Bills Digest 110 1995-96 Natural Heritage Trust of Australia Bill 1996

Numerical Index | Alphabetical Index

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


Passage History

Date Introduced: 19 June 1996
House: House of Representatives
Portfolio: Environment, Sport and Territories
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 of:

  • $318 million over five years to the National Vegetation Initiative
  • $32 million over five years to the National Land and Water Resources Audit
  • $163 million over five years to the Murray Darling 2001 project
  • $85 million over five years to the National Rivercare Initiative
  • $100 million over four years to the Coasts and Clean Seas Initiative
  • $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 Committee for
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)

Main Provisions

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 1901.

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 this Constitution.

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 respectively.

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 projects.

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 particular purpose.

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 programs;
  • 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 Energy.

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 well.

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 Reserve.

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.

Part 5

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 Reserve.

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 1936.

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 environmental sustainability.

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 1996.

(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.

Contact Officer and Copyright Details

Susan Downing ph 06 277 2784
25 June
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 amendments.

PRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

ISSN 1323-9032
© Commonwealth of Australia 1996

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1996.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 25 June 1996

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