Morrison government urged to fix flawed environmental offsets leaving threatened species at risk

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Audit of offsets to approve developments suggests usage is worsening impact of endangered species, not reducing it

The Morrison government is being urged to fix the use of environmental offsets to approve developments after an audit found major flaws in a system supposed to help protect threatened species from extinction.

Scientists said the scathing audit of how the federal environment department administered national conservation laws suggested the use of offsets was worsening the impact on endangered species, not reducing it.

Offsets are measures that are supposed to compensate for the loss of nationally important environmental areas to major development that has been approved under the Environment Protection and Biodiversity Conservation (EPBC) Act.

For example, a proposed development that would involve the loss of habitat that was home to Tasmanian devils could be approved if another existing area of devil habitat was protected and improved.

The offset program has been controversial in part because it does not guarantee replacement habitat for threatened species or ecosystems, just that another area will not also be developed or some other form of compensation. Environment groups and scientists say the result is the gradual erosion of places for threatened species to live in a time of national extinction crisis.

The audit by the Australian National Audit Office, released on Thursday, found the department had been ineffective in managing risks to the environment, and a blow-out in the time taken to make decisions correlated with a reduction in funding and staffing. It precedes a once-a-decade review of the legislation led by the former competition watchdog chair Graeme Samuel, who is due to release an interim report next week.

It found environmental offsets had not been properly managed. Offsets were rarely included in project approvals when the legislation was introduced 20 years ago, but their use has increased markedly such that more than 70% of project approvals each year now includes them.

Problems with offsets highlighted in the audit included:

  • There was no quality assurance process for reviewing approved offset plans. It left the department without a way of knowing whether offsets were assessed in line with the legislation and offsets policy.

  • The lack of quality control resulted in offsets inconsistent with the offsets policy being approved. In two cases they were approved on the basis the decisions were consistent with earlier incorrect approvals.

  • There was not an appropriate system to map offsets. An internal report on the risks this raised found gaps in record-keeping meant it was possible for land that had already been protected to be accepted as a new offset site for a second time.

  • Three attempts to introduce an offset mapping system had failed due to a lack of resources. At the time the last attempt was cut short, in May 2017, the department had not found spatial data for 174 of the 903 projects it was assessing. Only 142 of those with spatial data had been mapped.

It found that offsets for some matters of national environmental significance were increasingly not possible due to a lack of suitable locations – effectively, that all the habitat had already been cleared or protected – or a lack of data. The response had been to approve more indirect offsets that did not result in a measurable conservation gain.

Megan Evans, a researcher in environmental policy at the University of New South Wales in Canberra, said this finding was supported by independent research. She said instead of the increased scarcity of threatened species habitat being seen as an indication that further clearing should not be approved, the department had increasingly used alternatives to offsets such as providing research funding.

“This is a real concern,” she said. “The offsets policy is not being applied in the way that it was designed too, and as such it is worsening the impact on biodiversity – the opposite of what it is meant to be doing.”

Evans said failings in the legislation would lead to more species being at risk. “Unless there is substantial policy reform and additional resourcing, Australia’s trend of extinctions will continue,” she said.

Sarah Bekessy, a professor of sustainability and urban planning at RMIT, said the offsetting system and its implementation were broken. She said it had been used to approve some developments that would otherwise have been ruled unacceptable, and not prevented serious impacts to endangered species.

“I think the auditor-general’s report really focuses on the level of internal rigour around the implementation of offsets, which is fair enough, but there is a deeper issue. Every bit of scientific evidence is that they have failed to deliver positive benefits for biodiversity,” she said. “You can now basically do anything to critically endangered species and their habitat as long as you have an offset arrangement.”

James Trezise, a policy analyst at the Australian Conservation Foundation, said there was no peer-reviewed evidence that showed the federal offsets system was working.

“Offsets should be a measure of last resort, but are an over-utilised feature of almost every EPBC approval,” he said. “The lack of systems to track their performance means there is very limited evidence to drive policy improvement, which is clearly needed.”

The environment minister, Sussan Ley, said the auditor general’s report had focused on the department’s administration of the act and any wider assessment of the value of offsets would be the subject of a submission to the Samuel review.

“The report underlines the importance of changes we are already taking in delivering $25m in funding to reduce unnecessary delay, to drive new technologies and to ensure a comprehensive review of the EPBC Act, which is no longer meeting the needs of environmental groups or proponents,” she said.

“My focus will be on ensuring we have effective environmental protection, efficient processes and proper compliance in place.”

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