Chapter 6
Conclusions and recommendations
Introduction
6.1
The use of environmental offsets to compensate for the environmental
impacts of activities and developments has become increasingly common in recent
years. They are now used at all levels of government in Australia. While not
specifically recognised in the Environment Protection and Biodiversity
Conservation Act 1999 (Cth) (EPBC Act), their use has evolved as an
administrative practice and they are now regularly included in the conditions
of approval for actions that are likely to have a significant impact on matters
of national environmental significance.[1]
6.2
There were differing perspectives on the suitability of environmental
offsets in evidence to the committee. While some submitters supported
environmental offsets as a means to facilitate development in an
environmentally responsible manner, others were concerned that it is a flawed
concept which is used to justify unsustainable developments. Other submitters were
supportive of the principles of environmental offsets but concerned about their
application in practice.
Projects listed at term of
reference (2)
6.3
The committee notes that its terms of reference canvassed a number of
particular projects as case studies in relation to environmental offsets. These
case studies are outlined in further detail in appendices 3–7 of this report. The
committee does not intend to comment on particular projects. Rather, these case
studies have been identified as illustrations of particular problems in
relation to the implementation of offsets where relevant.
The EPBC Act Offsets Policy
6.4
The EPBC Act Offsets Policy has been in place since October 2012 and
provides guidance to all stakeholders on how offsets are determined under the
EPBC Act. The committee acknowledges evidence that the policy has only been in
place for just over a year and, as such, it may be somewhat premature to be
reviewing its effectiveness. However, the committee notes that many submitters
and witnesses were generally supportive of the EPBC Act Offsets Policy and the
principles articulated in the policy.
6.5
The committee received evidence that the EPBC Act Offsets Policy and
accompanying Offsets Assessment Guide have clarified Commonwealth policy in
relation to offsets and made offsets calculations and assumptions more
transparent and predictable. As such, it appears that the policy is meeting its
aim of providing stakeholders with greater certainty and guidance. Indeed, the
committee considers that the EPBC Act Offsets Policy has resulted in substantial
improvements in the approach to offsets at the Commonwealth level.
6.6
The committee considers that environmental offsets are an important tool
in the environmental assessment framework to address the residual environmental
impacts of developments. Nevertheless, the committee is persuaded by evidence that
some aspects of the policy and its implementation could be improved. These are
set out in further detail below.
6.7
The committee further notes that the use of offsets and the associated
principles are currently only administratively based, rather than expressly
included in the EPBC Act itself. Given the evidence from the Department of the
Environment that the use of offsets has grown over the last decade, the committee
considers that the EPBC Act Offsets Policy principles should have a statutory
basis. This would ensure that the offsets principles are relevant
considerations for the minister in making decisions in relation to the
conditions of approval under the EPBC Act. The committee considers that this
will create an obligation on the minister to ensure that the principles are
more rigorously implemented.
Recommendation 1
6.8
The committee recommends that the Environment Protection and
Biodiversity Conservation Act 1999 be amended to expressly recognise environmental
offsets and to include the principles set out in the Environment Protection
and Biodiversity Conservation Act 1999 Environmental Offsets Policy as
relevant considerations for the minister in making decisions about conditions
of approval relating to offsets.
Additionality
6.9
The EPBC Act Offsets Policy requires offsets to be 'additional'—that is,
they must deliver a conservation gain—and activities that are already required
by law or agreed to under other schemes cannot be used to meet offsets under
the EPBC Act. In addition, a particular offset cannot be used for more than one
action, although it is appropriate to recognise state or territory offsets
under the EPBC Act for the same action.
6.10
However, the committee received several examples illustrating the
failure to apply the principle appropriately, such as offsets being used to
protect land that it is already protected as a park or nature reserve. The
committee finds it hard to see how this practice is delivering a conservation
gain. Rather, it is consistent with the EPBC Act Offsets Policy and has the
potential to undermine the objectives of the EPBC Act to promote the
conservation of biodiversity.
6.11
The committee agrees with suggestions that the EPBC Act Offsets Policy
could be revised to provide further clarity on the principle of additionality,
and to ensure that areas are not being used as offsets if they are already protected
under existing conservation legislation or agreements.
Recommendation 2
6.12
The committee recommends that the Environment Protection and
Biodiversity Conservation Act 1999 Environmental Offsets Policy be revised
to provide further clarity on the principle of additionality.
Recommendation 3
6.13
The committee recommends that the Department of the Environment ensure
that all offsets adequately reflect the principles of additionality, and are
not granted in relation to areas that are already protected under existing
Commonwealth, state or territory legislation or policy.
Offsets as a last resort: the
mitigation hierarchy
6.14
The committee agrees that environmental offsets must be used only as an
absolute last resort. The Department of the Environment advised that, under the
EPBC Act Offsets Policy, prior to the granting of environmental offsets, 'all
reasonable steps should first be taken to avoid and then mitigate adverse
impacts on the environment'.[2]
However, the committee was concerned by evidence that this mitigation hierarchy
is not being rigorously applied and that there is insufficient emphasis on
avoidance and mitigation measures.
6.15
Clearly, offsets should be a last resort and the mitigation hierarchy
needs to continue to be rigorously followed. The committee considers that its
recommendation above for offsets principles to be explicitly recognised in the
EPBC Act should assist in this regard.
Recommendation 4
6.16
The committee recommends that offsets be used only as a last resort.
Recommendation 5
6.17
The committee recommends that, prior to approval being given for actions
under the Environment Protection and Biodiversity Conservation Act 1999,
the mitigation hierarchy be rigorously implemented, with a greater emphasis on
avoidance and mitigation.
Unacceptable impacts
6.18
In addition to a strong emphasis on avoiding and mitigating impacts of
development, the committee considers that offsets should not be used as an excuse
to allow developments in all circumstances. The committee notes that the EPBC
Act Offsets Policy states that 'offsets do not mean proposals with unacceptable
impacts will be approved'.[3]
6.19
However, there was ample evidence to the committee that this is not
always the case. As a consequence, submitters and witnesses called for greater
guidance on situations when offsetting will not be appropriate and
clarification on what is considered to be an 'unacceptable impact'. It was
suggested that some matters are irreplaceable and, as such, there should be
some clear 'red flags' or 'no go' areas where offsetting is not an appropriate
strategy.
6.20
The committee is persuaded by the argument that offsets should be
unavailable in some circumstances; for example, where the impacted matter is listed
as critically endangered, or within a world heritage area.
Recommendation 6
6.21
The committee recommends that the Environment Protection and
Biodiversity Conservation Act 1999 Environmental Offsets Policy be revised
to provide greater guidance on developments in which offsets are unacceptable,
including a list of 'red flag' areas, such as world heritage and critically
endangered ecological communities and species.
Timing of offsets and approval
conditions
6.22
The committee is also concerned by evidence that approvals are being
given under the EPBC Act that include offsets that are not properly identified.
The committee recognises that it can take some time to ensure that legal
mechanisms are in place to secure offsets. However, the committee heard that it
is an increasingly common practice for the conditions placed on approvals to
require the proponent to develop an offsets plan or strategy, rather than requiring
the delivery of the offsets themselves.
6.23
The department gave evidence that such plans and strategies are required
to be developed prior to commencement of any development activities. However,
the case studies examined by this committee, such as the Galilee Coal
Project—where an offsets management plan was required 12 months after
commencement—demonstrate that this is not always the case. Further, the
committee heard that conditions of approval are being varied where offsets are
unavailable or unable to be secured.
6.24
The committee considers that this approach effectively excludes public
participation in the process of assessing and developing offsets. The committee
is also concerned that this approach could hamper the ability to enforce
conditions relating to the actual delivery of offsets. The committee was
concerned to hear that offsets plans and strategies are not always made
publicly available, compounding concerns about the lack of transparency in
relation to offsets.
6.25
The committee considers that it is imperative for offsets to be properly
and fully identified prior to approval being given for the particular activity.
Recommendation 7
6.26
The committee recommends that environmental offsets related to any
particular development or activity should be clearly identified prior to
approval being given for that development or activity.
Transparency
6.27
The EPBC Act Offsets Policy states that, in assessing the suitability of
an offset, government decision-making should be 'conducted in a consistent and
transparent manner'.[4]
The committee acknowledges evidence that the publication of the EPBC Act
Offsets Policy and accompanying Assessment Guide has greatly improved the
transparency of offsets at the Commonwealth level.
6.28
Nevertheless, the committee heard that there could be improved
transparency and public consultation and reporting in the development and
implementation of offsets. The committee welcomes the department's evidence
that it has been working with the Indigenous Advisory Committee to improve
consultation with Indigenous Australians about the delivery and appropriate use
of offsets.
6.29
The committee notes that there is opportunity for public participation
at various stages of the assessment process, and that information relating to
offsets is often included in assessment documentation. However, it appears that
the final stages of the process are often lacking in transparency.
6.30
The committee notes the frustration of stakeholders who gave evidence
that offsets plans are not being made publicly available and, indeed, are often
developed through closed-door negotiations between proponents and the department.
The committee considers that its recommendation above for environmental offsets
to be clearly identified prior to approval should assist in this regard.
However, the committee also strongly recommends that all environmental offsets
plans and strategies that have been, or are in future, required as part of the
conditions of approval under the EPBC Act be published on the Department of the
Environment's website.
Recommendation 8
6.31
The committee recommends that all environmental offsets plans and
strategies, required as part of the conditions of approval under the Environment
Protection and Biodiversity Conservation Act 1999, be published on the
Department of the Environment's website.
Transparency: Public register of
offsets
6.32
The EPBC Act Offsets Policy expressly provides for offsets to be
registered and information in relation to those offsets to be made publicly
available on the Department of the Environment's website. However, the
committee was troubled to hear from the department that the development of this
public register of offsets has been delayed. The committee considers that
there is an urgent need for a public register of offsets in order to improve transparency
and monitoring of offsets. A public register of offsets would also assist in
providing greater accountability and scrutiny in relation to offsets
decision-making.
6.33
The committee recommends that the Department of the Environment
prioritise the development of a publicly available nationally coordinated
register of offsets. This should, as a minimum, include offsets granted under
the EPBC Act and in time should be extended to include offsets granted under
state and territory regimes. The committee therefore considers that the department
should be working with states and territories towards the development of one
nationally coordinated register of all offsets granted around Australia. However,
the committee notes that it is unclear how this might be achieved under the
so-called 'one stop shop' proposal, whereby national environmental
responsibilities are proposed to be devolved to the states and territories.
Recommendation 9
6.34
The committee recommends that the Department of the Environment expedite
the development of a publicly available nationally coordinated register of environmental
offsets.
Methods for assessing and
calculating offsets
6.35
The EPBC Act Offsets Policy states that, in assessing the suitability of
an offset, government decision-making will be 'informed by scientifically
robust information and incorporate the precautionary principle in the absence
of scientific certainty'.[5]
6.36
The committee notes the department's evidence that the EPBC Act Offsets
Policy and accompanying guide are based on the best available science.
Nevertheless, concerns were raised that there may be some weaknesses in terms
of the science underpinning the calculation and assessment of offsets. In
particular, the committee recognises the concerns as to the application of
offsets in the marine environment. The committee therefore suggests that the department
give consideration to developing a separate offsets policy in relation to the
marine environment. In the meantime, the committee considers that offsets for
developments in the marine environment should only be used in limited
circumstances and with full consideration of the precautionary principle.
Recommendation 10
6.37
The committee recommends that the Department of the Environment develop a
separate offsets policy in relation to the marine environment.
6.38
The committee notes concerns about the independence of scientific advice
and information underpinning the assessment process, including the calculation
of offsets. The committee therefore considers that the department's role is
critical in this regard. In particular, information and calculations relating
to offsets need to be carefully verified by the department.
Recommendation 11
6.39
The committee recommends that the Department of the Environment
carefully verify all calculations and information provided by proponents in
relation to environmental offsets.
6.40
The committee notes that the EPBC Act Offsets Policy and Offsets
Assessment Guide were scheduled to undergo a technical review one year from
release—that is, in October 2013. However, the department advised that this
technical review had been 'temporarily delayed' to allow consideration in
relation to the 'one stop shop' policy.
6.41
The committee considers that this technical review should be commenced as
soon as possible and finalised and made publicly available by the end of this
year. The committee suggests that this technical review consider the evidence
provided to this committee in relation to potential weaknesses in the Offsets
Assessment Guide.
Recommendation 12
6.42
The committee recommends that the scheduled technical review of the Environment
Protection and Biodiversity Conservation Act 1999 Offsets Policy be
commenced as soon as possible. The technical review should be made publicly
available and should consider evidence provided to this committee in relation
to the Offsets Assessment Guide.
Use of indirect offsets
6.43
The committee acknowledges the department's evidence that the use of indirect
offsets, or 'other compensatory measures' such as research or education
programs, has evolved over the course of the implementation of the EPBC Act.
The committee acknowledges evidence that the use of indirect offsets should be
strictly limited and notes that the EPBC Act Offsets Policy states that 'a
minimum of 90 per cent of the offset requirements for any given impact must be
met through direct offsets'.[6]
6.44
The committee supports the use of other compensatory measures in limited
circumstances and notes that the department's evidence that its use is
appropriate in some cases. The committee further considers that the approach in
relation to 'indirect' offsets has greatly improved under the EPBC Act Offsets
Policy. The committee considers that the EPBC Act Offsets Policy in relation to
the use of indirect offsets provides sufficient flexibility and is broadly
appropriate.
6.45
At the same time, the committee recognises the importance of the
principle of 'like for like' in the context of offsetting. That is, the
environmental values of offset sites should be equivalent to the environmental
values being impacted upon by a proposed action. Although the EPBC Act Offsets
Policy incorporates a requirement that offsets target the specific matter of
national environmental significance being impacted upon, the committee
considers that care should be taken to fully consider the specific attributes
of the protected matter to ensure that offsets are truly equivalent.
Monitoring and compliance
6.46
The committee was concerned to hear evidence that there appears to be insufficient
monitoring and compliance in relation to offsets. The department reported that
it conducts annual audits of compliance with EPBC approval conditions,
including conditions relating to offsets. However, the committee notes that
these audit reports only involve a small percentage of projects each year. The
committee considers that the department's auditing program should be expanded. The
committee notes that its recommendation above in relation to the public
register of offsets should improve the ability to monitor compliance in
relation to offsets.
6.47
The committee recognises the need for the Department of the Environment
to have sufficient resources and staffing to conduct rigorous monitoring of
compliance with the EPBC Act, including with offsets conditions under EPBC Act
approvals. The committee notes that a recent independent review found a number
of problems with compliance monitoring in relation to conditions of approval by
the Department of the Environment. The report recommended that the increased
resourcing being applied to monitoring and compliance be maintained as a matter
of priority.[7]
The committee endorses this recommendation, but is concerned as to whether this
can be achieved given the recent cuts to staffing in the Department of the
Environment.
6.48
The committee also notes that the Australian National Audit Office
(ANAO) has undertaken an audit looking into compliance and monitoring of
conditions of approval in relation to the EPBC Act. This audit follows on from
this committee's recommendations in its threatened species report in August
2013. The committee has examined the ANAO's findings in this regard with great
interest and notes that the ANAO has made a number of recommendations designed
to address shortcomings in the Department of the Environment's compliance
monitoring activities.
Recommendation 13
6.49
The committee recommends that resource and staffing levels within the
Department of the Environment should be sufficient to ensure adequate
monitoring capacity in relation to approvals of conditions under the Environment
Protection and Biodiversity Conservation Act 1999, including conditions
relating to offsets.
Evaluation of offsets
6.50
The committee considers that, while it is important to ensure compliance
with the conditions of approval relating to offsets, there is also a need to
evaluate whether offsets are achieving their intended outcomes. Unfortunately,
it appears to the committee that there is little evidence to indicate whether
offsets are effective.
6.51
The committee recognises that, in many cases, it may be too early to evaluate
the success or otherwise of individual offsets. The committee also acknowledges
the difficulties inherent in evaluating the effectiveness of offsets, including
the long time‑frames and uncertainties involved. In any case, it appears
that little or no attempts are being made to conduct any such evaluation.
6.52
The department advised that its focus at this stage is on compliance
with conditions under the EPBC Act, including those relating to offsets. However,
the committee considers that the department should extend its focus to
evaluating the impact and progress of offsets granted as conditions of approval
under the EPBC Act in achieving their intended environmental outcomes. The
committee suggests that the scheduled five-year review of the EPBC Act Offsets
Policy include consideration and an evaluation of the extent to which offsets
are achieving positive environmental outcomes.
Recommendation 14
6.53
The committee recommends that the Department of the Environment's
compliance audit program be extended to include an evaluation of the progress
of offsets granted as conditions of approval under the Environment
Protection and Biodiversity Conservation Act 1999 in achieving their
intended environmental outcomes.
Recommendation 15
6.54
The committee recommends that the scheduled five-year review of the Environment
Protection and Biodiversity Conservation Act 1999 Offsets Policy include
consideration and evaluation of the extent to which offsets are achieving
positive environmental outcomes.
Security of offsets
6.55
In terms of security of offsets, the committee supports the principle
that offsets should be protected in perpetuity. It is therefore imperative to
ensure that offsets have legal and financial security into the future.
Legal security of offsets
6.56
The committee notes that various legal mechanisms such as conservation
agreements and conservation covenants are being used to secure offsets under
the EPBC Act. However, the committee heard that conservation agreements or
conservation covenants do not provide sufficient protection as they can still
be subject to mining exploration and extraction activities in the future.
6.57
Indeed, the committee was somewhat disturbed to receive numerous
examples of developments on areas that were supposed to be 'secure', whether as
offsets or under another type of conservation protection. The committee was
concerned about evidence that in most, if not all, jurisdictions in Australia,
there is no secure mechanism available for the 'in perpetuity' protection
of offset areas on private land. The committee also heard that long-term
protection of offsets is not always legally possible unless the offset is on
public land and/or receives national park status. The committee recognises that
this will not be practical in many circumstances.
6.58
The committee recognises that legal mechanisms, such as conservation
covenants, are generally administered at the state and territory level. The
committee also acknowledges the department's evidence that where a protective
mechanism may be insufficient, this reduces the potential suitability of the
offset, and may increase the magnitude of the offsets required. Nevertheless,
it seems to the committee that improved legal mechanisms are required to ensure
that offsets are actually secured in perpetuity.
Recommendation 16
6.59
The committee recommends that the Department of the Environment reviews
the mechanisms for securing offsets under the Environment Protection and
Biodiversity Conservation Act 1999 with a view to ensuring that the
strongest possible legal mechanisms are used or developed, if required, to
secure offsets in perpetuity.
6.60
The committee also notes that the Commonwealth EPBC Act Offsets Policy
explicitly provides for the possibility of development which impacts on
existing offsets.[8]
However, the committee was troubled to hear of examples of offsets being
developed that resulted in subsequent offsets, themselves.
6.61
The committee notes evidence from the Department of the Environment that,
if an offset is subject to future development, there is a substantially increased
offset obligation for that subsequent activity. Nevertheless, the committee
considers that this approach, whereby an offset can itself be offset, appears
to undermine the principle that offsets should be protected in perpetuity. The
committee therefore recommends that the EPBC Act Offsets Policy be amended to
clarify that offsets need to be protected in perpetuity and should not be
subject to future development.
Recommendation 17
6.62
The committee recommends that the Department of the Environment revise
the Environment Protection and Biodiversity Conservation Act 1999 Offsets
Policy to clarify that offsets need to be protected in perpetuity and
should not be subject to future development.
Financial security of offsets
6.63
In addition, the committee notes the importance of secure funding for
the future management of offset areas. The committee therefore suggests that
the Department of the Environment consider including requirements for suitable
funding mechanisms in conditions of approval relating to offsets. This could
include bonds, paid for by the proponent, to support the financial viability of
the offset such as funding for ongoing management activities in relation to the
offset. This is a particularly important issue where the management of an
offset area is transferred to a state or territory government.
Recommendation 18
6.64
The committee recommends that the Department of the Environment include
requirements in conditions of approval under the Environment Protection and
Biodiversity Conservation Act 1999 for the secure funding of the future
management of offset areas.
Enforcement of offsets
6.65
The committee notes that concerns were raised as to whether penalties
and enforcement in relation to offset conditions are sufficient. The committee
notes the evidence from the Department of the Environment that there are substantial
penalties—which have
been applied in some cases—for
breaching the conditions of an approval under the EPBC Act, including
conditions relating to offsets.
6.66
However, the committee notes the concerns raised that approval
conditions are being varied on a regular basis in cases where offsets
conditions have not been met. At the same time, support was expressed by
industry groups for the flexibility to modify offset conditions, where needed. The
committee considers that the provisions allowing conditions of approval
relating to offsets to be varied should be used sparingly and only in limited
circumstances.
Strategic approaches and advanced
offsets
6.67
The committee notes concerns that the approach to offsets is somewhat
piecemeal given that they are often considered on a case-by-case or
project-by-project basis. As such, the committee heard that offsets do not
effectively manage the cumulative impacts of multiple developments. The
committee recognises calls for a more strategic approach to the identification
and delivery of offsets.
6.68
The committee also received evidence that there should be greater moves
towards the use of 'advanced offsets', whereby offsets are identified and
secured in advance of particular developments. Although the EPBC Act Offsets
Policy purportedly encourages the use of advanced offsets, the committee
received little evidence to indicate that this is occurring in practice. The
committee considers that advanced offsets provide a good opportunity for a more
strategic approach to offsets and that their use should indeed be encouraged. This
could include, for example, greater use of the BioBanking schemes that are
available in some states.
Recommendation 19
6.69
The committee recommends that the Department of the Environment examine
and review options to ensure a more strategic approach to offsets, including
encouraging greater use of 'advanced offsets'.
National consistency in relation to
offsets
6.70
This inquiry has focussed on Commonwealth policies and regulation
relating to offsets, particularly the EPBC Act and its processes. However,
offsets are also in regular use at the state, territory and local government
level in Australia and these regimes are increasingly relevant at the
Commonwealth level given that the Australian Government is committed to
delivering a 'one stop shop' by accrediting state and territory environmental
approval processes.
6.71
The committee recognises the need for greater consistency between
Commonwealth, state and territory offset regimes. The committee also agrees
with the suggestion that there should be one consistent, rigorous national
standard governing environmental offsets, and considers that the EPBC Act
Offsets Policy provides a good template for this standard.
6.72
However, the committee is concerned as to how a consistent national
standard can be achieved, given the Australian Government's current 'one stop
shop' proposal to accredit state and territory planning processes under the
EPBC Act. The committee notes the department's evidence that any offsets
delivered through an accredited process must be consistent with either the EPBC
Act Offsets Policy, or another policy accredited by the minister as achieving
the objects of the EPBC Act to an equivalent or better level. However, the
committee considers that the relevant state and territory standards and
legislation should meet the national offsets standard, not merely be accredited
as meeting the objects of the EPBC Act.
6.73
The committee is further concerned that the delegation of approval
powers to the states could actually exacerbate the reported lack of consistency
in the context of offsets. The committee has grave concerns about the Australian
Government's 'one stop shop' proposal, and particularly the evidence that the proposal
may actually increase the complexity of processes. Further, the committee
considers that it is inappropriate for the Commonwealth to be devolving its responsibilities
for matters of national environmental significance to the state and
territories.
Recommendation 20
6.74
The committee recommends that a consistent national standard be
developed in relation to environmental offsets based on the Environment
Protection and Biodiversity Conservation Act 1999 Offsets Policy.
Recommendation 21
6.75
The committee recommends that the Australian Government not accredit
state and territory approval processes under the Environment Protection and
Biodiversity Conservation Act 1999.
Senator the Hon Lin Thorp
Chair
Navigation: Previous Page | Contents | Next Page