Federal environmental reform: recasting the EPBC Act
Biodiversity offsets and net gain
A new concept of passing the 'net gain' test will apply to compensate for significant residual impacts on protected matters. This can be achieved either by the proponent compensating for damage by securing an environmental offset, or by paying a restoration contribution charge in respect of the residual significant impact (unless the Minister has declared that a restoration contribution charge is not available for the relevant MNES).
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Key provisions outlined in the EPR Bill, include:
- A requirement that, where an action (other than a national interest proposal) will have a residual significant impact on MNES, it satisfies the 'net gain test'.
- The 'net gain test' can be satisfied either by the proponent compensating for damage by securing an environmental offset, or by paying a restoration contribution charge in respect of the residual significant impact. However, a restoration contribution charge will not be an option where an MNES is the subject of a Ministerial declaration. The Minister must make such a declaration if a protection statement for a listed threated species or community specifies that payment of a restoration charge should not be available for a residual significant impact on that species or community. For other MNES, the Minister has discretion as to whether to make a declaration.
- Regulations can be made to prescribe what constitutes a net gain for particular MNES—where this does not occur, a decision on whether a proposal achieves net gain will be at the Federal Environment Minister's discretion.
- Restoration contribution charges will be held in a new Restoration Contributions Special Account. The Restoration Contributions Holder, a new federal office holder, will spend sums held in the special account on restoration actions for the purposes of compensating for environmental damage.
- Amendment to the Nature Repair Act 2023 (Cth) to allow biodiversity certificates to be used, in limited circumstances, for the purposes of environmental offsetting. Amongst other requirements, this could only occur if the methodology under which the biodiversity certificate was created specifies that a biodiversity certificate may be used for environmental offsetting.
How we got there
The Samuel Review acknowledged the role of biodiversity offsets as an aid to environmental restoration. However, it identified major shortcomings in the current system, describing the EPBC Act offsets policy as 'ineffective' and 'contributing to environmental decline rather than restoration', with 'major shortcomings both in its design and implementation'. It noted that for project proponents, biodiversity offset requirements can be difficult to comply with, cause delays and involve significant costs.
The Nature Positive Plan proposed a transformation of the offset system, including:
- a mandatory hierarchy of actions, being to avoid, reduce or mitigate impacts to be worked through (and 'strictly enforced') prior to considering environmental offsets.
- requirement for offsets to be 'like for like' and deliver net benefits where residual impacts cannot be avoided.
- provision for conservation payments where suitable offsets cannot be secured.
- a National Environmental Standard for Environmental Offsets requiring 'net positive outcomes', ie to leave the environment in a better state than prior to the action.
The new approach to offsetting was refined during consultation on the Nature Positive plan, including:
- terminology changes, with 'offsets' renamed to 'restoration actions' to align with the objective of delivering net gain, and 'conservation contributions' renamed to 'restoration contributions'.
- confirmation that restoration actions and restoration contributions cannot be used to (i) address unacceptable impacts or (ii) enable conditional approval that would not otherwise have been granted.
- introduction of a restorations contributions calculator to determine restoration contribution costs.
A core component of the consultation packages was the draft National Environmental Standard on Restoration Actions and Contributions (the draft Restoration Standard). We have summarised below the evolution of the Restoration Standard through the consultation process:
Key policy questions included:
- Approach to definition of net positive outcomes: there were various options for defining a 'net positive' outcome, whether in the principal Act, Regulation, National Environment Standard or elsewhere. Consultation materials signal possible flexibility in approach via the use of calculator tools and supporting policy. The EPR Bill ultimately adopted a 'net gain test'.
- Tension between state / territory and federal offset regimes: the draft Restoration Standard explicitly excluded the application of state / territory offset regimes. The exception is where the restoration action is in addition to existing actions and regulatory obligations (ie at the state / territory level) and meets the requirements of the draft Restoration Standard or is a 'registered advanced restoration action'. The Standard also required:
- the protection duration to be a 'reasonable expectation' for duration of the impact, which in some cases, where losses are irreversible, will be in perpetuity (where reasonable); and
- deliver a projected gain of a certain percentage (which does not appear to have been defined yet) for the protected matter, relative to a baseline that reflects what would have happened in the absence of the proposed action.
- 'Unacceptable' impacts:the draft Restoration Standard provided that in accordance with the mitigation hierarchy, restoration actions and contributions could only be used where a project is not 'unacceptable'. This was a shift from the current practice as a restoration action or contribution can no longer convert an unacceptable impact into an acceptable one. The Government will need to clarify how 'unacceptable impact' decisions will distinguish between project types, eg whether the test will be based purely on ecological impact. Industry experience with earlier offset regimes highlights the need for balanced, risk-based rules that recognise the public value of essential infrastructure while maintaining environmental integrity. Without clear guidance, the test risks uneven application across sectors, leading to inconsistent outcomes and pressure for case-by-case ministerial intervention.
- Restoration Contribution Fund: the Restoration Contribution Fund will establish an independent statutory office‑holder position (the Restoration Contributions Holder) who will be responsible for making investment decisions for restoration contribution, regional restoration contributions and managing the Restoration Contributions Fund. Although the consultation materials suggest there will be public reporting requirements on the Restoration Contributions Holder, the Government will need to consider implementing safeguards to ensure that restoration contributions are being appropriately managed (including ensuring the Restoration Contributions Holder is adequately resourced and is investing in appropriate restoration actions, within a timely manner).
Read more on headline issues
National EPA (NEPA)
A new, independent National Environmental Protection Agency. The CEO of the NEPA will be a statutory appointment and not subject to direction by the Minister. The CEO of the NEPA will be given a number of responsibilities under the Act, including compliance and enforcement functions, assurance of accreditation arrangements and the issuing of new enforcement tools such as environment protection orders.
Environment Information Australia (EIA)
A new function within the Department is to be headed by an independent statutory officer and is to be focused on the management of environmental data. The EIA would provide national leadership for the improvement of the availability and accessibility of high-quality, national environmental data and information, and ensure there is independent reporting and accountability for the state of the environment.
National Environmental Standards (NES)
A framework to establish legally enforceable National Environmental Standards that are intended to set the boundaries for decision-making to deliver the minimum protections to be achieved under the Act. These are intended to be subordinate legislation and will initially relate to matters such as the existing Matters of National Environmental Significance and environmental offsets.
Streamlined assessments and approvals
To remove certain lower-tier assessment pathways (such as assessment on referral information and public environment reports) and replace them with a 'streamlined assessment' pathway, intended to result in faster approvals timeframes. The bills also introduce a number of new tools to enable the Minister to ensure the protection of the environment, including 'Rulings' and 'Protection Statements' about how the Act should be interpreted and protections implemented.
Strategic assessments
Strategic assessments under Part 10 are retained, with new flexibility proposed, including to allow for the relevant policy, plan or program to evolve without necessarily requiring a new strategic assessment to be undertaken.
Bioregional plans
A new concept of bioregional assessments, allowing for broad-scale assessments to be undertaken to establish 'development' and 'conservation' zones, with 'priority actions' in development zones not to require further assessment and approval.
Biodiversity offsets and net gain
A new concept of passing the 'net gain' test will apply to compensate for significant residual impacts on protected matters. This can be achieved either by the proponent compensating for damage by securing an environmental offset, or by paying a restoration contribution charge in respect of the residual significant impact (unless the Minister has declared that a restoration contribution charge is not available for the relevant MNES).
First Nations engagement
Requirements for consultation with First Nations peoples are not included in the Bills, however new requirements are to be proposed through a National Environmental Standard consistent with the approach recommended in the Samuel Review.
Climate change
No 'climate trigger' is included. Instead, the EPR Bill requires certain proponents to disclose greenhouse gas emission information and reduction plans—this is anticipated to apply at least to facilities covered by the Safeguard Mechanism. This information is intended to be made available for transparency purposes only and will not inform decisions under the Act.
Penalties, merits review and third-party enforcement
Increased enforcement powers and, for certain large turnover body corporates, much higher maximum penalties for certain civil penalty provisions apply up to $825 million.
Unacceptable impacts
A redefined concept of an 'unacceptable impact', which varies for each protected matter. If an action has an unacceptable impact, the Minister must not approve it. Similar restrictions apply to other decisions made under the Act (eg to approve a regional plan, or when accrediting states/territories' assessment and approval powers).
Accreditation of states/territories for approval decisions
Various changes to the existing accreditation processes, placing a greater emphasis on the role of accredited state and territory processes to issue 'one-touch' approvals without the need for duplicative assessment by the Government.
National interest proposals and exemptions
The reforms introduce a strengthened national interest pathway, giving the Minister broad discretion to approve projects that serve Australia’s strategic priorities (noting that these exemptions are not available for fossil fuel actions). Under this approach, a project may proceed even if it conflicts with NES, has unacceptable impacts or fails the net gain test, where it is deemed critical to Australia’s defence, security or international obligations. At the same time, refinements to the existing exemption mechanism allow the Minister to dis-apply certain controlling provisions for protected matters, while imposing conditions and prescribing requirements to limit adverse impacts. Together, these changes create a more flexible framework for projects of national significance, balancing strategic imperatives with environmental safeguards.
Restoration fund
Proponents will be able to discharge their offset compensation liability (including under the new 'net gain' framework) by paying a restoration contribution charge to the Government. The money provided under this charge will be spent by a new independent Restoration Contributions Holder, supported by an expert advisory committee.
'Minor or preparatory' works
Authorisation to commence minor or preparatory works for an action after referral and before an approval has been issued. The Minister may also provide written agreement for other works that may commence.
Lapsing of not controlled action decisions
NCA and NCA-PM decisions will lapse after five years if the action has not 'substantially commenced'. The five-year period may be extended once by the Minister for a further period of up to five years (the total maximum being 10 years, lapsing from the date of the initial decision).
'Grandfathering' arrangements
Actions that are a lawful continuation of a use will no longer be exempt from approval if they involve clearing of vegetation from land within 50 metres of a watercourse, wetland or drainage line in a catchment area of the Great Barrier Reef Marine Park or the land has not been cleared of vegetation for at least 15 years (and the action is not a forestry operation).
Regional Forest Agreements
The exemption from approval for actions undertaken in accordance with an RFA will sunset on 1 July 2027.