Nick Thomas
Partner •
Sydney
Transition to nature positive is now legislated in NSW
3 minutes
NSW has now legislated for nature positive, although the legislative changes are yet to commence. The next step will be a draft nature positive strategy from the NSW Government, which will shape the operation and impact of the biodiversity offsets scheme.
New South Wales has taken a significant step towards a nature positive future, with the making of major legislative changes to the Biodiversity Offsets Scheme (BOS).
The NSW Parliament passed the Biodiversity Conservation Amendment (Biodiversity Offsets Scheme) Act 2024 on the last sitting day in 2024. The Amendment Act makes significant changes to the Biodiversity Conservation Act 2016 (BC Act) with a view to locking in net positive biodiversity outcomes and making other enhancements to the BOS.
It will become law when it is proclaimed to commence. This may not be until the regulations which will give effect to several of the key changes in the Amendment Act have been made, although an essential step in implementing the move to nature positive outcomes – the Ministerial strategy – must also be prepared.
We outlined the key legislative changes in the Bill when it was introduced.
While most of the Bill was passed without amendment, there were three key changes:
1. Ratchet clause for the nature positive strategy
The Amendment Act's requirement for a Ministerial strategy for transitioning the BOS to deliver nature positive outcomes now also prevents the Environment Minister from amending the strategy unless the Minister is satisfied that the amendment "will not reduce the effectiveness" of the BOS by:
- making the targets for the transition to delivering nature positive outcomes less ambitious, or
- extending the time frames for the transition to delivering nature positive outcomes.
This is designed to bolster the long term effectiveness of the strategy.
2. Limits on the use of variation rules – more "like for like" offsets
The BC Act currently allows regulations to permit variations to the number and class of biodiversity credits which a developer must provide to offset the impacts of their development. The Amendment Act seeks to limit the scope of those regulations to the application of offset funds by the NSW Biodiversity Conservation Trust.
This may not have much short term impact, because the variation rules have not been used very often so far. However, when combined with the Amendment Act's potential constraints (via regulations) on the use of offset payments as an alternative to delivering biodiversity credits, the change will have more significant effect as biodiversity credits in some classes become more scarce.
The Amendment Act does firm up opportunities for other alternatives to biodiversity credits, through the use of “prescribed biodiversity conservation measures”, determined in accordance with regulations.
3. Removal of the power to direct accredited persons
The Bill, when introduced into Parliament, included a scheme which allowed the Environment Agency Head to issue directions to the accredited person preparing a biodiversity assessment report for a development proposal if satisfied that the person is not complying with a requirement of their accreditation in relation to that report, and prevented the finalisation of the report until that direction was resolved.
That scheme has been removed from the Amendment Act. This should avoid delays in the assessment process. It's worth noting that relevant NSW Government agencies have other opportunities for input into a biodiversity assessment report under existing laws and practices.
What's next?
The NSW Government will now prepare regulations and a Ministerial nature positive strategy, to give effect to many of the changes in the Amendment Act.
The shift to nature positive outcomes could have significant effects for all stakeholders.
Development proponents should expect higher offset obligations, and more scrutiny of the ways in which they address their biodiversity impacts (given the significant expansion of the public register of offsets which the Amendment Act will provide). They should consider how they can accelerate the assessment of their existing proposals (before the Amendment Act commences) and reduce their biodiversity impact footprints in the design phase, the assessment phase and the post-approval phase.
In commenting on the passage of the Amendment Act through Parliament, the NSW Environment Minister acknowledged that there is more work to do to achieve nature positive outcomes in NSW, and highlighted the Government's Plan for Nature.
We highlighted some key areas for further reform in our review of the Amendment Bill earlier this year. One of the relatively easy wins, which it would be great to see early in 2025, is improvements to the functioning of the biodiversity credit market and market transactions. These include, for example, better access to credit and transaction information via public registers, and more efficient transaction and credit transfer processes. Reforms in these areas would promote accessibility, improve transaction efficiency and reduce transaction risks.
And as the reforms progress, advocates for nature positive should consider whether the new, improved BOS will provide a vehicle for voluntary measures to achieve nature positive outcomes.
Disclaimer
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.