Australia: Queensland's new environmental offsets framework: where does local government stand? Part 2

Last Updated: 16 June 2015
Article by Luke Grayson, Nadia Czachor and Ian Wright

This article concludes the discussion in our previous article, Queensland's new environmental offsets framework: where does local government stand? Part 1.

Delivery of environmental offsets must comply with the policy

The Environmental Offsets Policy relevantly provides the following for the delivery of environmental offsets:

  • Offset principles - These seven offset principles with which all environmental offsets must comply (Environmental Offsets Policy, section 1.3):
    1. offsets will not replace or undermine existing environmental standards or regulatory requirements, or be used to allow development in areas otherwise prohibited through legislation or policy;
    2. environmental impacts must first be avoided, then minimised, before considering the use of offsets for any remaining impact;
    3. offsets must achieve a conservation outcome that achieves an equivalent environmental outcome;
    4. offsets must provide environmental values as similar as possible to those being lost;
    5. offset provision must minimise the time-lag between the impact and delivery of the offset;
    6. offsets must provide additional protection to environmental values at risk, or additional management actions to improve environmental values; and
    7. where legal security is required, offsets must be legally secured for the duration of the impact on the prescribed environmental matter.
  • Offset size and scale - The size and scale of an environmental offset is stated to be that which is necessary to achieve a conservation outcome. Specific requirements are provided in respect of each type of delivery method, which generally relate to:
    • Land-based offsets - The land required to be provided is based on a habitat quality assessment, but cannot exceed four times the size of the land impacted by the prescribed activity.
    • Direct Benefit Management Plan - The suitability of this type of offset is considered on a case-by-case basis by reference to the benefits of the proposal.
    • Financial settlement offsets - The amount payable is determined in accordance with the methodology provided in the Environmental Offsets Policy.
  • Staged offset delivery - A proponent may deliver offsets in stages in line with stages of the prescribed activity, subject to:
    • the proposal to stage the offset delivery must be identified before the development approval is issued or infrastructure agreement is executed so that the conditions of the authority can reflect the arrangement;
    • the assessment of the development application or infrastructure agreement will need to consider, for the whole project, avoidance and mitigation of impacts on prescribed environmental matters and the maximum likely extent and duration of the impact on prescribed environmental matters;
    • detailed assessment of the impact of each stage of the proposal, including the offset requirement for that stage, will need to be conducted prior to providing a notice of election for that stage;
    • information in relation to completed stages is to be sought by the local government with the notice of election so that offset debits and credits may be assessed for subsequent stages; and
    • offset credits may be used in subsequent stages where the impact is on the same prescribed environmental matter, along with offset debits for earlier stages in unavoidable circumstances for unforeseen impacts.
  • Strategic offset investment corridors - Strategic offset investment corridors are pre-identified areas of land which may be suitable for land-management activities which provide a benefit to matters likely to be impacted by development. These areas are subject to:
    • offsets are not required to be provided in these areas, but proponents are encouraged to do so wherever possible to provide strategic landscape-scale benefits;
    • these corridors are intended to connect conservation hubs (e.g., national parks) in areas subject to low development pressure which are not zoned for activities such as urban development; and
    • at this stage only the Galilee Basin is identified as a strategic offset investment corridor on the Queensland government website.

Agreed delivery arrangement requirements

The local government and proponent must enter into an agreed delivery arrangement which has the following qualities (Act, section 19B):

  • the agreement is about the proponent's delivery of an environmental offset, with reference to any offset delivery plan (Act, section 19(4));
  • the agreement is entered into either before or after the development approval is granted or infrastructure agreement is executed (Act, section 19(5));
  • if the agreement is entered into before the development approval is granted or infrastructure agreement is executed, the following requirements are satisfied (Act, section 19A):
    • the proponent may start to deliver a proponent-driven offset before the development approval is granted or infrastructure agreement is executed, but must not pay any amount under a financial settlement offset until after the authority is granted;
    • the delivery method may be varied by the local government where the proponent changes the proposal after the agreement is entered into but not more than 10 business days after the development approval is granted or infrastructure agreement is executed (Act, section 19A(3) and (4));
  • either or both of the agreement and the offset delivery plan may be amended by entering into another agreed delivery arrangement before the proponent starts the relevant prescribed activity or stage of a prescribed activity (Act, sections 19(7) and 20).

Proponent-driven offset characteristics

Where under an agreed delivery arrangement a proponent is required to deliver an environmental offset in whole or in part by a proponent-driven offset, the following matters apply:

  • Form of offset - The proponent-driven offset may be one of the following:
    • Land-based offsets - This form of proponent-driven offset involves providing suitable land as an environmental offset. The suitability of the land for an offset condition imposed by a local government is determined by undertaking a habitat quality analysis under one of the following:
      • for a non-juvenile koala habitat tree under the Koala SPRP, the Guide to Determining Terrestrial Habitat Quality or an alternative approach approved by DEHP;
      • for a matter of local environmental significance, the local government's habitat quality assessment, provided any area of land for the offset does not exceed the impacted site area by more than a factor of 4.

      For a land-based offset, the site must be capable of delivering a conservation outcome for the impacted prescribed environmental matter. Most relevantly this means that for vegetation and for wetlands, the offset site must be of the same broad vegetation group or within the same wetland habitat type as the impacted vegetation and wetlands, respectively (Environmental Offsets Policy, section 2.3.1.6).

    • Direct Benefit Management Plan - This form of proponent-driven offset involves identifying priority actions in a pre-approved Direct Benefit Management Plan (DBMP) to address threats to, and provide substantial benefits for, prescribed environmental matters. Examples of conservation outcomes which may be achieved by a DBMP include the following where the activities are additional to existing management practices or requirements, and are priority actions for the prescribed environmental matter:
      • enhancing, restoring and establishing key habitat across multiple tenures or properties;
      • threat mitigation activities such as (but not restricted to) weed or feral animal control on a landscape scale or across multiple properties;
      • propagating and planting of threatened plant species or establishment and intensive management of new populations of threatened fauna in appropriate habitat;
      • protecting and restoring significant freshwater, marine or estuarine ecosystems;
      • landscape-scale fire management activities such as patch burning or protective burns;
      • fencing or other management techniques to manage access impacts on the prescribed environmental matter including legal security where relevant to all or part of the area.
    • Combination of land-based offset and DBMP - This form of offset involves providing a combination of land-based offset and DBMP.
  • Legally secured offset area - Generally, a proponent-driven offset is required to be, or to be undertaken on, a legally secured offset area. The consequences of land being a legally secured offset area include:
    • Any use of the area which is inconsistent with how the environmental offset was or is required to be undertaken, is a significant residual impact on the prescribed environmental matter for which the area was set aside (Act, section 8(4)),
    • It is a deemed condition of certain authorities that a prescribed activity cannot be undertaken in the legally secured offset area if carrying out the prescribed activity will delay, hamper or stop the delivery of the conservation outcome as stated in the agreement for the offset area (note that this is discussed further below) (Act, section 25)
  • Compliance with agreements - The proponent is required, as a deemed condition of the development approval or infrastructure agreement, to comply with the agreed delivery arrangement, including the agreed offset delivery plan (Act, section 22).
  • Advanced offsets - A landowner may apply to a local government for an area of land to be registered as an advanced offset to be used for the purposes of an environmental offset in the future (Act, section 93(2)(b)). Advanced offsets are subject to the following (Regulation, sections 13 and 14):
    • Approved form - The applicant must provide the application in the approved form, which may be found on the Queensland government website;
    • Local significance or SPRP - A local government may only consider an application which relates to an environmental impact for which an offset condition may be imposed under a State planning regulatory provision or a local planning instrument of the local government. However, where an environmental offset may be required by the State, the application must be made to the Chief Executive;
    • Consideration - The local government must have regard to the Environmental Offsets Policy and any other relevant environmental offsets policy.
    • Decision - The local government may:
      • approve the identification of all or part of the area as an advanced offset; or
      • refuse the identification of the area as an advanced offset.
    • Registration or notification - As soon as practicable after making the decision, the local government must:
      • if the application was approved or partly approved, register the area as an advanced offset in the local government's register of environmental offsets, or
      • if the application was refused, give the applicant a notice stating the decision, reasons for the decision and all rights of internal review. It is unclear whether such a notice must be given where the local government partly approves the application.
    • Deregistration - An owner of land may apply, at any time in the approved form, for an area of land registered as an advanced offset to no longer be identified as an advanced offset and to be removed from the register. As soon as practicable after the application is made, the local government must remove the record for the advanced offset from the register. There is no provision for the local government to refuse a request of this type.

Financial settlement offset characteristics

Where, under an agreed delivery arrangement, a proponent is required to deliver an environmental offset in whole or in part by a financial settlement offset, the following matters apply:

  • Maximum amount - The maximum amount payable for a financial settlement offset where the administering agency is a local government is the amount determined by the local government in accordance with the Environmental Offsets Policy (Act, sections 12(1) and 23(2); Regulation, section 6).
  • Payment requirements - The proponent must pay to the local government, the amount required by, and in the way stated in, the agreed delivery arrangement (Act, section 24):
    • before the proponent starts any part of the prescribed activity to which the offset condition relates; or
    • if the development approval or infrastructure agreement allows the prescribed activity to be carried out in stages, the proponent may pay the amount required by the agreed delivery arrangement for a stage.
  • Local government management - The amount payable as a financial settlement offset is held on trust by the local government and may only be transferred for one or more of the following (Act, section 89):
    • paying expenses incurred, directly or indirectly, by the local government in the delivery of the environmental offset to achieve a conservation outcome;
    • paying fees or expenses related to administering the trust fund.
  • There is also an ability for the State government to prescribe other amounts under the Regulation to be paid out of the trust fund. However, this has not yet been done in the Regulation dated 19 December 2014.

Deemed conditions of development approvals or infrastructure agreements

Where an offset condition is imposed on a development approval or an infrastructure agreement, the following conditions are deemed to be conditions of the authority despite section 347(b) and (c) of the SPA (Act, section 16):

  • Agreed delivery arrangement condition (Act, section 19B) - The local government and proponent holding a development approval or an infrastructure agreement which includes an offset condition must have entered into an agreed delivery arrangement before starting:
    • any works that impact on the matter of local environmental significance or the non-juvenile koala habitat tree to which the offset condition relates; or
    • if the development approval or an infrastructure agreement allows the prescribed activity to be carried out in stages, any works for the stage that impact on the matter of local environmental significance or the non-juvenile koala habitat tree to which the offset condition relates.
  • Proponent-driven offset condition (Act, section 22)- Where under an agreed delivery arrangement a proponent holding a development approval or an infrastructure agreement is to deliver an environmental offset in whole or in part by a proponent-driven offset, the proponent must comply with the agreed delivery arrangement, including the agreed offset delivery plan. This condition has the effect of locking a proponent to its proposal for offset delivery.
  • Financial settlement offset condition (Act, section 24)- Where under an agreed delivery arrangement a proponent holding a development approval or an infrastructure agreement is to deliver an environmental offset in whole or in part by a financial settlement offset, the proponent must pay to the local government the amount required by, and in the way stated in, the agreed delivery arrangement:
    • before the proponent starts any part of the prescribed activity to which the offset condition relates; or
    • if the development approval or infrastructure agreement allows the prescribed activity to be carried out in stages, the proponent may pay the amount required by the agreed delivery arrangement for a stage.
  • Legally secured offset area condition (Act, section 25) - Where a development approval or an infrastructure agreement authorises a prescribed activity to be undertaken in a legally secured offset area, the proponent holding the approval or agreement must not carry out any prescribed activity in the legally secured offset area if:
    • a delivery or management plan or agreement applies to all or part of the offset area; and
    • carrying out the prescribed activity will delay, hamper or stop the delivery of the conservation outcome for a prescribed environmental matter as stated in the delivery or management plan or agreement.

This appears to apply even where no offset condition is imposed. However, the Explanatory Notes to the Environmental Offsets Bill 2014 indicate that this section is intended to be read down such that this section only applies where an offset condition is imposed (Act, sections 16 and 25; Explanatory Notes, clause 24).

It is also relevant to note that legally secured offset areas are matters of State environmental significance and, on this basis, a local government may not impose an offset condition in respect of a legally secured offset area (Act, section 15(4); Regulation, section 5(2), 4(b)(ii) and schedule 2, (section 12)). A local government may impose an offset condition in respect of a matter of local environmental significance within the legally secured offset area, but not in respect of the area itself.

Delivery of environmental offsets for koalas

Delivery of environmental offsets in respect of koalas may be provided by way of proponent-driven offsets or, where appropriate, financial settlement offsets.

  • For proponent-driven koala offsets, the following apply:
  • SEQ requirements - For koala habitat within South East Queensland and under the Koala SPRP, the only acceptable approach to meeting a proponent-driven offset is to meet all of the following requirements (Environmental Offsets Policy, section 2.3.1.6):
    • DBMP - A DBMP cannot be used to manage a proponent-driven koala offset and therefore proponent-driven koala offsets in South East Queensland can only be delivered through a land-based offset.
    • Habitat rehabilitation, establishment and protection - The rehabilitation, establishment and protection of koala habitat is the only appropriate action to offset koala habitat within South East Queensland and under the Koala SPRP.
    • 3-to-1 replacement - Establish three new koala habitat trees for every one non-juvenile tree removed.
    • Same local government area - Offset plantings must occur within the same local government area as the impact site, except relevantly where the impact occurs within the Koala Coast (as identified in the Koala SPRP maps) and the impact area crosses local government boundaries. In these circumstances the assessment manager, local authority, Minister or State agency may determine an appropriate area within the Koala Cost for the offset plantings to occur.
    • Habitat value - In an area of high value or medium value suitable for rehabilitation habitat, or where these are not available, within low value suitable for rehabilitation habitat or where appropriate, within bushland habitat to enhance the quality of bushland within the local government area.
    • Tree density - Koala habitat trees to be established must be reflective of the species endemic to the site and planted at densities that will produce a mature density reflective of the regional ecosystems present on the site.
  • Requirements outside SEQ - For koala habitat outside South East Queensland, a proponent may choose to either (Environmental Offsets Policy, section 2.3.1.6):
    • establish three new koala habitat trees for every one non-juvenile tree removed, or
    • provide a land-based offset in accordance with the Guide to Determining Terrestrial Habitat Quality and the Land-Based Offsets Multiplier Calculator tool.
      It is unclear whether these offsets must be provided in the same local government area as the impacted site.
  • General offset site requirements - For fauna habitat under the Nature Conservation Act 1992, including koala habitat, the offset site must contain, or be capable of containing, a self-sustaining population of that same species

What action is required from a local government?

In order to impose an offset condition, other than a condition in respect of a non-juvenile koala habitat tree under the Koala SPRP, a local government must make a local planning instrument that identifies:

  • matters of local environmental significance for which an environmental offset is required (Act, section 10(1)(c); Regulation, section 5(4)(a)); and
  • development for which an environmental offset may be required (Act, section 9; Regulation, section 4 and schedule 1 (item 7(a))).

A local government must also comply with the following when administering environmental offsets:

  • a trust fund must be established for the holding of money received as a financial settlement offset by the local government, which may only be transferred in certain circumstances (Act, section 89(1) and (2));
  • a register of information must be kept about each authority with an offset condition that has been issued by the local government, which must be made available for inspection in the way in which the local government reasonably considers appropriate, including being made electronically available (Act, section 90).

Local planning instrument

Should a local government decide to make or amend a local planning instrument to provide for the requirements of the Act and Regulation, the local government should consider the following:

  • SPA requirements - The requirements of the SPA, including the applicable guideline, apply to the process for making or amending the local planning instrument (SPA, chapter 3, part 5; MALPI Guideline).
  • Adoption of additional documents - To assist in interpreting the local planning instrument and explaining the local environmental significance of relevant matters, the local government should also consider adopting the following documents with the local planning instrument:
    • a significant residual impact guideline, to explain the significance of the local environmental matters and set guidelines for the types of impacts on these matters which will be considered significant residual impacts;
    • an environmental offsets policy, to set guidelines around the delivery of environmental offsets for the identified matters of local environmental significance;
    • a habitat quality assessment tool, to provide a local tool for assessing the suitability of a proposed offset site.

Key matters for local governments

A local government may only impose conditions in respect of:

  • a non-juvenile koala habitat tree under the Koala SPRP; or
  • a matter of local environmental significance set out in a local planning instrument.
  • For the purposes of this article, the offset condition must be imposed as a condition of a development approval or as part of an infrastructure agreement.

    An offset condition imposed by the Commonwealth government (or a decision not to impose a condition) will prevent a local government from imposing a condition on the same, or substantially the same, matter. There is still some uncertainty as to how this will operate in practice.

    Generally, an offset condition imposed by the State government will prevent a local government from imposing a condition on the same, or substantially the same, matter. However, this is not the case for conditions in respect of a non-juvenile koala habitat tree imposed under the Koala SPRP.

    All levels of government continue to have a stake in imposing some form of offset condition in respect of koalas or koala habitat.

    Offsets may be delivered by a proponent-driven offset (land-based offset or DBMP) or a financial settlement offset.

    A landowner may apply for an area of land to be designated as an advanced offset to be used as an environmental offset for a future impact.

For further information, please contact:

Ian Wright Nadia Czachor
Local government
CBP Lawyers

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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