By Aaron Gadiel, Partner
Biodiversity legislation in NSW has been tightened. The changes impose additional obligations on property developers seeking to re-develop land with biodiversity values.
The changes are made by the Biodiversity Conservation Amendment (Biodiversity Offsets Scheme) Act 2024. Most of that legislation came into effect last Friday (7 March 2025).
The article analyses some key changes in the legislation — from the perspective of a property developer. Not all the changes are addressed.
In general terms, development applications in NSW are subject to the Biodiversity Conservation Act 2016 (the BC Act).
This means that, in certain circumstances, an application for development consent must be accompanied by a biodiversity development assessment report (BDAR).
Specifically, a BDAR is required when a proposed development is ‘likely to significantly affect threatened species’. There are various thresholds and tests that are applied to determine whether this is the case in particular circumstances. Any BDAR must be prepared in accordance with the Biodiversity Assessment Method 2020.
Prior to 7 March 2024, when a BDAR was required, the applicant was also as a threshold issue, required to demonstrate that appropriate and sufficient steps have been taken to avoid or minimise the biodiversity impacts (this was often referred to as the avoid, minimise and offset hierarchy).
The consent authority, when determining the development application, was (and still is) required to consider the likely impact of the proposed development on biodiversity values — as assessed in the BDAR.
If the consent authority decides to grant consent (and the biodiversity offsets scheme applies to the proposed development), the conditions of the consent must require the applicant to ‘retire’ (obtain and surrender) biodiversity credits to offset the residual impact on biodiversity values.
If the application is for state significant development, the consent authority has a broad discretion as to the retirement of biodiversity credits.
For development that is not state significant development, the retirement must be equal to the number and class of credits specified in the BDAR (subject to discretion for the consent authority to increase or reduce this number, based on the environmental, social and economic impacts of the proposed development).
In short, when the BC Act applies, and a BDAR is required, a developer may be required to retire biodiversity credits.
Additionally, a developer also needs to address the ‘serious and irreversible impacts’ of the proposed development on biodiversity values. If a consent authority considers that there are ‘serious and irreversible impacts’ under the statutory tests (for development that is not state significant development), the consent authority must refuse the development application.
For state significant development, the consent authority must take into account any likelihood that the development will have serious and irreversible impacts but may approve the development nonetheless.
The BC Act has now been amended to introduce a new ‘avoid, minimise and offset hierarchy’. This applies to development applications for which a BDAR is required.
Under the new hierarchy, a development application is evaluated against the following principles:
This differs from the regime that applies prior to 7 March 2025. Previously, a proponent was only required to show that appropriate and sufficient steps have been taken to avoid or minimise the biodiversity impacts.
Many developers — particularly on smaller sites — have found it difficult to avoid a biodiversity impact.
In this regard, the Land and Environment Court held that the absence of development on land on which the development is already prohibited is not ‘avoidance’. This means that to ‘avoid’ a biodiversity impact, a developer would need to give up the opportunity to develop land that that was already zoned for the given development. That is, avoidance typically reduces development potential.
Until last week, the legislation allowed a developer to propose a minimisation approach instead of an avoidance approach. ‘Minimisation’ was able to be achieved, by among other things, by carrying out plantings and weed management to restore ecological values of on-site vegetation. Unlike ‘avoidance’ measures, such minimisation work could be carried out on adjacent conservation land that where the substantive proposed development was prohibited.
However, under the new principle, in every case, a developer must first take ‘all reasonable measures’ to avoid the impacts of the development on biodiversity values. A developer cannot now adopt a minimisation strategy first.
In addition to ‘avoidance’ a developer now has to also demonstrate ‘minimisation’ of impacts.
(Some local environmental plan provisions include biodiversity clauses that already mandated an avoidance and minimisation hierarchy. Where such clauses already apply to land, this particular change to the BC Act may make no practical difference.)
The legislation does not expressly address how far a developer should be expected to go to avoid impacts. However, where land that is zoned for the given substantive development includes ecologically sensitive features, it is likely that there would need to be some ‘giving up’ of development potential to show that the ‘avoidance’ obligation has been met.
If the giving up of that development potential has the effect of sterilising the development site, it could be argued that there are no ‘reasonable measures’ that could be taken to avoid the impact. A consent authority who was satisfied at this point, may allow the development to be carried out with no avoidance measures (but with, say, some minimisation measures).
This new regime applies immediately and affects pending development applications (for which a BDAR has been required).
The current biodiversity offsets scheme — and the Biodiversity Assessment Method 2020 — operate in accordance with a ‘no net loss of biodiversity’ principle.
The Government has decided that this is no longer good enough.
The amended legislation now requires the biodiversity offsets scheme to transition to ‘net positive biodiversity’.
This means that the scheme, as a whole, must aim to deliver an improvement to biodiversity outcomes, rather than just stopping things from getting worse.
There will not be any immediate change flowing from this aspect of the amendments.
Instead, the NSW Environment Minister (Penny Sharpe) must put in place a strategy for the transitioning of the biodiversity offsets scheme ‘to deliver net positive biodiversity outcomes’.
The strategy must specify the actions required and include targets and time frames for the transition process.
The strategy must be the subject of a consultation process. This requires, as a minimum:
The strategy must be prepared and finalised ‘as soon as practicable’ after 7 March 2025.
Once the strategy is prepared, it will inform any review of the Biodiversity Assessment Method 2020. Any replacement must be at a standard that the Environment Minister considers will result in net positive biodiversity outcomes in NSW.
The adoption of this strategy (and a new biodiversity assessment method) is likely to lead to more onerous obligations on developers (and higher costs) in relation to the retirement of biodiversity credits.
At present, a developer who is required by a development consent to retire biodiversity credits may satisfy that requirement by instead paying an amount into the Biodiversity Conservation Fund. The cash payment is determined in accordance with the offsets payment calculator.
This has been a necessary feature of the biodiversity offsets scheme, due to the difficulty of acquiring credits in the open market to retire. In short, landowners have not embraced opportunities to create credits. There often are simply no credits available to purchase.
The amendment to the legislation now allows the Government to make regulations limiting the ability for a developer to pay cash into the Biodiversity Conservation Fund in lieu of retiring credits.
The regulations may, instead, specify that a developer would have to carry out ‘prescribed biodiversity conservation measures’ as an alternative to actually retiring biodiversity credits.
No such regulations have been made at this time. So, for the moment, that status-quo continues and all obligations to retire credits can (for now) be satisfied by paying the required amount into the Biodiversity Conservation Fund.
These changes make it clear that the Government’s commitment to boosting housing supply does not extend to relaxing development rules on environmentally sensitive land.
The amendments to the BC Act will lead to greater burdens on developers of new housing on environmentally sensitive land.
Large parts of Western Sydney are already the subject to biodiversity certification (this removing the requirement for a BDAR). As a result, these latest changes are likely to have the greatest impact on housing supply in regional NSW, rather than Sydney.
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