By Peter Burnett
Some of you will have read Saul Griffith’s recent book on moving Australia to an all-electric and renewable future, The Big Switch. Despite the subject being biodiversity rather than renewable energy, ‘the big switch’ is what came to my mind when I read the recent Independent Review of the NSW Biodiversity Conservation Act 2016, led by former Treasury Secretary and National Australia Bank Chairman Ken Henry.
Let me explain.
Parallel vision, parallel tracks
The NSW Biodiversity Act seeks to protect and conserve biodiversity, within a broader context of Ecologically Sustainable Development’ (ESD). (This is broadly the same as for its federal counterpart, the Environment Protection and Biodiversity Conservation (EPBC) Act 1999.)
ESD is a uniquely Australian variant of the international idea of Sustainable Development, and has been reduced to five principles, one of which is that conservation of biodiversity and ecological integrity should be ‘a fundamental consideration’ (whatever that means).
Both the NSW and Commonwealth Acts provide for statutory reviews. In the NSW case, this is occurring after five years. And, just like the 2020 Samuel Review of the EPBC Act, the Henry Review found, essentially, that the Biodiversity Act is not working and that biodiversity continues to decline in NSW.
Indeed, Ken Henry was quite blunt about this and spells it out in his opening statement:
We started with the available evidence, consulted widely and reviewed numerous submissions. While the Biodiversity Conservation Act 2016 has been in operation for only five years, we cannot pretend that it is ever likely to achieve its objectives.
Both reviews called for major change. Dr Henry’s finding that the NSW Act was ‘incapable of achieving its objectives’ parallels Professor Samuel’s finding that the EPBC Act ‘does not enable the Commonwealth to effectively fulfil its … responsibilities …’
But in one key respect, Dr Henry went further than Professor Samuel. He found that the very principles of ESD were ‘no longer fit for purpose’.
This is a highly significant finding with national implications, but first, a little more about the NSW biodiversity laws and Dr Henry’s findings.
Biodiversity regulation in NSW is a tangled web, but the bottom line is clear
The NSW system is too complex to describe here, involving as it does complex interactions between the Biodiversity Act, planning laws and the Local Land Services Act which, though you’d never guess, is where you’ll find NSW laws on land clearing.
It is enough here to make two key points.
First, this complexity may not just be the product of tinkering and patching over the years, though there is an element of that. I suspect that some of the complexity has been created deliberately, to obfuscate the politics of dealing with different stakeholders — especially farmers and developers — and different political parties — the Liberals and Nationals in Coalition.
As the Henry Review found (and recommended for fixing):
a developer in regional areas will have to meet a specified regulatory standard, but the same type of biodiversity can be cleared for agricultural reasons by meeting a different standard with less, or no, regulatory oversight.
This reminded me of the way in which telecommunications companies make their phone plans complicated to make comparisons hard for the customer.
And the finding doesn’t just lead to inconsistent protection for the same biodiversity. It also creates perverse incentives to play the system:
The Review Panel heard that different standards may be encouraging pre-emptive clearing under the land clearing laws before a development application is made.
Second, although the law is complex, the policy bottom line is simple: biodiversity is protected to a degree, including by offset requirements, but this will never stand in the way of development prioritised by government. Despite protective-sounding statutory concepts such as ‘areas of outstanding biodiversity value’ and ‘serious and irreversible impacts’, the environment minister has no power, ultimately, to decide that biodiversity must come first.
The ‘big switch’
Dr Henry’s primary solution to the failure of the Biodiversity Act to halt the decline of biodiversity is to switch off the discretionary ‘balancing’ that occurs under the auspices of the ESD principles (under which the ‘balance’ almost always favours development).
Switched on in its place would be a ‘nature positive’ framework, under which the Biodiversity Act would take primacy and the bottom line would — except in rare and transparent circumstances — be a required net gain for biodiversity. Among other things, the environment minister would be able to declare ‘no go’ areas.
The Henry Review recognises that its recommendations imply ‘a major reset in public policy thinking, which many will find challenging’. But the logic behind the recommendations can only be disputed by disputing the science, which credible stakeholders are not.
As Dr Henry said in his Foreword:
[T]he natural environment is now so damaged that we must commit to ‘nature positive’ if we are to have any confidence that future generations will have the opportunity to be as well off as we are.
… Even though sustainability concepts have been central to policy development for more than a generation, many in the community, and even within government circles, still struggle with the notion that policies to promote human progress should recognise any constraints, social or environmental. Yet the fact of humanity’s dependence upon the quality of the biosphere, in both social and economic dimensions, is as immutable as the laws of physics. The case for giving primacy to environmental repair is inescapable. Our future depends upon it.
What will the government do?
How will the NSW government respond to this narrative, which wedges them between an irrefutable policy logic and the ongoing dominance of ‘endless growth’ politics?
I think they’ll accept the ‘big switch’ in principle but look for a ‘relief valve’, so that development can continue, as close as possible to business as usual. I think this relief valve lies in the price of biodiversity offsets.
Over the last 20 years, offsets have grown from occasional use to routine application. They are also evolving from bespoke regulatory conditions, often centred around a one-off purchase and reserving of nearby land, towards something developers can buy, off the shelf.
The review recommended strengthening the existing offsets scheme under the Biodiversity Act, especially by stimulating the supply, which cannot match demand in NSW.
The evolving norm of biodiversity policy, both in NSW and the Commonwealth, has two elements.
First, some additional areas of high biodiversity will be placed in ‘no go’ areas or ‘red zones’, in advance of development. The new political fights will in part be over how much land to protect like this and at whose cost.
Second, when developers can’t avoid doing permanent damage to the remaining environment, they will still be allowed to proceed, by paying for biodiversity offsets, or ‘credits’. Hopefully, the government will ensure these credits represent real biodiversity gain and avoid the ‘paper credits’ problems experienced by carbon credits.
At what price?
The more challenging issue may be the price. As development’s footprint grows, the supply of suitable land for offsets reduces, and the cost increases. (As someone once said, ‘buy land now – they aren’t making it anymore!) To avoid making offsets unaffordable, I think governments will keep their price artificially low.
This has consequences is two possible directions.
One is that offset funds, such as the NSW Biodiversity Conservation Trust, will be unable to afford, or unable to find, suitable offsets, and just accumulate offset payments before investing them eventually in recovering species or ecosystems other than what is being lost. NSW is already part-way down this track and the Commonwealth is intending to do so with its proposed ‘better overall environmental outcome’ test.
The other is that governments will absorb the additional cost and investing in generating a supply of suitable ‘like for like’ offsets, by promoting offsets markets and by direct environmental restoration.
I think the NSW government will do more of the latter, but probably not enough to fix the problem of not replacing losses with ‘like’ gains. It will seek to plug the gap by promoting private sector investment in offsets and restoration (though I’m skeptical of the business case for this, as I’ve written before.)
And what about the national implications? I’ve run out of space and will cover these in my next blog.