Chapter 1Contextual information
1.1On 30 March 2023, the Senate referred the provisions of the Nature Repair Market Bill 2023 and the Nature Repair Market (Consequential Amendments) Bill 2023 to the Environment and Communications Legislation Committee for inquiry and report by 1 August 2023. On 31 July 2023, the committee was granted an extension of time to report until 1 November 2023. On 6 November2023, the committee was granted a further extension until 18April2024.
1.2Details of the inquiry were advertised on the committee's website, including a call for submissions by 1 June 2023. The committee wrote directly to various stakeholders to invite them to make submissions.
1.3Responses were received from individuals, from environmental organisations, peak bodies and other interested groups and associations.
1.4The committee received 105 submissions, which are listed at Appendix 1 and are available in full on the committee's website. The committee also received 476campaign emails; a representative sample of these emails is available from the committee’s website. Additional information provided by inquiry participants is also listed in Appendix 1.
1.5The committee held public hearings in Canberra on 30 June 2023 and 11September 2023. Witnesses are listed in Appendix 2. Hearing programs, transcripts of hearings, and answers to questions on notice are available from the committee’s website.
Acknowledgements
1.6The committee thanks the organisations and individuals that made submissions to this inquiry and those that appeared at the committee’s public hearings.
Background of the bills
1.7The Nature Repair Market Bill 2023, together with the Nature Repair Market (Consequential Amendments) Bill 2023 (the bills) aim to establish a world first nature repair market in Australia. The bills provide the legislative framework for a voluntary national market in biodiversity certificates to enable private investment in high integrity projects to protect, manage and restore nature.
1.8The market will be open to all landholders, including farmers, First Nations people, conservation groups and businesses. The market will enable project proponents to undertake projects that protect or enhance biodiversity on a range of land tenures, including in aquatic environments and the ocean to the extent of Australia’s territorial sea.
1.9Project proponents would be able to apply to the Clean Energy Regulator for a unique biodiversity certificate that could then be sold to interested persons in the market.
1.10The market would be regulated to prevent greenwashing and to monitor progress towards specified environmental outcomes.
1.11The bill is framework legislation, with significant elements of the scheme to be provided in a series of legislative instruments to be made by the Minister, including rules, biodiversity assessment instruments and methodology determinations. The legal instruments would be the subject of consultation.
1.12The Nature Repair Market (Consequential Amendments) Bill 2023 would make minor amendments to the Clean Energy Regulator Act 2011 and the National Greenhouse and Energy Reporting Act 2007 to facilitate the establishment, operation and regulation of the nature repair market.
Background
1.13The 2021 State of the Environment Report found significant investment is needed in the areas of conservation and restoration to reverse the decline in Australia’s natural environment. A part of reversing this decline is creating a clear and regulated pathway for businesses, philanthropists and other Australians to invest in activities that repair and protect nature.
1.14The recent independent review of the Environment Protection and Biodiversity Conservation Act 1999 (Samuel Review) also suggested that attracting private sector investment would be crucial in addressing the shortfall in restoration funding. A regulated nature repair market will encourage voluntary investment from the private sector towards the task of restoring Australia’s natural environment by providing investment certainty, clear standards and protections from greenwashing.
1.15Prior to the bills’ introduction in the Parliament and referral to this committee, they were subject to two rounds of public consultation, which further informed the development of the market framework. The Department of Climate Change, Energy, the Environment and Water noted that as part of this public consultation:
[T]he [d]epartment conducted over 60 engagement events, including sessions focused on Aboriginal persons and Torres Strait Islanders; public information sessions; and targeted meetings with individuals, organisations and Commonwealth and State and Territory representatives. A request for submissions resulted in over 180 written responses.
1.16To allow for flexibility to adapt the NRM framework to different kinds of projects, some details about how the market will operate in practice has been left to delegated legislation. These details, including methodology determinations and biodiversity assessment instruments, will be subject to public consultation processes as required by the bill.
1.17Under the former government, the Agriculture Biodiversity Stewardship Package was set up to develop market arrangements and kick start private investment in farm biodiversity and other sustainability opportunities.
1.18The Agriculture Biodiversity Stewardship Package commenced with pilot work which was undertaken with three partners (the Australian National University, National Farmers’ Federation and Natural Resource Management organisations) in 12 natural resource management regions across all six states.
1.19Two methodologies are being prototyped through the pilots. The NRM would commence based on these two methodologies and expand over time as other methodologies are developed and approved.
1.20An independent review of the Agriculture Biodiversity Stewardship Pilots was undertaken from December 2022 to May 2023. The review highlighted the various barriers to entry for landholders and the opportunities to better enable landholder participation in environmental markets.
Amendments passed by the lower house
1.21During the committee’s inquiry, several crossbench-initiated amendments were agreed to by the House of Representatives on 21 June 2023. These amendments placed some parameters around the use of biodiversity certificates for environmental offsetting and improved transparency and integrity in the NRM scheme. The amendments:
allow landholders to specify if the certificates connected to their land are able to be used for offsets;
allow the department to publish information about the market;
expand statutory reviews to include the performance of the regulator;
require a member of the Board of the Clean Energy Regulator to have relevant expertise;
require the Clean Energy Regulator to prepare regular activity reports for the Minister; and
require the department to prepare regular purchasing reports for the Minister.
Human rights compatibility
1.22The Explanatory Memorandums state that both bills are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. The Parliamentary Joint Committee on Human Rights considered the NRM Bills but did not have any comments.
Scrutiny of Bills Committee consideration
1.23The Senate Standing Committee for the Scrutiny of Bills (Scrutiny Committee) assessed the NRM Bills for their effect on individual rights, liberties and obligations, and on parliamentary scrutiny. The Scrutiny Committee observed that ‘much of the detail of how the nature repair market will operate is not set out within the bill but is instead left to delegated legislation.’ The Scrutiny Committee queried:
the need to leave details about the scheme to delegated legislation;
why some of the delegated legislation that would be enabled by the bill would not be subject to disallowance;
why some reports which would be required by the bill would not be tabled in Parliament;
why immunity from liability for damages had been conferred on a broad class of persons;
why the Regulator was empowered to delegate responsibilities to an Executive Level 2 employee rather than an Senior Executive Service employee.
1.24In response, the Minister for the Environment and Water, the Hon Tanya Plibersek MP, advised that the approach:
provides flexibility to adapt the framework to different kinds of projects, and allows for public consultation, co-design with stakeholders, and technological advancements.
protects commercial information from being tabled in Parliament.
protects persons who act in good faith to ensure efficient and effective administration of the bill.
allows powers to be delegated to officials that hold relevant expertise and ensure efficiency in the administration of the scheme.
1.25The Scrutiny Committee did not consider that the minister's responses provided sufficient justification.
Structure of the report
1.26This report comprises two chapters:
Chapter 1 provides background information on the inquiry and the bills.
Chapter 2 canvasses the key issues raised by inquiry participants and provides the committee’s views and recommendation.