The investigation that blew the lid off Sydney’s environmental offsets | Ten years of Guardian Australia

A series of exclusives by Lisa Cox led to a parliamentary inquiry, a state audit and Icac referrals. She looks back at the painstaking work that went into piecing it all together

Lisa Cox has been writing about failures in Australia’s environmental protections for a long time.

Back in 2018 she recalls being “very much aware that biodiversity offsets were an issue”.

Offsets allow land developers to compensate for the environmental damage they cause in one area by pledging work to deliver an equivalent environmental benefit in another.

“I’d always thought if I found some examples where I could show what the issues were – clearly show them – that would be when we pursue it,” the Guardian Australia environment reporter says.

Her break came in late 2020 when, as often happens, she was reporting on another matter. “I was writing about the proposal to raise the Warragamba Dam wall,” she says.

She met up with Dr Steve Douglas, a Sydney ecologist. “He happened to be out on this trip that [photographer] Mike Bowers and I did out out in the bush,” Cox says. “We got chatting and I said, ‘Look, if there’s anything you know that you think would be worth a story, let me know.’

“And he got in touch afterwards and says, ‘Oh, look, I do have something, but it will require a longer conversation.’”

Housing in western Sydney bordering threatened bushland that the NSW government pledged to turn into a public reserve
Housing in western Sydney bordering threatened bushland that the NSW government pledged to turn into a public reserve. Photograph: David Maurice Smith/Oculi

He revealed to Cox that he’d been commissioned to write a report about a site in western Sydney that was meant to be an offset for a toll road. Fifteen years after the M7 opened to traffic, the New South Wales government had not yet established a public reserve that was proposed as the major environmental offset for the motorway’s construction.

“Steve didn’t decide to go on record right away, that was something we talked about,” Cox says. “But once we had that initial conversation, it got me looking at different projects around western Sydney.”

She found an old report on the internet written by a group of community environmental organisations in the area, highlighting the decline of the region’s bushland. The document expressed concerns about potential conflicts of interest in trading of offset credits and in passing mentioned the practice of double dipping by the government.

“Consultants who had companies that were providing environmental advice to the government were also selling offsets to the NSW and federal governments for those same projects,” Cox says. “This information was there, if you went looking for it. It was just pulling it together.”

She tracked down some of the people who wrote the report, including Lisa Harrold and Wayne Olling. They helped blow the whistle about other offsets, such as those meant to compensate for land clearing for the western Sydney airport. A contact directed her to specific offset purchases associated with the western Sydney airport, while another taught her how to use a series of NSW government databases to track offset credit transactions.

“I could find out who owned particular credits under a particular offset site number. By doing that, it was possible to trace which company owned an offset site and which companies or government agencies had purchased credits from that site and what they had paid for them.”

If it sounds technical, it was. It took Cox two weeks working after hours to uncover concerning evidence of potential conflicts of interest: consultants from a company that advised the government on developments in western Sydney had bought land in the area and made millions in windfall profits selling offsets.

When asked for a response at the time, the consultants told Guardian Australia that they had not been personally involved in preparing the offset advice for the government, and did not recall seeing the relevant report. They denied any suggestion of wrongdoing or conflict of interest and said they had made the appropriate declarations to the government.

Serious transparency concerns

“What made this investigation possible was the brave scientists and people in western Sydney who decided to put all of these concerns on record,” Cox says, speaking broadly about the whole series, which covered a number of different offsets. “It wouldn’t have happened without them.

“When major projects are approved, they’re approved with conditions that these offsets will be delivered. We had clear examples of where those offsets never happened. We had clear examples of a government project that had been approved on land that was already government-owned and somewhat protected, because it had heritage listing.

“There were serious questions about the legitimacy of offsets and what they were achieving for some projects in terms of their environmental benefit. And it also showed clear concerns about transparency, potential conflicts of interest and integrity issues with the system.”

Ultimately Cox’s series led to a NSW parliamentary inquiry into the state’s entire offsets scheme that warned that habitat for threatened species was being traded away for cash.

There were Icac referrals and the NSW auditor general brought forward her own review of the biodiversity offset scheme. In a report dubbed “utterly damning” by conservationists, she found serious transparency and integrity concerns, and questioned the legitimacy of environmental benefits.

Critically endangered woodland on the Cumberland Plain in western Sydney
Critically endangered woodland on the Cumberland Plain in western Sydney. Photograph: Carly Earl/The Guardian

Internal investigations by the NSW government led to changes to environment department policy. “As a result of these stories, people who hold certain roles within the NSW environment department are prevented from owning or participating in the offset scheme,” Cox says.

The NSW inquiry report made 19 recommendations, which include establishing clear thresholds for when offsets should not be permitted for ecosystems and species that were so threatened that damage was impossible to offset.

While the report found it had no evidence of wrongdoing by the environmental consultants who Guardian Australia reported made windfall gains, it found that the case illustrated that, when there was insufficient transparency – including with how potential conflicts of interest are managed – the scheme was “open to the perception of collusion or insider trading between consultants, their clients and/or the authorities managing it”.

It also found there were multiple areas in the scheme in which conflicts of interest could arise and recommended that the planning and environment department continue to review arrangements for managing them, in addition to improvements already made.

“Offsets is still a very live issue,” Cox says. “Every single report that gets done finds that actually what they’re delivering is a net loss.

“Penny Sharpe, who’s the new NSW environment minister, is saying she wants to make larger reforms to offsetting. And federally it’s also under scrutiny.”

The issue is something she cares deeply about.

In February she reported on a high-risk NSW plan to offset urban growth at the Cumberland Plain woodland, described by experts as “almost certain to fail”.

“You’re talking about western Sydney’s last bushland,” Cox says. “There’s something like 6% of it left. Sometimes when people think about a woodland, they’re just thinking, ‘Oh, it’s just trees, and you can just plant trees to replace it.’

“But the original, intact versions of these ecosystems are really complex. They’ve got hundreds of species, grasslands, different types of flowers.

“It’s the last of what’s left.”

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