Chapter 2Key Issues
Introduction
2.1This chapter explores the extent of support for the bills and examines some of the key issues raised by submitters, such as ensuring integrity in the Nature Repair Market (NRM), sequencing of the bills, and the use of national biodiversity certificates for environmental offsetting purposes.
Overall views on the bills
2.2Overall, there was strong support from submitters for the intent of the bills to give effect to a market-based mechanism that incentivises and rewards landholders for better biodiversity outcomes and nature repair.
2.3Key areas of interest in submissions related to the purpose of the scheme, offsets, market design, integrity, governance, broader environmental reform, market operation and First Nations. Throughout the submissions, general support for the market remained strong, despite some concerns on particular elements.
2.4The Nature Conservancy (TNC) supported the bills’ principles by stating:
We welcome the creation of a Nature Repair Market and its applicability to all landholders. Overall, TNC is supportive of the need to incentivise and reward landholders for the protection, good management and restoration of native vegetation, threatened species habitat and other natural values. There is a role for governments in ensuring there is consistency, integrity and transparency and a baseload of demand, particularly in emerging market mechanisms...
2.5The National Farmers’ Federation (NFF) similarly endorsed the operation of a market for landholders:
The NFF supports the proposed Nature Repair Market Bill and recognises the opportunities it will offer to farmers and landholders in contributing to ecosystem services and participating in a broader marketplace. The Bill provides a critical step towards achieving sustainable and resilient ecosystems in Australia.
2.6Other supportive stakeholders included: Climate Friendly, Indigenous Desert Alliance, Kimberley Land Council, Farmers for Climate Action, Australian Sustainable Finance Institute, Property Council of Australia, Business Council of Australia and Australian Climate and Biodiversity Foundation.
2.7Certain stakeholders were supportive of the market but only with certain amendments. Climate Friendly, for example, asserted that:
The Nature Repair Market Bill should explicitly exclude offsetting at commencement. A review of the suitability of expanding the scheme into offsets should occur once the reforms to the EPBC Act [resulting from the Samuel Review] are implemented, including releasing a truly nature positive offsetting standard.
2.8Some objections to the use of national biodiversity certificates for the purpose of environmental offsetting were received, with several submitters suggesting that the Australian Government prohibit their use. The Law Council of Australia for example pointed out that ‘offsets, in a biodiversity space, are very difficult because there is no real like for like. You can't replace what is taken away, necessarily’.
2.9This view was countered by other stakeholders who were supportive of an offsets scheme or noted that governance surrounding offsets is most appropriately dealt with through other legislative mechanisms—namely the development of a restoration actions and restoration contributions National Environmental Standard under proposed reforms of the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act).
2.10For example, Mr Warwick Ragg, General Manager of Natural Resource Management at the NFF, explained to the committee:
[The nature repair market is] not just about offsets. Offsets are a component that we think should participate in a nature repair market. They should be developed under the auspices of the EPBC Act. Our view is there are a whole lot of opportunities that aren't offsets that are creating biodiversity gains, whether it's reducing predation, whether it's connecting existing habitat, whether it's expanding habitat health—all of which can be done without a direct requirement for an offset—as a true advance for biodiversity in that farm landscape.
2.11The Chamber of Minerals and Energy of Western Australia endorsed the use of offsets in the Nature Repair Market, including avoided loss offsets which the chamber maintained would ‘contribute to habitat connectivity and landscape‑level conservation’.
2.12The Australian Government is currently conducting rolling consultations on the broader EPBC Act reforms. These began with targeted stakeholder workshops in October 2023. Additionally, a ‘Have Your Say’ process is open until 30March2024.
Ensuring integrity in the scheme
2.13While the inquiry received broad support for the introduction of a NRM, some respondents focused on a range of areas relating to integrity and transparency. The most common views related to:
Ensuring recommendations from the independent review of Australian Carbon Credit Units were considered and adopted in the design of the Nature Repair Market, as appropriate.
Ensuring there is integrity and transparency around the market, including how certificates are used and whether they are used for environmental offsets.
Ensuring a robust compliance and enforcement framework is in place to ensure genuine environmental outcomes are delivered.
2.14In relation to ensuring integrity around the use of offsets, the Australian Government is working to introduce a new National Environmental Standard for restoration actions and restoration contributions. This new standard is expected to include a requirement that offsets must deliver a ‘net gain’ for impacted protected matters and that biodiversity projects certified under the NRM would only be able to be used as offsets if they met the new standard.
2.15DCCEEW officials further explained:
Any component of the biodiversity market that is used as an offset needs to meet the standard for offsets that the government has set out in the Nature Positive Plan. It's very clear in the Nature Positive Plan that there has to be a net gain—I think the language used was that offsets would be 'like for like' and deliver 'net benefit'—for matters of national environmental significance. We would argue that, in the use of those credits in that way, in circumstances where that's possible…there would be a net gain overall.
2.16In relation to the new standard, the Threatened Species Scientific Committee gave evidence that ‘one of the key new amendments that has been made to that standard has been independent verification of both your ability to repair nature and the validation, enforcement and permanence of the repair mechanism’.
2.17In response to concerns regarding the scheme’s ability to deliver genuine environmental outcomes, Mr Anthony Bennie, Division Head, Nature Repair Market and Environmental Science, DCCEEW, outlined the integrity and accountability measures in the bills:
…for an activity to be approved and a certificate to be issued, the activity needs to be additional. That's a requirement—[proposed section 57 of the bill] for a certificate they have to be additional activities. The certificate would then define, in accordance with the biodiversity methods, the specific outcomes that would be achieved by undertaking that activity. Then within the certificate would be a range of attributes that then allow investors, the general public and others to understand what that certificate is being issued for, whether it be for a certain number of hectares—it might be for 10,000 hectares of conservation activity—for a certain conservation activity for a threatened species or flora, or for how it is contributing to a broader NRM community to link up projects and the like. So it's providing much more information about what this activity is delivering, but it has to be additional, in accordance with the integrity standards.
2.18This was further illustrated in DCCEEW’s submission, which outlined the various integrity mechanisms within the bill, including:
An independent, expert committee to advise the Minister;
Mandatory public consultation;
Fit and proper person tests;
Regulation of the biodiversity certificates;
Mandated reporting;
A publicly available register of certificates and projects;
An assurance and compliance framework;
Regular and mandated publication of information; and
Five-yearly independent reviews of the scheme.
2.19Additionally, as noted in the previous chapter, amendments made by the lower house require that project proponents specify whether or not their biodiversity certificate can be used for an environmental offsetting purpose.
2.20The Australian Government is also undertaking an audit of over 1000 offset sites that had been approved under national environmental law over the last 20 years to identify whether developers have been meeting their obligations. DCCEEW is expected to complete the program’s reference audits by the end of 2023, which would inform the prioritisation and timeline of auditing all EPBC approvals and conditions.
Government should provide initial market support
2.21Certain respondents were supportive of government intervention to facilitate a successful market and encourage landholder participation.
2.22Some suggested that government funding should be allocated to purchase certificates in the market’s nascent stage to encourage supply and support pricing. For example, Ernst & Young (EY) maintained that:
The Australian Government should purchase biodiversity certificates in the near to medium term to create market certainty.
2.23This was similarly expressed by Byron Shire Council:
The free market alone may not facilitate rapid update of this scheme. We recommend the Federal Government kick-start the market by committing to purchasing certificates itself (as it previously with the carbon market).
2.24Certain stakeholders also encouraged government activity to build capacity and support informed participation by small landholders and First Nations peoples. This was seen by some as important as it facilitates participation by those that may be excluded due to upfront cost or risk.
The role of First Nations peoples
2.25Importantly, throughout the inquiry, the recognition of the role of Australia’s First Nations peoples in caring for country was well articulated.
2.26For instance, the NSW Aboriginal Land Council highlighted that Local Aboriginal Land Councils possess ‘specific Traditional Ecological Knowledge and land management expertise accumulated over millennia’. The Northern Land Council (NLC) gave similar evidence, arguing that Traditional Owners ‘must be recognised as integral to the development of any emerging Nature Repair Market’.
2.27The NLC underscored the importance of First Nations people being given the opportunity to ‘contribute to and/or co-design legislation that affects them’.Indeed, Emeritus Professor Jon Altman pointed out that due to the scale of First Nations land holdings across the country, the bill would ‘disproportionately impact First Nations people’. He went on to explain:
First Nations people are not just another landowning interest group alongside governments and private landowners and leaseholders. While [comprising] only 4 per cent of the national population, First Nations people will be the dominant players in any real or imagined ‘nature repair’ or ‘biodiversity’ market in Australia today because of their rights and interests in a majority part of the continent, much in remote and very remote Australia, that is relatively environmentally intact and so has relatively high biodiversity ‘value’.
2.28Meanwhile, the Central Land Council acknowledged the ‘positive contribution’ that a nature repair market could make in ‘the creation of important economic opportunities for Aboriginal and Torres Strait Islander peoples on their country’, as well as to the protection of ecosystems.
2.29DCCEEW’s submission outlined how First Nations Australians can participate in the market:
...by undertaking projects that deliver biodiversity improvements or protect biodiversity on land which they hold through different types of tenure. This includes exclusive and non-exclusive Native Title, land rights, leasehold and freehold. First Nations people could also provide on-ground management services or advice to support nature repair projects managed by others.
Committee view
2.30The committee acknowledges the range of views expressed regarding the bills.
2.31The committee notes that there was overwhelming support throughout the inquiry for the intention to strengthen private investment in nature repair and stronger biodiversity outcomes. The weight of the evidence then focused on the design of the market and the appropriateness of integrity measures.
2.32The committee acknowledges the views from certain sectors that the use of the scheme for biodiversity offsets should be restricted, or deferred until after the Government’s reforms to federal environmental laws are complete.
2.33This argument, however, needs to be balanced against the broader legislative considerations on offset design and use, which the committee notes is taking place through the environmental law reforms processes currently underway and welcomes the Government’s commitment through its ‘Nature Positive Plan: Better for the environment, better for business’ to inter alia legislate the offsets hierarchy and ensure that offsets arrangements deliver real gains for the environment.
2.34The committee also notes that following the passage of this legislation, there will be a lengthy period of design of the methodologies underpinning the nature repair market, which will require public consultation processes to occur.
2.35On balance, the committee is satisfied that the bills’ integrity and accountability measures will lead to a robust market framework that incentivises private investment in nature. Accordingly, the committee recommends that the bills be passed.
2.36The committee recommends that the bills be passed.
Senator Karen Grogan
Chair