into the Senate on
9 May 1996 and has been referred to the
Environment, Recreation, Communications and the Arts References
inquiry and report by 22 August 1996.
During the election campaign preceding the 2 March 1996
election, the then Opposition Leader Mr John Howard MP confirmed
that a Coalition Government would not provide additional funds to
pay for its $1.15 billion environment policy if the Parliament
refused to approve the one-third sale of Telstra.(7)
Clause 4 of the Bill establishes the Natural
Heritage Trust of Australia Reserve.
Clause 5 declares the Natural Heritage Trust to
be a component of the Reserved Money Fund after the Financial
Management and Accountability Act 1996 commences. At the time
of writing this digest, that proposed legislation had not been
introduced. If the proposed legislation does not commence then the
Reserve is established as a trust account under the Audit Act
Clause 6 requires unused money in the Reserve
to be invested and the proceeds of any investment to be paid into
the Consolidated Revenue Fund. An amount equal to the amount paid
into Consolidated Revenue is then transferred to the Reserve. This
is consistent with section 81 of the Constitution which reads:
All revenues or moneys raised or received by the Executive
Government of the Commonwealth shall form one Consolidated Revenue
Fund, to be appropriated for the purposes of the Commonwealth in
the manner and subject to the charges and liabilities imposed by
Clause 8 lists the purposes of the Reserve as
supporting specific projects (for example the Murray-Darling 2001
Project) and other more generic matters such as 'environmental
protection', 'sustainable agriculture' and 'natural resources
management'. These are defined in the proposed sections 15-17
Clause 9 restricts the use of money in the
Reserve that originated from the partial privatisation of Telstra
to five projects only: the National Vegetation Initiative, the
Murray-Darling 2001 Project, the National Land and Water Resources
Audit, the National Reserve System and the Coasts and Clean Seas
Initiative or any matter ancillary or incidental to those
This means that donations, further appropriations to the fund,
if any, and interest earned upon investments (or on the existing
money) transferred back from the Consolidated Revenue Fund may be
applied to the other purposes. Although there is nothing in the
proposed legislation that obliges money to be spent upon a
Clauses 10-14 inclusive specify the primary
objectives of the five major projects that the Reserve designates
as its purposes to fund. Briefly, these include:
- the National Vegetation Initiative - which aims to conserve
native vegetation and biodiversity, and by the means of
revegetation, restoring degraded land and water;
- the Murray-Darling 2001 Project - which aims to restore the
Murray-Darling Basin to achieve a sustainable resource for the
natural systems and communities surrounding it;
- the National Land and Water Resources Audit - which aims to
estimate the direct and indirect effects of land and water
degradation on the Australian economy and on the quality of the
Australian environment. Such estimates will help establish a
baseline to assess the efficacy of land and water restoration
- the National Reserve System - this implements part of the
Convention on Biological Diversity by setting aside areas that
protect and maintain biological resources, ecosystems and viable
populations of natural species in their native habitat; and
- the Coasts and Clean Seas Initiative - which aims to protect
marine biodiversity and protect coastal areas from pollution and
other environmental threats. Another aim is to develop an oceans
policy for Australia.
Clauses 15-17 detail the other projects that
the Bill will allow Reserve moneys (other than those moneys
specifically received from the sale of shares in Telstra) to be
directed to. These include:
- environmental protection - the maintenance, conservation and
preservation of the natural environment, biodiversity and the
minimisation of waste production (including preventing or combating
pollution) and research into the Australian natural environment and
biodiversity, etc; The clause does not expressly provide for
research into pollution or waste minimisation or disposal.
- sustainable agriculture - the promotion of agricultural
practices that are economically, socially and ecologically viable.
This includes the sustainable use of Australia's biodiversity.
- natural resources management - which includes the use of soil,
water and vegetation and activities concerned with the development
or conservation of those resources. Unlike the preceding clauses,
Clause 17 does not refer to 'sustainable use' of the natural
resources like water. Neither does it make any mention of
encouraging 'environmental best practice' or like concepts.
Clause 18 sets out certain payments from the
Reserve that are authorised under paragraph 8K. These include, for
example, payments under the Rural Adjustment Act 1992
provided that they are connected with property management planning
in relation to a farm unit.
Clause 19 inserts a requirement that prior to
any amount being debited from the Reserve and given to a State,
there must be a written agreement between the Commonwealth and the
State. The two Ministers given authority to sign such an agreement
on behalf of the Commonwealth are the Minister for Environment,
Sport and Territories and the Minister for Primary Industries and
Clause 20 is similar to Clause 19 in that it
requires a written agreement between the Commonwealth and a person
or other body (other than a State), prior to the grant of financial
assistance being given from the Reserve.
Clause 21 requires the Minister deciding to
spend money from the Reserve to have regard to the principles of
ecologically sustainable development and 'such other matters as the
Minister concerned considers relevant'.
Proposed subsection 21(3) defines the
principles of ecologically sustainable development. Among them are
the notion of intergenerational equity, the need to protect
biological diversity and maintain essential ecological processes
and life-support systems. In determining the application of the
principles, a number of guidelines are to be followed, including
that where there is a threat of serious or irreversible damage to
the environment, the lack of full scientific certainty can not be
relied upon to postpone or prevent action being taken to protect
the environment. This is a rule of customary international law as
The proposed Part 4 deals with the financial
aspects of the Reserve.
Clause 22 transfers the first $1 billion
dollars received from the sale of shares in Telstra to the Reserve.
Should less than $1 billion dollars be received then obviously the
Reserve will receive only the amount accrued.
Clauses 23 and 24 allow for budget
appropriations, gifts and bequests to be added to the Reserve.
Clause 25 provides that if a grant of financial
assistance had been made from the Reserve and is repaid or
partially repaid, the repayment will be transferred back into the
Reserve. Similarly, Clause 26 provides for moneys
repaid under a written agreement to be transferred back into the
Clauses 27 to 29 inclusive are all similar
again in that money earned from Reserve money (whether by way of
income or asset disposal or other related projects) must be
transferred from the Consolidated Revenue Fund to the Reserve.
Clause 30 establishes the Natural Heritage
Board comprising the Minister for Environment, Sport and
Territories and the Minister for Primary Industries and Energy. The
proposed section requires the Ministers to consult with each other
on any decision about spending or investing the Reserve money, in
any decision to make a recommendation to the Governor-General about
regulations or otherwise under a law that relates to the
One of the functions that the Ministers must do is to prepare
estimates in accordance with clause 31. The
estimates of debits are to be prepared for each financial year (or
other period that the Ministers acting as the Natural Heritage
Board determine). The object of this process is to manage an
investment strategy for the Reserve and subclause
31(4) provides that money can not be debited from the
Reserve other than in accordance with the estimates.
There is no mechanism for ensuring that all the listed projects
will be funded and the priority of funding is left to the
Ministerial discretion of the two Ministers named.
Proposed section 32 provides that the Reserve
must have a minimum balance (and provides a formula for calculating
the minimum) for each financial year after 1 July 2001. The base
amount is 30% of the amount provided by the sale of shares in
Telstra - a maximum of 30% of $1 billion. That amount is not
indexed prior to 1 July 2001 but there is a formula for indexing it
for each subsequent year.
Proposed section 33 requires an annual report
to be prepared each year in the usual manner.
Proposed section 34 provides that financial
statements must be provided to the Auditor-General and sets out the
actions the Auditor-General must take.
Proposed section 35 provides that the Minister
for Environment, Sport and Territories may delegate to the
Secretary of the Department or to the Director of National Parks
and Wildlife or to other SES officers any of his or her powers
other than the ones under proposed sections 30-31 (ie the estimates
and spending decisions).
Clause 37 prevents gifts or bequests to the
Reserve from being conditionally bestowed. For example, an
environmental organisation or an individual wishing to donate to
the Reserve could not specify that they wanted their donation to be
put towards the Murray-Darling Project 2001.
In order for such gifts or donations to be tax deductible, an
amendment would be necessary to the Income Tax Assessment Act
Clause 39 provides that moneys debited from the
Reserve are included within definitions used in other legislation.
For example, the Rural Adjustment Act 1992 in section
21(1) requires that payments by the Commonwealth to a State must be
done 'out of money appropriated by the Parliament for the purpose'.
However, item 39 proposes to include moneys debited from the
Reserve within this definition.
The Rural Adjustment Act 1992 is designed to promote 'a
better financial, technical and management performance from the
farm sector' among other objectives. Sustainability is referred to
in the Rural Adjustment Act 1992 but in the sense of
sustained productivity and competitiveness rather than
Clauses 40-42 provide that the Governor-General
may make regulations under the Act and establish the transitional
guidelines. An example being that all the expenses of investment of
money in the Reserve are to debited from the Reserve.
(1). Press Release of Senator the Hon Robert Hill 23 June
(2). The Impact of "Greenhouse 21C": An Assessment of the
Federal Government's Greenhouse Plan of Action (3 April 1995)
The Australia Institute.
(3). Kennedy, M. What Future for Australia's Endangered
Mammals (1990) 27 Wildlife Australia 3-5.
(4). p1 Saving our Natural Heritage.
(5). Ibid p1-2.
(6). Ibid p2.
(7). AAP 25 February 1996.
Susan Downing ph 06 277 2784
Bills Digest Service
Parliamentary Research Service
This Digest does not have any official legal status. Other
sources should be consulted to determine whether the Bill has been
enacted and, if so, whether the subsequent Act reflects further
PRS staff are available to discuss the paper's contents
with Senators and Members and their staff but not with members of
© Commonwealth of Australia 1996
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Last updated: 25 June 1996
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