Offsets have the potential to aid environmental restoration, but the current EPBC Act environmental offsets policy (DSEWPAC 2012) contributes to environmental decline rather than active restoration. The EPBC Act environmental offsets policy has major shortcomings in both its design and implementation.
The ‘avoid, mitigate, offset’ hierarchy is a stated intent of the policy. This is not how the policy has been applied in practice. Proponents see offsets as something to be negotiated from the outset, rather than making a commitment to fulsome exploration (and exhaustion) of options to avoid or mitigate impacts.
This is in part because the proponent has generally made the decision to develop a particular site before a referral is made under the EPBC Act. This limits real consideration of broadscale avoidance. Once a proposal is referred, assessment officers have limited scope and time to work with proponents to avoid and mitigate impacts. This becomes a ‘nice to do’, rather than a core focus of their efforts. An offset has become an expected condition of approval, rather than an exception.
The policy allows proponents to meet their offset condition by creating new habitat from highly degraded land – an approach the Review terms a ‘restoration offset’ – however, this rarely occurs. Most offsets are averted loss offsets that deliver only weak protection of remnant habitats of MNES that may have never been at risk of development. This is reinforced by the lack of a formal requirement to adequately demonstrate that the area set aside for the offset was sufficiently likely and able to be cleared for future development.
Although the policy allows restoration ahead of impacts (‘advanced offsets’), they are difficult to deliver under the current settings. There is no guarantee that the Environment Minister will accept an advanced offset, nor is it possible to accurately determine the area of offset required before an approval is granted. This makes investing in an advanced offset a risky proposition. Consequently, proponents focus on protecting what is left rather than promoting restoration.
Offset requirements are applied as a condition of approval. These conditions are not adequately monitored to ensure appropriate management and efforts to enforce compliance are weak (Chapter 9). There is no transparency of the location, quality or quantity of offsets. There is no register of offsets and, in the absence of such a tool, the same area of land may be ‘protected’ more than once.
The Review concludes that the EPBC Act environmental offsets policy requires fundamental change.
8.3.2 - The levers of Government, should align with National Environmental Standards and plans
Government funding is finite and needs to be targeted to achieve the best results. The reforms recommended by this Review will provide a foundation for more effective prioritisation and coordination of investments by governments. Specifically:
- The adoption of National Environmental Standards for MNES will provide clarity on the environmental outcomes that should be targeted through investments in restoration.
- National and regional plans will define how to most effectively and efficiently improve MNES in a landscape. Offsetting should also be guided by priorities identified in regional plans.
- The quantum change in information and data will assist monitoring and evaluation of environmental improvement delivered through government investments.
A pre-condition for Commonwealth funding of any restoration in a State or Territory should be that the State or Territory has agreed to implement the National Environmental Standards. This will ensure that restoration does not occur in areas where there is little protection of the environment and that the Commonwealth does not pay for restoration while the environment is being degraded in the same region.
Reforming the EPBC Act environmental offsets policy
Recent research has shown that even when sophisticated offset metrics are applied, restoring individual patches of land can still lead to poor outcomes for species if the wider landscape is not considered (Marshall et al. 2020). Regional recovery plans should help coordinate offsets by defining the areas where restoration would deliver the greatest environmental return within the region, including benefits to targeted species and ecological communities. The development and implementation of successful regional plans will reduce the need for offsets, because less species should be up-listed and more down-listed as the environment is restored.
A greater use of strategic assessments will also improve environmental restoration outcomes by balancing impacts and delivering offsets in a coordinated way across multiple projects in a region. However, major short-comings in the EPBC Act environmental offsets policy need to be addressed prior to widespread adoption in strategic assessments.
Changes are required to the policy to ensure that offsets do not contribute towards further environmental decline. Immediate changes need to be made to ensure that the existing policy is adequately implemented. Amendments are required to ensure the policy is aligned with the reform framework and that offsets required under the EPBC Act or accredited arrangements can effectively achieve net-benefit outcomes for the environment. These changes (Box 28) include only accepting offsets where:
- they are permitted under the National Environmental Standards
- they align with planning instruments
- an offset plan demonstrates that they can be ecologically feasible
- outcomes from offsets can be properly monitored and measured.