Draft NSW Bidiversity Offsets Plicy NSW Minerals Cuncil Submissin May 2014 0
Executive Summary The NSW minerals industry recgnises the vital the rle f ffsetting in the develpment prcess in NSW. The industry, thrugh the NSW Minerals Cuncil (NSWMC) has been an active participant in the develpment f ffsetting plicy, including prviding submissins n the develpment f the BiBanking Scheme, sitting n the industry reference grup fr the Scheme, thrugh ur members prviding their prjects t test the BiBanking Scheme fr majr prjects, and participating in the BiBanking Review. NSWMC acknwledges that successive NSW gvernments have made effrts t bring greater scientific rbustness, quantificatin, certainty and cnsistency t the assessment f ffsets. The creatin f the BiBanking Scheme was the first attempt t bring a quantative, disciplined apprach t bidiversity ffsetting. NSWMC have cnsistently pinted ut the flaws with the BiBanking Scheme, hwever acknwledges that the aim f Scheme - achieving a higher level f scientific rbustness and certainty in ffsetting - is sund. The Draft NSW Bidiversity Offset Plicy addresses many f the cncerns that NSWMC have lng raised in relatin t the BiBanking Scheme. Hwever the detail f the Plicy and its applicatin thrugh the Framewrk fr Bidiversity Assessment (FBA) are flawed in many areas and will result in perverse utcmes unless significant amendments are undertaken. Areas where the Plicy and FBA are deficient include: The arrangements fr nging security and management f ffset sites. The level f credit given fr mine rehabilitatin in reducing ffsetting requirements. The availability f supplementary measures and the ability t vary the ffset criteria. That vital cmpnents f Plicy and FBA that are nt available at this time. Significant areas f the FBA that appear t have errrs and incnsistencies, and a lack f detail necessary t be able t be implemented. There are areas f the Plicy and FBA, which have been rushed and shuld have been the subject f greater cnsultatin with industry during develpment. There are areas where lngstanding, state wide mapping deficiencies will undermine the peratin f the Plicy and the FBA. There are areas f the Plicy and FBA where undefined and ambiguus terms including reasnable are used, where further descriptin and guidance will be crucial t stated bjective f reducing negtiatin f ffsets. There are prducts that are referred t, but nt yet available, including the calculatr fr assessment f ffsets, which is vital t understanding the new system, the Bidiversity Investment Opprtunity Map, Schedule X and the State and Reginal Bidiversity Links. The 18 mnth transitinal perid during which the Plicy will be applied administratively makes sense given the lack f cnsultatin in develping the Plicy and FBA, and the shrt cnsultatin perid. Hwever there is little detail in the Plicy r FBA t guide agencies, prpnents and decisin makers n what administrative applicatin means. In the experience f NSWMC s, where plicy is 1
unclear, results in all agencies, decisin makers, prpnents and the cmmunity have different interpretatins f the plicy, resulting in delayed and incnsistent utcmes. This is nt acceptable and there must be greater clarity prvided befre the Plicy and FBA can be implemented. The NSW Gvernment is wrking t a deadline impsed by the NSW- Cmmnwealth Bilateral Apprval Agreement time frame. The benefits frm achieving a Bilateral Apprval prcess by September 2014, rather than at a later date will be felt by nly a few prjects. The impacts f implementing the Plicy and FBA prematurely will be felt acrss the industry and will cntinue t have impacts fr many years. These lng-term impacts must nt be traded ff t reach an arbitrary time frame fr the Bilateral Apprval. The NSW minerals industry takes the view that the Plicy and FBA will have wide reaching impacts n the industry. There is ptential t greatly imprve the prcess f assessment f bidiversity and ffsetting thrugh the Plicy. Hwever, prly implemented this prcess will have wide reaching and lng term impacts n prjects and n the NSW mining industry. The Gvernment must wrk with industry, particularly in recgnising the value that the industry cntributes t bidiversity utcmes thrugh existing cmmitments and rehabilitatin activities, t finalise the Plicy. In practical terms this will require the Gvernment t present further drafts f bth the Plicy and FBA prir t beginning administrative applicatin. The time frame fr the Bilateral Apprval must be a secndary cnsideratin. 2
Table f Cntents Executive Summary... 1 1. Intrductin... 4 1.1. Mining in NSW... 4 1.2. Abut the NSW Minerals Cuncil... 4 1.3. The imprtance f ffsetting t the minerals industry... 4 2. Draft NSW Bidiversity Offsets Plicy... 6 2.1. Missing cmpnents f the Plicy and FBA... 6 2.2. Areas fr further cnsideratin... 7 2.3. Offset flexibility... 8 2.4. Offset security and management csts... 18 2.5. Bidiversity gains... 20 2.6. Discunting in exceptinal circumstances... 21 3. Framewrk fr Bidiversity Assessment... 23 3.1. Criteria fr the FBA... 23 3.2. Key cmments... 23 3.3. Fine detail cmments... 30 4. Cmments n FBA Credit Calculatr... 35 4.1. Ntes... 35 4.2. Regent Hneyeater survey times... 35 4.3. Assess threatened species... 35 4.4. Area f indirect impact... 35 5. NSW Bidiversity Offsets Fund fr Majr Prjects... 37 5.1. Management and land csts... 37 6. Transitinal arrangements... 39 6.1. Administrative applicatin f the Plicy and FBA... 39 6.2. The Plicy/ FBA and the NSW Cmmnwealth Bilateral Apprvals Agreement... 41 7. Issues nt addressed in the Draft NSW Bidiversity Offsets Plicy... 43 7.1. Training f assessrs... 43 References... 44 APPENDIX A Generating Bidiversity Credits Fr Eclgical Rehabilitatin Of Mined Land... 45 3
1. Intrductin 1.1. Mining in NSW Mining is a strategic industry fr NSW wrth $21.2 billin in ttal. Cal is the mst valuable exprt cmmdity in NSW, accunting fr 35% f all merchandise leaving NSW in 2011-12. 1 The NSW mining industry directly emplys 50,000 peple. 2 In 2012/13 mining cmpanies perating in NSW spent $12.8 billin n wages, cntractrs, suppliers and cmmunity cntributins and indirectly supprted lcal businesses and service industries thrugh spending by emplyees. 3 This cntributin t the ecnmy f NSW generated an additinal $13.7 billin in indirect ecnmic activity. 4 Mining underpins the reginal ecnmies f the Hunter Valley (cntributing t 35.8% f Grss Reginal Prduct (GRP)), Illawarra (16.5% f GRP), Central West (18.9% f GRP) and ther twns and cmmunities acrss the state. 5 In 2012/13 mining generated $1.3 billin in ryalties fr NSW. 6 Mining uses natural resurces efficiently, generating this very significant cntributin t the NSW ecnmy while using nly 0.1% f NSW land and 1.55% f NSW water. 1.2. Abut the NSW Minerals Cuncil The NSW Minerals Cuncil represents the minerals industry in NSW, including explrers and prducers f minerals and cal in NSW, as well as suppliers t the industry. NSWMC prvides a single, united vice n behalf f ur 100 member cmpanies: 40 full members (prducers and explrers), 25 assciate members (junir explrers) and 35 assciate members (service prviders) and wrks clsely with gvernment, industry grups, stakehlders and the cmmunity t fster a dynamic, efficient and sustainable minerals industry in NSW. 1.3. The imprtance f ffsetting t the minerals industry Envirnmental ffsets prvide a vital tl fr decisin makers when balancing the impacts and benefits f a develpment. Offsets prvide envirnmental benefits t cmpensate fr the residual significant impacts that remain after avidance and mitigatin measures have been applied. Offsets are particularly imprtant t the types f develpment where pprtunities t avid impacts are limited. Mining prjects, unlike husing and ther residential and cmmercial develpment, have 1 Australian Bureau f Statistics, Internatinal Merchandise Trade, and Department f Freign Affairs and Trade, 2011/12 2 ABS, Labur Frce, Cat. 6291.0.55.003, Nvember 2013 3 Lawrence Cnsulting, NSW Mining Industry Ecnmic Impact Assessment 2012/13 4 Ibid 5 Ibid 6 NSW Budget Statement 2013-14. Budget Paper 2, Chapter 6 4
limited flexibility t avid impacts. Mining is limited by the lcatin f the resurce. Accrdingly the use f ffsets is vital t the cntinued viability f mining in NSW. While ffsetting shuld be the final ptin, where it ccurs it prvides the pprtunity t secure vital resurces fr cnservatin frm private business. These resurces can be in the frm f land fr cnservatin, imprvement and nging management f that land, recvery actin plans as well as research and ther frms f indirect ffsets. The industry acknwledges the wrk f Gvernment t develp Plicy arund ffsetting the impacts f Majr Prjects. The Industry als recgnises its rle in cntributing t the prtectin f bidiversity values in NSW. 5
2. Draft NSW Bidiversity Offsets Plicy 2.1. Missing cmpnents f the Plicy and FBA The Plicy and FBA are currently incmplete. The fllwing cmpnents are missing and as a result have nt been able t be assessed as part f this submissin: Schedule X crucial t determining areas fr further cnsideratin. Bidiversity Investment Opprtunities Maps crucial fr assessing the strategic lcatin value f an ffset. Pririty Investment Area Maps crucial fr assessing the strategic lcatin value f an ffset. State r reginal bidiversity link plans apprved by OEH crucial t assessing whether an impact is n an area requiring further cnsideratin. A calculatr t determine the number f credits generated by ffset sites (that factrs in strategic lcatin and security gain scres) crucial t assessing the FBA treatment f ffsetting. It is nt pssible t implement the Plicy withut this calculatr. A calculatr t determine the number f credits generated by rehabilitatin n mined land crucial t testing this part f the Plicy and FBA. It is nt pssible t implement the Plicy and FBA, even administratively withut these cmpnents. Additinally, given the imprtance f these cmpnents t the verall utcmes f the Plicy and FBA, each must be subject t cnsultatin befre being finalised. The Plicy and the FBA must nt be implemented until the fllwing cmpnents have been finalised, and that prcess must include cnsultatin: Schedule X Bidiversity Investment Opprtunities Maps Pririty Investment Area Maps State r reginal bidiversity link plans apprved by OEH A calculatr t determine the number f credits generated by ffset sites. A calculatr t determine the number f credits generated by rehabilitatin n mined land. 6
2.2. Areas fr further cnsideratin The Gvernment has acknwledged the impracticality f red flags, which are a cmpnent f BiBanking Scheme and cannt be ffset, by remving this cncept frm the FBA. Instead areas which require further cnsideratin are included in the Plicy. Under the Plicy, there are fur mechanisms suggested t address these areas. They must be avided, have their severity reduced, include additinal ffsets, r supplementary measures may be required. 2.2.1. Critically endangered cmmunities and species Any impact n a critically endangered eclgical cmmunity (CEEC) r critically endangered (CE) species is cnsidered a matter fr further cnsideratin. At the Cmmnwealth level, fr example, any area f White Bx Yellw Bx Blakely s Red Gum Grassy Wdland and Derived Native Grassland wuld require further cnsideratin and the likely utcme f additinal ffsetting. At the NSW level, this wuld mean any area f ptential habitat fr the critically endangered Regent Hneyeater wuld require further cnsideratin. Fr a CEEC with a brad distributin r a wideranging species such as the Regent Hneyeater, the likelihd f mining prjects requiring further cnsideratin fr these matters is substantial. In the case f the Regent Hneyeater, it is nt necessarily the case that all f its ptential habitat is f high value. Recmmendatins: The Plicy shuld prvide further guidance n what areas within the distributin f a critically endangered species wuld require further cnsideratin. Further cnsideratin shuld be limited t impacts n theses areas. Fr instance the Plicy shuld prvide guidance n what areas within the Regent Hneyeater s distributin acrss NSW wuld require further cnsideratin. Such areas culd cmprise key breeding and fraging sites fr the species, leaving ptential habitat areas t be assessed utside the cntext f areas fr further cnsideratin. Mre bradly, clarificatin and guidance, is required as t whether the applicatin f further cnsideratin applies t CEECs and CE species n bth the Threatened Species Cnservatin Act (TSC Act) and the Envirnmental Prtectin and Bidiversity Cnservatin Act (EPBC Act), r ne f the Acts. Guidance must be prvided n hw these areas fr further cnsideratin will be assessed, and linkages made t existing prcesses in place, such as recvery plan actins. 2.2.2. Schedule X Any impact n a species listed in Schedule X will require further cnsideratin. Schedule X is yet t be released and is further discussed in sectin 3.2.7. The ptential limitatins that the Plicy cannt be assessed until Schedule X is released and industry can assess the likely level f cnstraint it may place n majr prjects. 2.2.3. State Bidiversity Links Impacts that create a gap f 100 metres r mre in a state bidiversity link (in an OEH apprved plan) are als impacts that require further cnsideratin. N OEH apprved state bidiversity link plans have been released by OEH. 7
The ptential limitatins that this plicy may place n majr prjects cannt be assessed until OEH apprved state bidiversity plans have been released and industry can assess the likely level f cnstraint it may place n current and future majr prjects. 2.2.4. IBRA subregins The distributinal restrictin f IBRA subregins that identifies matters that require further cnsideratin (where there is less remaining than needed fr ffsetting), culd ptentially require the further cnsideratin f matters that are nly restricted within the subregin by the arbitrary subregin bundary. IBRA subregins are varied shapes and bundaries and are relatively arbitrary such that a small prtin f a matter requiring further cnsideratin may extend int ne IBRA subregin while the remaining r majrity f a matter may ccur acrss the IBRA subregin bundary r nearby in the adjining subregin. This ptential inability t seek crss bundary ffsets may facilitate perverse utcmes. The reference t IBRA subregins, as a trigger fr matters f further cnsideratin where the required ffset is mre than the remaining area in the subregin, shuld be expanded t include adjining subregins. 2.3. Offset flexibility The Plicy intrduces new ptins, which will allw greater flexibility when identifying ffsets. Objective 2 f the Plicy is t imprve utcme fr cmmunities and the envirnment. The verarching aim f ffsets shuld be t imprve the verall bidiversity f the State. T achieve this much greater ffsetting flexibility is needed. The Gvernment has made much f its ptential f the Plicy t reduce the area f farmland purchased by develpers fr ffsets. If given the right pririty, ptins fr ffsetting utside direct, like fr like, land based ffsets, have the ptential t reduce the area f land that is held in ffsets, which might therwise be used fr agriculture. The Plicy prvides fr variatin f the ffsetting requirements, where like fr like is nt available, which prvides the pprtunity t achieve imprved verall utcmes, as substitutes must be f equal r higher cnservatin value. Supplementary measures are als recgnised in the Plicy. These ffsetting measures including funding fr recvery actins prgrams and funding fr research, are vital t the recvery f species and cmmunities and are insufficiently funded by gvernment. The Plicy als prvides recgnitin fr the lngstanding cnventin f including eclgical rehabilitatin f mined areas as part f the ffsets package. The FBA seeks t frmalise identificatin f the value f rehabilitatin as an ffset. Rehabilitatin frms a very imprtant part f achieving imprved cnservatin utcmes frm develpment, and imprtantly prvides a way f achieving thse utcmes while reducing the area f agricultural land lcked up in ffsets. 8
Whilst the industry bradly supprts the directin f the Plicy in prviding fr sme flexibility in ffsetting, the Plicy and FBA place t lw a pririty n flexible ffsetting measures t realise their benefits t the envirnment and t the agricultural sectr. 2.3.1. Variatin f ffsetting requirements The Plicy frmalises the ability t target ffsets t a higher but related cnservatin pririty. This is nt new plicy in NSW, but has nt been well recgnised by decisin makers including the Planning Assessment Cmmissin and Land and Envirnment Curt. The NSW OEH interim plicy n assessing and ffsetting bidiversity impacts f Part 3A, State significant develpment (SSD) and State significant infrastructure (SSI) prjects, 25 June 2011 (Interim OEH Plicy 2011), and its 2010 predecessr, prvided variatin criteria that can be applied where like fr like ffsets are nt available r the cst f such ffsets are nt reasnable in all f the circumstances. Under the Plicy nly where all reasnable steps have been undertaken in rder t find suitable ffsets fr a vegetatin cmmunity and nne can be fund, can the ffset rules may be varied (if nt an eclgical cmmunity n the EPBC Act r CEEC n the TSC Act). Only vegetatin cmmunities frm the same vegetatin frmatin may be used, and they must have an equal r higher percentage cleared. The classificatin f Plant Cmmunity Types (PCTs) int vegetatin frmatins was a relatively arbitrary prcess and may prevent PCTs f the same frmatin, that are structurally very similar and that ccur in the same regin, frm being suitable ffsets under the variatin rules. Taking All reasnable steps There is n guidance prvided fr what will cnstitute all reasnable steps t secure a like fr like ffset befre cnsidering the variatin rules. This is cncerning as it will leave cnsideratin f what steps are reasnable pen t different interpretatins by OEH fficers, Planning and Envirnment in their rle as the assessing agency and the decisin maker. The Plicy and FBA aim t reduce areas f uncertainty and negtiatin and shuld prvide clear criteria fr what effrts will be required t cnstitute all reasnable steps. Prpsed steps are prvided under the discussin f Supplementary Measures see sectin 2.3.2. Recmmendatins: The FBA needs t prvide clear and unambiguus guidance n what steps the prpnent has t take t satisfy that they have taken all reasnable steps t secure a like fr like ffset and be able t apply the variatin rules (see sectin 2.3.2 belw). Whether the cst f securing a like fr like ffset is reasnable in all the circumstances shuld be included in the cnsideratin f whether all reasnable steps have been made t secure an ffset befre applying the variatin criteria. Evidence f reasnable csts shuld be prvided by the prpnent by btaining an independent land valuatin, as is current practice in land acquisitin under apprvals (see sectin 2.3.2 belw). The FBA must include a prcess fr challenging the vegetatin frmatins where a PCT, which shuld therwise be eligible, is excluded frm cnsideratin as an ffset under the variatin rules. 9
2.3.2. Supplementary measures Supplementary measures play an imprtant rle in imprving cnservatin utcmes acrss NSW. Althugh ffsetting shuld be the final ptin after avidance and mitigatin, where it is undertaken the Gvernment shuld prvide flexible ptins t allw fr the greatest benefit t the envirnment t be achieved. Direct land based ffsets are a relatively blunt instrument and have been successfully cmplemented with industry based funding fr research and ther initiatives such as implementing recvery actin plans. This is a valuable cntributin by industry where there is limited public funding available fr these prgrams. Research is particularly imprtant t understanding the management and recvery f threatened species. The Plicy shuld als allw prpnents t prvide funding t Gvernment thrugh supplementary measures t undertake the wrk needed t update mapping and the deficient databases underpinning the FBA. Like the variatin rules, the Plicy des nt allw fr the use f supplementary measure until all reasnable steps have taken t secure apprpriate ffset sites (land based). This apprach is different t the preferable apprach f the Cmmnwealth Gvernment, which prvides that 10% f the ffsetting liability can be autmatically discharged thrugh cmpensatry measures, which are akin t supplementary measures. Autmatically prviding that a small prprtin f the ffsetting requirements can be discharged thrugh supplementary measures is preferable fr the fllwing reasns: The requirement t take all reasnable steps is subjective and will lead t additinal negtiatin. The use f supplementary measures can reduce the amunt f land required t be purchased and remved frm agricultural prductin. This will nt be achieved if a level f supplementary measure is nt autmatically prvided, as prpnents will be unlikely t risk having the decisin verturned by using supplementary ffsets where all reasnable steps remains a highly subjective test. The plicy is nt reflective f the current prcess f negtiated ffsets where supplementary measures have been part f ffsetting packages fr a number f years. Eliminating these measures will result in prer verall envirnmental utcmes. Case Study 1 shws recent apprvals where a variety f ffsets have been used in the final ffset package. Taking all reasnable steps The plicy sets ut a list f actins that are t be included in the cnsideratin f whether the prpnent has taken all reasnable steps t secure a land based ffset befre cnsidering supplementary measures. This list prvides n certainty and is pen t interpretatin by OEH fficers, Planning and Envirnment in their rle as the verall assessr f the prject and decisin makers. Objective 1 f the Plicy is T prvide clear, efficient and certain guidance fr stakehlders and that the bjective will be achieved thrugh reduced negtiatin. One f the reasnable steps t seek a suitable ffset site is liaising with an OEH ffice and the relevant lcal cuncil t btain a list f ptential sites that meet the requirements fr ffsetting. Lcal cuncils are unlikely t have the resurces t identify ptential ffset sites. 10
Instead OEH shuld develp, maintain and prmte an Offsets Prperty Register. The register wuld be similar t the BiBanking Register. Landhlders wh are interested in selling their prperties as an ffset wuld register their prperty with OEH (subject t meeting the minimum requirements). The minimum requirements fr entry n the register shuld be set in cnsultatin with industry. The minimum requirements shuld address size, cnditin, and ther parameters relevant t achieving a brad cnservatin utcme fr a particular vegetatin cmmunity/threatened species. OEH shuld drive the registratin f private prperties by identifying ptential ffset prperties and appraching wners t register. The Register must be maintained by OEH. T satisfy the requirements f all reasnable steps, the prpnent must nt be required t apprach landhlders wh are nt registered n the BiBanking Register r the Offset Prperty Register, but t register an expressin f interest and apprach thse landhlders wh respnd. Under the Plicy the cst f an ffset site is nt t be cnsidered as a factr in whether the prpnent has taken all reasnable steps t find a suitable ffset site. The ptential cst f the ffset site must be cnsidered during the search fr suitable sites. Pssible ffset csts in sme cases culd ptentially reach levels that make prjects unviable (e.g. where an ffset requirement is in shrt supply and high demand). This is incnsistent with the apprach that the Gvernment has previusly taken thrugh the Interim OEH Plicy 2011, and will have the perverse effect f distrting the market fr ffsets as landhlders becme aware that prpnents are required t purchase prperties regardless f price. The Plicy shuld cntain an exhaustive list f steps that need t be taken (rather than inclusive). The fllwing shuld be cnsidered as evidence f reasnable steps t secure a direct ffset: Checking the BiBanking register and placing an expressin f interest n it, with a prescribed time after which the prpnent is able t rely n lack f respnse as evidence that this step has been undertaken. The cst f available credits must be reasnable, and this wuld be decided by reference t the average purchase price f the relevant credit. (It shuld be nted that this is nt an ideal way f identifying a reasnable cst f a credit given the small size f the market.) Placing an expressin f interest n a register n the Offset Prperty Register. The prpnent wuld need t prvide evidence that within a prescribed perid f time: The prpnent has nt been able t meet the ffsetting requirements thrugh favurable respnses t the expressin f interest, r Where there has been interest expressed, the purchase f the prperty r prperties t meet the full ffsetting requirement has nt been pssible because the cst is unreasnable. Evidence f unreasnable cst shuld be prvided by the prpnent by way f an independent land valuatin. A prcess fr establishing reasnable value exists thrugh the land acquisitin prcess within existing cnditins f develpment cnsent. The mining industry is a substantial landhlder in its wn right. Withut an ability t accunt fr the pprtunity cst f utilising existing land hldings when establishing ffsets, there is n incentive fr utilising these land hldings, many f which may cntribute significant bidiversity utcmes. 11
These rules with regard t reasnable steps shuld apply t bth supplementary measures and the variatin f ffsetting rules (sectin 2.3.1). Calculating the cst f supplementary measures The Plicy prpses that the cst f supplementary measures shuld be calculated by reference t the ttal fund depsit fr the BiBanking Agreement secured ver the direct land based ffsets which the prject has been able t secure. This is flawed fr a number f reasns: NSWMC des nt agree that BiBanking Agreements are the apprpriate way t secure prpnent managed ffsets. BiBanking Agreements include the in perpetuity cst f management f a particular site. This is nt an apprpriate way t calculate the cst f supplementary measures. The methdlgy is incnsistent with current arrangements fr cnverting ffsetting requirements t cash that exist fr ffsetting funds, and which shuld apply t the NSW Bidiversity Offsets Fund (Offsets Fund) prpsed t be set up by the Gvernment as part f the Plicy. There shuld be ne simple way f cnverting credits t cash amunts. Current methdlgies perating in NSW t cnvert BiBanking credits t cash invlve the cnversin f credits t a number f hectares, then cnversin t cash by applying a management cst and land value per hectare. This apprach is favured fr a number f reasns: It is mre predictable. It wn t be skewed by high management csts f a particular site, which d nt reflect what wuld be required fr the remaining credits required. It can be calculated withut any reference t a BiBanking Agreement It prvides a cnsistent methd f cnverting credits t cash that wuld apply t supplementary measures and cnversin f ffsetting requirements t an amunt t be paid t the prpsed Offsetting Fund. It is cnsistent with existing methdlgies fr cnverting credits t cash in NSW. The Fund Calculatr fr supplementary measures will need t be develped. There is currently a BiBanking Credit Cnverter. This cnverter is inapprpriate fr large scale reginal develpments. The in-perpetuity land management cst f the BiBanking Credit Cnverter f $3250.00 per hectare t be t high and drives excessive ffsetting csts. Similarly, the land csts cntained in the cnverter are excessive and drive excessive ffsetting csts. Supplementary measures must be accmpanied by scientific evidence that the measures are likely t lead t lng-term benefits t bidiversity. The Plicy and FBA are silent n the type f evidence that is cnsidered scientific and hw much scientific evidence will be required. 12
Recmmendatins: Supplementary measures must be available t meet 10% f the ffset requirement withut any further assessment requirements, as per the current Cmmnwealth plicy. Prpnents wanting t make use f supplementary measures t reduce the remaining direct ffsetting requirement belw 90% shuld be required t shw that they have taken all reasnable steps t secure a land based ffset. The Gvernment must include in Tier One supplementary measures, funding t OEH t undertake urgent updating f mapping and databases relevant t the FBA. In determining whether all reasnable steps have been taken t secure a direct ffset, the cst f an ffset must be taken int accunt. OEH must develp, maintain and prmte an Offsets Prperty register t allw landhlders t register their interest in selling their prperties as ffsets. Registratin shuld be subject t minimum criteria t be established in cnsultatin with industry. The Plicy must state that prviding evidence that the prpnent has taken the fllwing steps will allw the prpnent t vary the ffsetting requirements, r include supplementary measures (f greater than 10% f the ffsetting requirement) in the ffsets package: Checking the BiBanking register and placing an expressin f interest n it, with a prescribed time after which the prpnent is able t rely n lack f respnse as evidence that this step has been taken and been fully r partially unsuccessful. Placing an expressin f interest n an Offset Prperty Register. The prpnent wuld need t prvide evidence that within a prescribed perid f time, the prpnent has nt been able t meet the ffsetting requirements thrugh favurable respnses t the expressin f interest, r where there has been interest the purchase f the prperty r prperties t meet the full ffsetting requirement has nt been pssible because the cst is unreasnable. Evidence f unreasnable cst shuld be prvided by the prpnent by way f an independent land valuatin. Further guidance n the type and level f scientific evidence that will be required t shw supplementary measures will be likely t lead t lng term benefits t bidiversity, must be prvided. A Fund Calculatr fr supplementary measures must be develped as a matter f urgency and shuld be the same calculatr that is applied under the prpsed Offsets Fund. 13
Case Study 1 - Offset packages apprved under the current prcess Currently the whle ffsets package is negtiated n a case by case basis. This generally includes securing direct land based ffsets, supplementary measures fr large prjects, such as funding fr research r recvery actins plans and rehabilitatin t native vegetatin cmmunities. Examples include: Ulan 408 hectares f native vegetatin t be impacted and the ffset package includes: Bidiversity ffsets 1229 hectares. 239 hectares f rehabilitatin f mined land t native vegetatin cmmunities. Ravenswrth 559 hectares f wdland t be impacted and the ffset package includes: Bidiversity ffsets f 1654 hectares. 2200 hectares f rehabilitatin f mined land that is t be returned t native vegetatin. Funding f $900,000 t Birds Australia fr a recvery actin plan. Cbbra a ttal f 1911 hectares f native vegetatin will be impacted and the ffset package includes: Bidiversity ffsets 8827 hectares 2101 hectares f additinal areas t be rehabilitated r regenerated t prvide bidiversity cnservatin utcmes Funding f at least $500,000 twards research and/r measures t assist the recvery f threatened species. 2.3.3. Mine rehabilitatin Many f the areas where the NSW minerals industry perates are highly cleared. Fr instance in the Upper Hunter there has been cnsiderable clearing f the valley flr. Areas f the lwers classes f grazing land make up a significant prprtin f land disturbed fr mining in the Upper Hunter regin. The New England Nrth West area where mining is in the grwth phase is als highly cleared fr agriculture. Mining presents an pprtunity t undertake eclgical rehabilitatin n thse areas, prviding imprved cnservatin utcmes by adding habitat fr threatened species, re-establishing eclgical cmmunities and adding t remnant areas and cnservatin crridrs. In additin prviding ffsetting credit fr eclgical rehabilitatin reduces the area f land ffset fr that might therwise be used fr agriculture, while still prviding a significant envirnmental benefit. Mt Owen Mine illustrates the gains that can be made thrugh a strategy invlving bth ffsets and rehabilitatin (see Case Study 2). Prviding ffsetting credit fr eclgical rehabilitatin is a strng 14
incentive t mining peratins t undertake this type f rehabilitatin, which is significantly mre resurce intensive than returning rehabilitated areas t pasture. The Plicy and the FBA frmally acknwledge the imprtance f rehabilitatin and prvide a methdlgy fr assessing the value f rehabilitatin in terms f ffsetting fr the first time. Hwever the inclusin f eclgical mine rehabilitatin has been a feature f ffsetting packages in NSW fr many years. The examples in Case Study 1 shw the imprtance f eclgical rehabilitatin t verall all cnservatin utcmes, which has been acknwledged by Gvernment in thse apprvals. The Plicy and FBA prvide a staged prcess fr the recgnitin f eclgical rehabilitatin in reducing the ffsetting requirement fr a mining prject. The current methdlgy set ut in the FBA with regard Stage 1 assessment f rehabilitatin is t cnservative and des nt allw prpnents t achieve the maximum benefit upfrnt frm gains that can be made in Stage 1. Appendix A prvides an analysis f the FBA methdlgy with regard t assessment f mine rehabilitatin. Ntable cncerns abut the current apprach are: It des nt allw the generatin f any credit fr landscape value during Stage 1. It sets the maximum allwable increases in predicted imprvement in site attribute scres t lw fr a number f attributes, including species richness, native grund cver and ver strey cver. Appendix A sets ut evidence frm existing rehabilitatin which supprts higher maximum scres fr a number f site values, and supprt fr the inclusin f credit fr landscape value in Stage 1. The FBA prvides fr security t be ldged in relatin t the eclgical rehabilitatin. This is apprpriate and significantly reduces any risk t gvernment and the cmmunity in the event that the rehabilitatin des nt meet the standard prpsed t gain ffsetting credits in Stage 1. Hwever it is nt clear whether this is the existing rehabilitatin bnd paid under the Mining Act 1992, r a separate bnd. The NSW minerals industry is f the view that the Mining Act bnd fr rehabilitatin shuld cver this security, and there shuld be n duplicatin. Recmmendatins: The Gvernment shuld undertake further cnsultatin with the mining industry t ensure that the methdlgy fr assessing bidiversity credits generated by eclgical rehabilitatin prvides adequate acknwledgement f gains that can be made in Stage 1 (see Appendix A). The FBA needs t set ut clearly the arrangements fr the security bnd in relatin t rehabilitatin gaining credits under Stage 1, and ensure that there is n duplicatin with the existing rehabilitatin bnd prvided fr under the Mining Act 1992. 15
Case Study 2 Mt Owen Mine Rehabilitatin and Bidiversity Offset areas Open cut mining cmmenced at Mt Owen near Singletn in the Hunter Valley in 1993. The mine currently perates under a 2004 NSW apprval granted t the current wners Glencre. The mine is disturbing part f the Ravenswrth State Frest. Regeneratin and revegetatin effrts acrss Mt Owen s ffsets and rehabilitatin are targeted twards re-establishment f the Central Hunter Irnbark-Sptted Gum-Grey Bx Frest 1. At the end f the mine s life, it is expected that rehabilitatin f mined areas, and active plantings and management f vegetatin acrss Mt Owen s ffsets will result in an area f native wdland apprximately five times larger than the wdland cmmunity that existed prir t mining. This ttal area f wdland - 1774 hectares - will be cmparable with the largest areas f existing remnant vegetatin n the Hunter Valley flr. The 1994 apprval f the mine included cnditins t establish the 430 hectare New Frest in cmpensatin fr the lss f 240 hectares f the Ravenswrth State Frest. This was an area that was generally devid f native wdland and frest vegetatin. The successful reestablishment f vegetatin cmmunities and habitats enabled transfer f the New Frest t Frestry Crpratin NSW in December 2003, and incrpratin int the Ravenswrth State Frest where it is designated fr cnservatin. The 2004 apprval added a number f Bidiversity Offset Areas (BOAs) that adjin t New Frest r Ravenswrth State Frest. A cmprehensive Bidiversity Offsets Strategy was established as part f the 2004 apprval which includes cnservatin f existing vegetatin (apprximately 15 20 years ld) and active planting f 133 hectares f existing pasture areas t return them t their riginal wdland state, while the remaining areas f existing pasture will be managed t enhance natural regeneratin. Augmentatin f fauna habitat, including cnstructing nest bxes and amphibian habitat is als part f the strategy. Perfrmance f the ffsets In 2013 Glencre cmmissined an assessment f the eclgical value f ffset restratin wrks and mine rehabilitatin t determine hw these areas are trending twards cmpletin / perfrmance criteria. Cmparisns were made against the NSW Scientific Cmmittee s Final Determinatin fr the Central Hunter Irnbark Sptted Gum Grey Bx Frest in the NSW Nrth Cast and Sydney Basin Biregins Endangered Eclgical Cmmunity (EEC) fr each f the rehabilitatin, revegetatin, regeneratin and remnant vegetatin areas sampled as part f the Prject: All areas shw reasnable evidence f self-sustainability (thrugh species recruitment), r at least early signs f self-sustainability All areas supprt a canpy dminated by sptted gum (Crymbia maculata) (which is a characteristic species f the EEC), and in sme cases ther characteristic canpy species All areas supprt a reasnable t mderate prprtin f species that are listed as being characteristic f the EEC (assessed bth as the prprtin f the cmmunity that is represented n the EEC listing, and as the prprtin f the 16
EEC listing that is represented in the cmmunity). Areas f the New Frest and the BOAs were fund t meet the cmpletin criteria and are nw regarded t supprt vegetatin cmmunities cnsistent with the Central Hunter Irnbark-Sptted Gum-Grey Bx Frest. Annual fauna mnitring has taken place at Mt Owen since 1996. Apprximately 20 native fauna species have been recrded during mnitring in mine rehabilitatin sites and between 20 and 175 fauna species have been recrded in fur regenerating mnitring lcatins in the BOAs and the New Frest. These lcatins prvide habitat fr key threatened species, such as the Envirnment Prtectin and Bidiversity Cnservatin Act 1999 (EPBC Act) listed endangered sptted-tailed qull (Dasyurus maculatus maculatus), which is regularly recrded in the New Frest Area, as well as a number f NSW Threatened Species Cnservatin Act 1995 (TSC Act) listed threatened wdland birds and micr-bats. Example f Regenerated Central Hunter Irnbark - Sptted Gum Grey Bx Frest EEC fund in the Munt Owen Bidiversity Offset Areas Wetland habitat augmentatin t facilitate the return f lcally ccurring fauna species t rehabilitated and regenerated habitat 17
2.4. Offset security and management csts Principle 5 f the Plicy prvides that ffsets must be enduring, enfrceable and auditable. The Plicy ges n t state that the nly frm f ffset security that is acceptable under the Plicy is a BiBanking Agreement. The NSW minerals industry believes that the security and funding f the management f an ffset shuld relate t the utcmes that are sught with regard t the particular ffset. Stating that all ffsets shuld be in perpetuity des nt accunt fr the utcmes that are required. NSWMC has wrked with members t develp a set f requirements fr the security mechanism that apply t bth apprved prjects and prjects that will be apprved under the Plicy. Offset security mechanisms must: Be suitable fr Federal and State gvernment requirements. Reflect the level f security and nging management f the ffset that was cntemplated in the utcmes fr the ffset established in the Envirnmental Assessment/ Envirnmental Impact Statement and cnditins f apprval. Additinal management f the site in terms f actins, term, management and/ r csts shuld nt be impsed by the ffset security mechanism. Be capable f integrating with existing apprvals and management plans, nt duplicate dcumentatin r effrt. Be capable f being implemented withut further delay r amendment f existing mechanisms. Nt require additinal assessment t be undertaken including field surveying. Nt bring frward csts f management, as this is incnsistent with the requirement fr cmpanies t fund management actins prgressively ver the life f a prject in accrdance with their cnditins f apprval. Minimise csts f set up especially due t the scale f these ffsets. Fr example the mechanism shuld nt require n grund detail cadastral survey where a higher level f mapping wuld suffice. Be flexible t allw land use changes ver time as lng as the cnservatin value f the ffset is nt cmprmised. This wuld allw fr ther lng term viable land use enterprises t be cnsidered and help sustain the ffset. Prvide fr management f the ffset t reflect the intentins at the time the develpment was apprved. Be able t reflect the use f the land in the level f cuncil rates that can be levied. Where the land s use is cnservatin this shuld be reflected in the rates paid t lcal gvernment. The mst apprpriate frm f ffset security mechanism is the existing vluntary cnservatin agreement. 18
2.4.1. Management and security and ffsetting utcmes The particular set f utcmes that relate t the prject ffset shuld determine hw it is secured and the perid f time that the prpnent needs t prvide funding fr management actins. Where pssible the Gvernment shuld encurage prpnents t align the time perid fr utcmes t the perid f apprval f the develpment. Where the utcme f an ffset is driven by management actins t restre r regenerate bidiversity, these ffsets shuld require a security mechanism that will ensure funding by the prpnent f the management actins that are necessary t restre, enhance r establish bidiversity in accrdance with the cmmitment made under the apprval. When that cmmitment is met, the prpnent shuld be discharged frm funding further management actins. A cnservatin agreement (r similar mechanism) cupled with cnditins n the develpment apprval and Bidiversity Management Plan wuld secure the nging management and prtectin f these ffset sites. An ffset where the envirnmental gain is related t prtectin instead f management wuld attract different gvernance and funding arrangements. In this case the utcme sught is the prtectin f the site, which des nt require significant restratin, enhancement r establishment f bidiversity. In this case the ideal mechanism fr securing the site shuld be dedicating it t the Natinal Park reserve. In the case f such a dedicatin the apprpriate csts f managing the prperty shuld be negtiated with Natinal Parks and Wildlife and be paid at the rate the agency applies t managing its ther prperties. Natinal Parks shuld nt be seeking t have prperties dedicated t the reserve system BiBanked prir t acceptance. This wuld be a cmpletely unnecessary step, which wuld impse additinal and pintless burdens n the prpnent fr with n envirnmental gain. Offset sites where the cnservatin utcme is prtectin, that are nt acceptable t Natinal Parks, shuld be analgus t ther areas f private land prtected fr cnservatin. These areas shuld nt require majr restratin wrks, and accrdingly the management shuld nt be mre nerus than applies t private land currently held under cnservatin agreements. 2.4.2. Why BiBanking Agreements are inapprpriate The Plicy vercmplicates the arrangements f security and management f ffset sites. The BiBanking Scheme was set up t be a market scheme t allw fr the trading f ffsets between parties at arms length. The agreements were nt designed t be used where the develper causing the impact and the wner f the ffset site are ne and the same. They are nt fit fr the purpse f develpers securing and managing their wn ffsets. This is very clearly illustrated by the requirement under a BiBanking Agreement fr a develper t pay all f the in perpetuity csts f management f an ffset int the BiBanking trust at the cmmencement f the ffset and t have annual management fees paid. While the agreements make sense when the parties are at arms length, they wuld impse unnecessary additinal administrative burdens and csts n majr prject prpnents, including the frnt ending f management csts. The NSW minerals industry des nt believe that the BiBanking Scheme has the ptential t ffer a market based slutin t the industry s need fr ffsets. Impsing these agreements n prpnentmanaged ffsets is unwarranted and driven the OEH s desire t see an increase in the funds managed by the BiBanking Trust t prp up the Scheme, rather than any real benefit t the envirnment. 19
2.4.3. BiBanking and security frm future mining develpment There is an errneus belief that a BiBanking Agreement prvides a greater level f prtectin against future mining than ther frms f security registered n the title f the land. That is nt the case. Sectin 127S f the Threatened Species Cnservatin Act 1995 expressly prvides that where a mining r petrleum title is granted with respect t a bibank site the Minister fr the Envirnment can, withut the cnsent f the wner, terminate the BiBanking Agreement. Sectin 127U f the Act expressly prvides that nthing within the Act prevents the granting f a mining title with respect t a bibank site. Recmmendatins: The Plicy must acknwledge that different ffsets will have different utcmes and that the nging management, funding fr management and prtectin fr a site must be related t the utcmes f the particular site. The ffset security mechanism and arrangements fr funding must be driven by the utcmes sught. The Plicy must acknwledge that in mst cases a vluntary cnservatin agreement will be the apprpriate mechanism fr prpnent managed ffset sites, cupled with apprpriate cnditins f cnsent and the Bidiversity Management Plan. Other mechanisms must be available t prpnents where these mechanisms can be demnstrated t meet the verall cnservatin utcme. 2.5. Bidiversity gains The Draft NSW Bidiversity Offsets Plicy fr Majr Prjects may actively discurage ffsetting management actins with a high envirnmental gain. Investment in the return f wdland cmmunities frm derived native grasslands via active replanting and supprted regeneratin may be discuraged under the FBA. The restrictive increases in site attribute scres fr sites with lw starting attribute scres mean that grasslands returned t wdland frm will nly receive credit fr part f the envirnmental gain they achieve. In cntrast, the Cmmnwealth Envirnmental Offsets Guide (EPBC Offset Calculatr) acknwledges the envirnmental gains t be achieved frm return wdlands and identifies large gains in value fr restred wdlands. The FBA Credit Calculatr needs t be mdified t recgnise the large envirnmental gains that culd be achieved thrugh the active management f derived native grasslands back t wdland frm. 2.5.1. Treatment f derived native grasslands Additinally the Plicy needs further guidance t describe hw derived native grasslands f PCTs are treated within the FBA. Currently within the FBA credit lads fr derived native grasslands are determined by the ecsystem species predicted t ccur fr the wdland frm f the PCT, despite the absence f mst, r all, habitat features fr ecsystem species in derived native grasslands. 20
Such an apprach results in credit requirements fr derived native grasslands fr threatened species that d nt ccur in derived native grasslands. The current negtiated apprach t ffsetting typically has nt required ffsetting f derived native grassland cmmunities. The requirement t ffset derived native grasslands as part f the FBA will significantly increase ffsetting requirements fr many prpnents, as grasslands have typically been seen by OEH as nt requiring ffsetting. Additinally the current apprach f nt requiring ffsetting fr derived native grasslands has seen prpnents seek t psitin impacts in grassland areas rather than wdland areas t minimise bidiversity impacts and t reduce ffsetting requirements. The requirement t ffset derived native grasslands, particularly if they drive credit requirements similar t wdland frms f cmmunities, may result in prjects being psitined in wdland areas (where the eclgical impacts are likely higher) if there is little difference in the credits generated by wdland and derived native grassland frms f cmmunities. This wuld be a perverse result f the inadequacy f the Plicy and FBA t deal with an issue that NSWMC raised with OEH tw years ag. Case study analysis f tw derived native grasslands in the FBA Credit Calculatr has indicated that ne scred a site value scre f less than 17 and the ther scres higher than 17. The derived native grassland that scred higher than 17 was a PCT that has wide ranging benchmark scres, meaning that it is easier fr prer cnditin habitat (such as derived native grasslands) t achieve cnditin attribute scres. Benchmark scres that have a large range reflect PCTs that were prly knwn during the develpment f the benchmark scres. OEH shuld cllect mre apprpriate lcal data fr PCTs that have wide ranging benchmark scres t ensure that the benchmarks f PCTs d nt include lw cnditin frms f the PCTs such as derived native grasslands. Recmmendatins: The FBA Credit Calculatr shuld be mdified t allw derived native grassland frms f PCTs t be identified in the calculatr and fr the resulting credit requirements f derived native grasslands t be determined by the ecsystem species likely t ccur in the derived native grasslands, nt the wdland frm f the cmmunity. Alternatively, a pst credit calculatin discunt shuld be applied t derived native grasslands t ensure that derived native grasslands generate significantly less credits than wdland frms f cmmunities t encurage prpnents t avid wdland areas. OEH shuld cllect mre apprpriate lcal data fr PCTs that have wide ranging benchmark scres t ensure that the benchmarks f PCTs d nt include lw cnditin frms f the PCTs such as derived native grasslands. 2.6. Discunting in exceptinal circumstances The Plicy prvides fr the discunting f ffsetting requirements where significant scial and ecnmic benefits accrue t NSW as a cnsequence f the Plicy. The NSW minerals industry is supprtive f the cncept f discunting, but believe that it shuld be extended t cver significant envirnmental benefits. 21