On behalf of Mr Jihad Dib: I move:

That this bill be now read a second time.

I am pleased to introduce the Biodiversity Conservation Amendment (Biodiversity Offsets Scheme) Bill 2024. On 17 July this year, the Government released theNSW plan for nature. The plan responds to the independent statutory review of the Biodiversity Conservation Act 2016, led by Dr Ken Henry, and sets out how we will protect what is left, restore what has been degraded, and transition to a nature positive approach for biodiversity. Dr Henry's review made it clear that nature in New South Wales is declining and must be set on a path to recovery. A key part of this picture is the Biodiversity Offsets Scheme, which Dr Henry found required reform to ensure its effectiveness in protecting biodiversity. Previous inquiries and reviews into the scheme have identified similar concerns, including the 2022 parliamentary inquiry, which recommended that the scheme be reformed, that the "avoid and minimise" hierarchy be strengthened and that changes be made to ensure offsetting is genuinely used as a last resort.

That is why the Government made a key election commitment to fix the Biodiversity Offsets Scheme. TheNSW plan for nature sets out the actions the Government will take to meet this commitment. Many of those actions require changes to the Biodiversity Conservation Act 2016. This bill is a major first step in delivering those necessary reforms and meeting the Government's commitment to fix the Biodiversity Offsets Scheme. Under the Biodiversity Offsets Scheme, developers or landholders wanting to clear land must compensate, or offset, for any biodiversity loss. The offset is generated by a landowner through the permanent protection and improvement of a separate site with a similar habitat, through a stewardship agreement. The landholder receives annual payments to undertake management actions to offset the original development. The scheme is a necessary arrangement to provide a mechanism for balancing development and conservation objectives.

However, reforms are essential for the scheme to function effectively to ensure the environment is properly compensated whenever unavoidable biodiversity loss occurs. Having an effective offsets scheme which leads to better environmental outcomes will directly benefit communities like those in my electorate of the Blue Mountains, an area cherished for its natural beauty and unique biodiversity. The bill was referred to Portfolio Committee No. 7 - Planning and Environment for inquiry and report to the House. I thank the committee for its work, and I thank those who contributed to the inquiry process. It was encouraging to see a diverse range of stakeholders participate in the inquiry, and that most stakeholders broadly supported the intent of the bill. The Government listened carefully to the feedback received through the inquiry and my colleagues have worked closely with members in the other place to introduce a range of amendments to the proposed bill. I highlight that we are committed to meaningful engagement with stakeholders as we continue this reform process.

I now turn to the bill. The bill has five key elements. The bill requires that steps be taken to avoid impacts, first and foremost; requires the scheme to transition to delivering net positive biodiversity outcomes; allows for the circumstances where developers can pay into the Biodiversity Conservation Fund to be reduced and, when the fund is used, ensures quicker investment in impacted species and ecosystems; increases transparency through new public registers; and allows for local development to be exempt from the scheme in exceptional circumstances and for the regulations to prescribe circumstances where burden on low‑impact local development can be reduced, particularly in regional areas. Amendments to subordinate legislation, including the Biodiversity Conservation Regulation 2017, will be needed to implement the bill and deliver other reform commitments in theNSW plan for nature. Those further changes will include amending the scheme entry threshold so that small, low-impact local development does not come into the scheme, and removing the option for major mining proponents to meet a credit obligation through a commitment to ecological mine site rehabilitation.

I turn now to the details of the bill. The bill will improve the biodiversity outcomes achieved by the scheme. The Government's goal is to leave nature better off than we found it. Dr Henry recommended the scheme become nature positive, as it is a critical tool for reversing biodiversity loss. The bill will amend the Act to make it clear that the scheme will transition to net positive biodiversity outcomes. That will mean moving beyond the current "no net loss" standard to one where the scheme will achieve overall biodiversity gains. The bill requires a strategy to be developed that will set out how the scheme will transition to net positive, including targets, time frames and actions. The Government will take time to work with experts, stakeholders and the public on the development of the strategy, and carefully consider the views of scheme participants and impacts on the biodiversity credit market.

Part of the Government's pre-election commitment to fix the Biodiversity Offsets Scheme was to seek a greater emphasis on avoidance of biodiversity impacts as the first step in the offset process. Offsets must be a genuine last resort. While that step is currently required under the scheme too regularly, it is not given the focus it requires. The Government will legislatively require certain measures to be taken to fulfil that critical obligation. The bill strengthens the application of the "avoid, minimise and offset" hierarchy by requiring development proponents to take all reasonable measures to avoid and minimise impacts before moving to offsetting. The bill also requires that the avoid and minimise measures are genuine—that is, that they respond to biodiversity values on the site.

New statutory assessment standards detailing the requirements to meet that obligation will be set out in the regulation. It will give particular attention to protecting our most at-risk species and ecological communities, including our threatened plants and animals at risk of serious and irreversible impacts. To support the standard, the bill introduces a public register that will keep track of commitments to avoid and minimise impacts to biodiversity for approved projects. That new register is one of several to improve the transparency of the scheme. In recognition of the critical responsibility that the Minister for the Environment has to protect biodiversity across New South Wales, the bill will provide a new ministerial concurrence power in relation to certain biodiversity offset decisions for State significant developments and infrastructure proposals.

Concurrence from the Minister for the Environment will be required for those State significant projects where it is proposed that approval be granted with conditions other than requiring the total number and class of biodiversity credits to be retired, as specified in the biodiversity development assessment report. That amendment will ensure biodiversity is protected, while also increasing consistency and minimising delays to the approvals process for these important projects. The bill will also strengthen the processes, requirements and administration of the Biodiversity Conservation Fund to support the Biodiversity Conservation Trust in achieving outcomes for biodiversity. The bill will require the trust to acquit offset obligations paid into the fund within three years, after which it must enter into an agreement with the Minister for the Environment on how the obligation will be met. This will ensure that impacts to biodiversity are offset sooner and minimise delays in biodiversity outcomes. While this seems administrative in nature, it is critical. Any delay means that biodiversity has been lost and not yet compensated for.

I turn next to how the bill will support a well-functioning biodiversity credit market. The Government's pre‑election commitment to fix the Biodiversity Offsets Scheme specifically identified that payment into the Biodiversity Conservation Fund, which currently operates as a default pathway for many proponents, should be a genuine last resort. The bill will enable restrictions to be imposed on when proponents can meet offsets obligations through payment into the fund. These restrictions will be set out in changes to the Biodiversity Conservation Regulation 2017 following public consultation. This reform will facilitate greater participation in the biodiversity credit market while still ensuring that the fund is available when needed.

I turn to how the bill will increase the efficiency and transparency of the scheme. Both the Henry review and the 2022 inquiry into the scheme found that there was a lack of transparency around how the scheme operates and on the biodiversity outcomes it delivers. The bill addresses these issues by introducing requirements for new public registers. The bill will establish new public registers to provide transparency of actions taken and commitments made by proponents to avoid and minimise impacts to biodiversity; offsets obligations imposed for projects under the scheme, including if, when and how these obligations have been met; decisions made to approve developments, activities or clearing with serious and irreversible impacts; and ministerial decisions to exempt local development from the scheme following a natural disaster or other exceptional circumstances. To support the establishment of these registers and ensure that they are accessible and reliable, we are also investing in the digital systems underpinning the scheme. The bill also proposes a series of small but important amendments to clarify the intent and interpretation of existing provisions in the Act.

Finally, the bill will enable a better balance to be struck between the costs associated with complying with the scheme and the risks to biodiversity posed by smaller scale local development. Dr Henry made several recommendations that considered how the scheme could apply more reasonably to local development. The scheme applies to a range of different development types across New South Wales, from major projects to small developments. This is an important aspect of the scheme that ensures that unavoidable impacts to biodiversity are identified, assessed and offset wherever they occur. However, we must ensure that the application of the scheme is balanced, taking a risk-based approach to impacts on biodiversity from development, and that the scheme is workable for small developers and local community.

The bill will allow for scheme entry thresholds to be revised through amendments to the regulation so that we can reduce the regulatory burden on low-impact local development. It is important for the scheme to apply sensibly, especially in regional areas. We will consider these changes in consultation with local government and with communities. The bill introduces a new power that enables the Minister for the Environment to provide exemptions from the scheme for local development in exceptional circumstances or in response to natural disasters. After the 2019-20 bushfires, temporary legislative amendments were made to switch off the scheme to help affected communities rebuild and get back on their feet. This new power will allow the Minister for the Environment to respond more quickly to similar disasters and ensure that there is some flexibility when needed.

In line with the Government's commitment to improve transparency, all exemptions to the scheme will be published on a new public register. The Minister will be required to set out reasons for the exemption, including the consideration of ecologically sustainable development. The bill also facilitates the making of regulations to create a formal review process for landholders whose land is mapped on the Biodiversity Values Map, one of the scheme triggers for local development. The regulations will mean that landholders will be able to formally request a review if they believe the mapping for their property is incorrect. If the review finds their land should be removed from the Biodiversity Values Map, and they do not meet other entry requirements, the scheme will not apply.

This bill represents the biggest reform to the Biodiversity Offsets Scheme since its inception. It is a significant first step in implementing our commitments to fix the Biodiversity Offsets Scheme and set nature in New South Wales on a path of recovery. The next step will involve amendments to subordinate legislation, including the Biodiversity Conversation Regulation 2017, to operationalise key positions in the bill and deliver other reform commitments laid out in theNSW plan for nature. We will continue to engage stakeholders, including through public consultation, as we continue this reform process. Under ourNSW plan for nature, we will protect what is left, restore what has been degraded and begin the transition to a nature positive approach for biodiversity in New South Wales. I commend the bill to the House.