AGRICULTURE BIODIVERSITY STEWARDSHIP MARKET BILL 2022 Explanatory Memorandum

Commonwealth of Australia Explanatory Memoranda

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AGRICULTURE BIODIVERSITY STEWARDSHIP MARKET BILL 2022

2019-2020-2021-2022 THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA HOUSE OF REPRESENTATIVES AGRICULTURE BIODIVERSITY STEWARDSHIP MARKET BILL 2022 EXPLANATORY MEMORANDUM (Circulated by authority of the Minister for Agriculture and Northern Australia, the Hon. David Littleproud MP)

AGRICULTURE BIODIVERSITY STEWARDSHIP MARKET BILL 2022 GENERAL OUTLINE The Agriculture Biodiversity Stewardship Market Bill 2022 (the Bill) will establish a legislative framework to support a national voluntary agriculture biodiversity stewardship market. This will enable agricultural landholders to undertake projects that enhance or protect biodiversity in native species and receive a tradeable certificate for doing so. It will facilitate private investment in projects that will support biodiversity protection and restoration. It will be primarily administered by the Clean Energy Regulator (the Regulator). The Bill will: • Create a nationally consistent framework to describe and measure biodiversity outcomes; • Enable biodiversity certificates describing biodiversity projects to be purchased, transferred, claimed, used and publicly tracked; and • Establish project assurance and compliance systems to provide certainty to the market. The Bill will support the Australian Government's Delivering Ag2030 commitment to ensure that Australian farmers are rewarded for their stewardship of land and water. It builds on the Agriculture Biodiversity Stewardship pilots, which are trialling market-based approaches to value biodiversity on farms, including piloting projects in Natural Resource Management Regions around Australia. It is in Australia's interest to ensure an appropriate framework is in place to support the objects of the Bill. The administration of this legislative framework should not be burdensome for government, businesses, community organisations, and individuals participating in the market. The Bill will establish a flexible framework enabling the Australian Government to be responsive to change and issues as they arise. To make it easier for landholders to undertake landscape restoration and management projects that deliver both carbon and biodiversity benefits, the Bill has similarities with the Carbon Credits (Carbon Farming Initiative) Act 2011 (CFI Act). The CFI Act established a scheme for crediting and facilitating a voluntary market for carbon sequestration projects. There are, however, important differences between carbon credits and biodiversity certificates. Carbon credits represent a tonne of CO2e avoided or removed from the atmosphere. All credits have an equivalent environmental value and multiple credits are normally issued for every project. In contrast, a biodiversity certificate is heterogenous and only one certificate will be issued for each project. The biodiversity certificate will set out consistent, verifiable information about each project, including the anticipated biodiversity gain or change. This information will enable the market to assess its value. Objects of the Bill The objects of the Bill will include helping to meet Australia's international obligations in relation to biodiversity, and establishing a framework to support a market for biodiversity outcomes that provides incentives for the enhancement or protection of biodiversity in native species in Australia. 1

Responsibility The Bill will assign the Agriculture Minister with responsibility for the legislation. It will delegate the power to make rules to the Agriculture Minister. The rules will be legislative instruments and will be subject to the requirements of the Legislation Act 2003, including Parliamentary scrutiny, oversight, disallowance and sunsetting. The Bill will make provision for the Clean Energy Regulator (the Regulator) to be the regulatory authority. It will provide for the authorisation of persons to exercise certain powers and perform certain functions under the Bill. These powers will include the conduct of audits and the giving of directions that must be complied with (such as a written notice requiring information) by regulated businesses and individuals. Participation The Bill will provide for projects to be on eligible land, which will mean agricultural land within Australia, or otherwise eligible land will mean what is prescribed by the rules. An eligible person may apply to the Regulator for registration of a biodiversity project. The Bill and rules will define what is required in relation to this process, including information, documentation and consents required. Registration may be granted subject to conditions of regulatory approval or consent of eligible interest holders. These conditions would need to be satisfised by the project proponent in order to receive a biodiversity certificate. The Bill will allow for the registration, variation and cancellation of biodiversity projects. An application for registration of a project can be submitted by an "eligible person" under the scheme, which will include an individual, a body corporate, a trust or a corporation sole. This approach will allow flexibility for farmers and other persons to participate in the scheme in a way that is consistent with their preferred business models. Multiple project proponents are also able to jointly apply to the Regulator to register a biodiversity project. The Bill will set out a fit and proper person test that will need to be satisfied by an eligible person. If a person does not pass the fit and proper person test, the person will not satisfy the criteria for approval of registration of a biodiversity project. The Regulator will also be able to cancel the registration of a biodiversity project if a person ceases to be a fit and proper person. These mechanisms are in place to maintain the integrity of eligible persons, and the projects undertaken by those persons, that are subject to the scheme. The Bill will enable the Agriculture Minister to make protocol determinations that will apply to biodiversity projects. Protocol determinations will be developed to accommodate the assessment and measure of the various types of biodiversity projects. The protocol determinations will establish specific requirements for how distinct types of projects will be managed under the legislation, and will also be the legal mechanism through which certain rights and obligations are assigned to the project proponent. Agriculture Biodiversity Stewardship Market Advisory Committee The Bill will establish the Agriculture Biodiversity Stewardship Market Advisory Committee (ABSMAC) which will consist of independent experts to advise and provide recommendations to the Agriculture Minister on the development of protocols. The Bill will 2

also allow the Agriculture Minister to vary or revoke a protocol determination which will require consideration of advice provided by the ABSMAC. Biodiversity Certificates The Bill will establish "biodiversity certificates" which will be a form of tradeable personal property. When a project is registered and has met any conditions, including those stipulated under the protocol determination, the project proponent can apply to the Regulator for the issue of a biodiversity certificate. The biodiversity certificate will be personal property that is owned and traded separately from the land. A biodiversity certificate will remain valid for the life of the project. The Bill will require biodiversity certificates to contain the key attributes of the project (for example, project type, size of project area and permanence period) and the kind of biodiversity that is being delivered and maintained. To ensure transparency, accountability and that information is publicly available, a register (to be named the Agriculture Biodiversity Stewardship Market Register) will be established under the Bill and maintained by the Regulator by electronic means to track the biodiversity projects and the issuance, ownership, and transfer of biodiversity certificates. This will also allow potential purchasers to assess and value the package of attributes associated with each biodiversity certificate. To facilitate the trading of biodiversity certificates, the Bill will provide that the rules may establish an online platform. The Regulator would have oversight of the platform, if established under the rules. To ensure the transparency of the scheme, and provide the market with assurances in relation to the integrity of the tradeable biodiversity associated with biodiversity certificates, the Regulator will be required to publish certain information about biodiversity certificates issued by them on their website. The Regulator will also be required to publish reports about biodiversity certificates at least once a year. While it is anticipated that purchases of biodiversity certificates will primarily be made by private sector investors, the Bill also enables the Commonwealth to purchase biodiversity certificates. The Bill will empower the Secretary to enter into biodiversity conservation contracts, for the purchase of a biodiversity certificates on behalf of the Commonwealth. The Bill will also set out the biodiversity conservation purchasing processes (such as tender processes), which are to be conducted by the Secretary. Where the Commonwealth Procurement Rules are not applied, the Bill will include certain principles and other matters (such as value for money, the extent and quality and importance of biodiversity conservation that is likely to be achieved, the integrity of the process etc) that must be applied when conducting such purchasing processes. As biodiversity projects are associated with areas of land, the Bill will enable a relevant land registration official of the relevant state or territory to make entries or notations in their land registers in relation to the area of land that is the subject of the biodiversity project. This includes making an entry or notation in relation to a registered biodiversity project; or a biodiversity maintenance declaration. This will operate to ensure that interests in the land associated with a biodiversity certificate under the scheme will be reflected in the land titles registers of each jurisdiction, and that any potential purchasers of the land (or any other interested parties) will be informed of such interests. The Secretary will be required to publish information relating to any such process and the associated contracts. 3

Compliance and enforcement There are also various assurance and compliance measures set out in the Bill for the purposes of ensuring that a registered biodiversity project complies with the legislation, including requirements for a project proponent to provide reports about the biodiversity project. The Regulator will also have the power to audit projects and require third-party audits to be commissioned by a project proponent. The Regulator will also be empowered with information-gathering powers to monitor general compliance or undertake more specific investigations into suspected breaches. There are also record-keeping and project monitoring requirements that project proponents must comply with under the Bill. Assurance and enforcement processes will be managed by the Regulator throughout the project. To deter conduct that would reduce confidence in the market, and to ensure effective enforcement, the Bill will provide for a range of powers that can be exercised by authorised officers, including those triggered under the Regulatory Powers (Standard Provisions) Act 2014. Regulatory powers include monitoring, investigation, civil penalties, infringement notices, enforceable undertakings, and injunctions. The Bill also allows for the cancellation of biodiversity projects and relinquishment of certificates in response to specific circumstances of non-compliance. The Regulator may make a biodiversity maintenance declaration in relation to a specified area of land (known as a biodiversity maintenance area) where there has been non- compliance or likely non-compliance with a relinquishment notice given by the Regulator. The Bill requires the Regulator to publish information on the scheme and projects through the register and other sources, including its website, to inform and engage stakeholders and facilitate the development of the market. Reviewable decisions Certain decisions will be able to be reviewed internally by the Regulator and externally by the Administrative Appeals Tribunal. Fees The Bill provides for fees to be imposed under the Bill, on a cost-recovery basis, in relation to activities carried out by, or on behalf of, the Commonwealth (for example, by authorised officers) in the performance of functions or the exercise of powers under the Bill. The Bill also provides, in some circumstances for fees to be refunded. CONSULTATION The Department of Agriculture, Water and the Environment (the Department) undertook targeted consultation with select stakeholders in the agriculture, industry, environment and finance sectors, and state and territory governments from November 2021 to January 2022. Consultation also occurred with appropriate Commonwealth agencies, including the Clean Energy Regulator, the Department of the Prime Minister and Cabinet, the Attorney-General's Department, the Department of Finance, Treasury, the Department of Home Affairs, the Department of Foreign Affairs, the Australian Public Service Commission, the National 4

Indigenous Australians Agency, and the Department of Industry, Science, Energy and Resources. FINANCIAL IMPACT STATEMENT The costs associated with the establishment of the agriculture biodiversity stewardship market are expected to be $13.2m over two years from 2021-22 to 2022-23. Further costs of implementation will be subject to future appropriation. Options for cost recovery will also be subject to future decisions of Government. REGULATION IMPACT STATEMENT The Regulation Impact Statement is attached to this explanatory memorandum. STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. The full statement of compatibility with human rights is attached to this explanatory memorandum. 5

ACRONYMS, ABBREVIATIONS AND COMMONLY USED TERMS the ATSI Act the Aboriginal and Torres Strait Islander Act 2005 the Acts Interpretation Act Acts Interpretation Act 1901 the Agriculture Department the Department administered by the Agriculture Minister the Agriculture Minister the Minister means the Minister administering the Primary Industries Research and Development Act 1989 the ABSMAC the Agriculture Biodiversity Stewardship Market Advisory Committee the Biodiversity Convention United Nations Convention of Biological Diversity the CER Act Clean Energy Regulator Act 2011 the CFI Act Carbon Credits (Carbon Farming Initiative) Act 2011 the Constitution Commonwealth of Australia Constitution Act the Corporations Act Corporations Act 2001 the Crimes Act Crimes Act 1914 the Criminal Code Criminal Code Act 1995 the Guide to Framing the Guide to Framing Commonwealth Offences, Commonwealth Offences Infringement Notices and Enforcement Powers published by the Attorney-General's Department the Legislation Act Legislation Act 2003 the Native Title Act Native Title Act 1993 the PGPA Act Public Governance, Performance and Accountability Act 2013 the Privacy Act Privacy Act 1988 the Regulator the Clean Energy Regulator the Regulatory Powers Act Regulatory Powers (Standard Provisions) Act 2014 the Secretary the Secretary of the Agriculture Department 6

AGRICULTURE BIODIVERSITY STEWARDSHIP MARKET BILL 2022 NOTES ON SECTIONS PART 1--PRELIMINARY 1. This Part of the Bill would set out preliminary matters, including the objects, application of the Bill to external Territories and relevant definitions used throughout the Bill. Section 1 Short title 2. This section would provide that the Bill, when enacted, may be cited as the Agriculture Biodiversity Stewardship Market Act 2022. Section 2 Commencement 3. This section would provide for the commencement of the Bill. 4. The effect of the items within the table in subsection 2(1) would be to enable different parts of the Bill to commence at different times. Each provision of the Bill specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. 5. Item 1 of the table would provide that the whole of the Bill would commence the day after the Bill receives Royal Assent. 6. Subsection 2(2) would provide that any information in column 3 of the table is not part of the Bill. It would clarify that information may be inserted in column 3 of the table, or information in it may be edited, in any published version of the Bill. Section 3 Objects of this Act 7. This section would provide for the objects of the Bill, which are to establish a framework for a market that facilitates projects to enhance or protect biodiversity in native species in Australia, and to contribute to meeting Australia's international obligations in relation to biodiversity. The reference to Australia's international obligations includes obligations under the Convention on Biological Diversity (Biodiversity Convention) as in force for Australia from time to time. Section 4 Simplified outline of this Act 8. The simplified outline is included to assist the reader to understand the substantive provisions of this Bill; however, it is not intended to be comprehensive. It is intended that the reader will rely on the substantive provisions of this Bill to which the outline relates. 7

Section 5 Crown to be bound 9. This section would provide that while the Crown in each of its capacities would be bound by the Bill, the Crown would not be liable to a pecuniary penalty. This protection would not apply to authorities of the Crown. Section 6 Extension to external Territories 10. This section would provide that the Bill will extend to all external Territories of Australia. Section 2B of the Acts Interpretation Act defines an external Territory as a Territory, other than an internal Territory, where an Act makes provision for the government of the Territory as a Territory. The intention is that the Bill will facilitate private investment in biodiversity protection and restoration in those places. Section 7 Definitions 11. This section would provide definitions for the Bill. Notes are provided below on each definition. Aboriginal person 12. This definition would provide that Aboriginal person has the same meaning as in the Aboriginal and Torres Strait Islander Act 2005 (the ATSI Act). The ATSI Act currently provides that Aboriginal person means a person of the Aboriginal race of Australia. Activity period 13. This definition would provide that the activity period of a registered biodiversity project means the activity period identified in the notice of approval of registration under paragraph 16(6)(e), subject to any variation under rules made for the purposes of paragraph 21(1)(c). Agriculture Biodiversity Stewardship Market Advisory Committee 14. This definition would provide that Agriculture Biodiversity Stewardship Market Advisory Committee means the committee established by section 156. Agriculture Biodiversity Stewardship Market Advisory Committee member 15. This definition would provide that Agriculture Biodiversity Stewardship Market Advisory Committee member means a member of the ABSMAC, and includes the Chair of the ABSMAC. Agriculture Department 16. This definition would provide that Agriculture Department means the Department administered by the Agriculture Minister. 8

Agriculture Minister 17. This definition would provide that Agriculture Minister means the Minister administering the Primary Industries Research and Development Act 1989. Associated provisions 18. This definition would provide that associated provisions means the following provisions: • the provisions of the rules; • the provisions of a protocol determination; • sections 134.1, 134.2, 135.1, 135.2, 135.4, 136.1, 137.1 and 137.2 of the Criminal Code, in so far as those sections relate to the Bill, the rules or a protocol determination. Audit team leader 19. The definition would provide that audit team leader means a registered greenhouse and energy auditor appointed under any of the listed provisions. • paragraph 13(3)(a); • paragraph 60(1)(f); • paragraph 91(1)(d); • paragraph 107(2)(a); • subsection 108(1). Biodiversity 20. This definition would provide that biodiversity means the variability among living organisms from all sources (including terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part) and includes: • diversity within species and between species; and • diversity of ecosystems. 21. This definition would align with the definition of biodiversity in the Convention of Biological Diversity and the Environment Protection and Biodiversity Conservation Act 1999. It is intended that the scheme established under the Bill will be limited to enhancing or protecting the biodiversity of native species, rather than exotic species, to align with the scope of the Biodiversity Convention. By focusing on native species, the Bill will implement substantial parts of Australia's international obligations in respect of the Biodiversity Convention. Biodiversity certificate 22. This definition would provide that biodiversity certificate means a certificate issued under section 62. 9

Biodiversity conservation contract 23. This would be a signpost definition to draw the reader's attention to section 70 for the meaning of biodiversity conservation contract. Biodiversity conservation contractor 24. This would be a signpost definition to draw the reader's attention to section 70 for the meaning of biodiversity conservation contractor. Biodiversity conservation purchasing process 25. This would be a signpost definition to draw the reader's attention to section 74 for the meaning of biodiversity conservation purchasing process. Biodiversity Convention 26. This definition provides that Biodiversity Convention means the Convention on Biological Diversity, done at Rio de Janeiro on 5 June 1992, as in force for Australia from time to time. There is a note indicating where a copy of the Convention is available in 2022 - in the in the Australian Treaties Library on the AustLII website (http://www.austlii.edu.au). Biodiversity integrity standards 27. This would be a signpost definition to draw the reader's attention to section 57 for the meaning of biodiversity integrity standards. Biodiversity maintenance area 28. This would be a signpost definition to draw the reader's attention to subsection 120(1) for the meaning of biodiversity maintenance area in relation to a biodiversity maintenance declaration. Biodiversity maintenance declaration 29. This definition would provide that biodiversity maintenance declaration means a declaration made by the Regulator under subsection 120(1). Biodiversity outcome 30. This definition would provide that biodiversity outcome, means the enhancement or protection of biodiversity that the project is designed to achieve. Biodiversity project 31. This definition would provide that biodiversity project means a project, carried out in a particular area, that is designed to enhance or protect biodiversity in native species (whether the effect on biodiversity occurs within or outside the area). 10

Chapter 5 body corporate 32. This definition would provide that Chapter 5 body corporate has the same meaning as in the Corporations Act. Civil penalty order 33. This definition would provide that civil penalty order has the same meaning as in the Regulatory Powers Act. Civil penalty provision 34. This definition would provide that civil penalty provision has the same meaning as in the Regulatory Powers Act. Covers 35. This definition would provide that a protocol determination covers a registered biodiversity project if the entry for the project in the Register states that the protocol determination covers the project. Crown land 36. This definition would provide that Crown land means land that is the property of the Commonwealth, a State or a Territory, or a statutory authority of the Commonwealth; or a State or a Territory. For this purpose, it is immaterial whether the land is: • subject to a lease or licence; or • covered by a reservation, proclamation, dedication, condition, permission or authority, made or conferred by the Commonwealth, the State or the Territory; or • covered by the making, amendment or repeal of legislation of the Commonwealth, the State or the Territory under which the whole or a part of the land is to be used for a public purpose or public purposes; or • held on trust for the benefit of another person; or • subject to native title. Crown lands Minister 37. This definition would provide that Crown lands Minister: • in relation to a State--means the Minister of the State who, under the rules, is taken to be the Crown lands Minister of the State; or • in relation to the Northern Territory--means the Minister of the Northern Territory who, under the rules, is taken to be the Crown lands Minister of the Northern Territory; or • in relation to the Australian Capital Territory--means the Minister of the Australian Capital Territory who, under the rules, is taken to be the Crown lands Minister of the Australian Capital Territory; or 11

• in relation to a Territory other than the Northern Territory or the Australian Capital Territory--means the person who, under the rules, is taken to be the Crown lands Minister of the Territory. Declared prohibited activity 38. This definition would provide that declared prohibited activity, in relation to a biodiversity maintenance area, means an activity specified under subsection 120(4) in relation to the biodiversity maintenance area. Director 39. This definition would provide that the meaning of director includes a constituent member of a body corporate incorporated for a public purpose by a law of the Commonwealth, a State or a Territory. Electronic notice transmitted to the Regulator 40. This definition would provide that the meaning of electronic notice transmitted to the Regulator has the meaning given by section 10. Eligible interest 41. This definition would provide that eligible interest, in relation to an area of land, has the meaning given by sections 80, 81 or 82. Eligible land 42. This would be a signpost definition to draw the reader's attention to section 8 for the meaning of eligible land. Eligible person 43. This definition would provide that eligible person means any of the following: an individual, body corporate (including registered native title bodies corporate), trust, or a corporation sole. Eligible voluntary action 44. This definition would provide that eligible voluntary action means: • making an application; or • giving information in connection with an application; or • withdrawing an application; or • giving a notice (including an electronic notice); or • making a submission; or • making a request; or • giving information in connection with a request to the Regulator, where the application, information, notice, submission or request is permitted, but not required, to be made, given or withdrawn, as the case may be, under this Bill or an instrument made under this Bill. 12

Engage in conduct 45. This definition would provide that engage in conduct means to do an act, or to omit to perform an act. Excluded biodiversity project 46. This would be a signpost definition to draw the reader's attention to section 34 for the meaning of excluded biodiversity project. Exclusive possession native title land 47. This definition would provide that exclusive possession native title land means native title land, where the native title confers a right of exclusive possession over the land. Executive officer 48. This definition would provide that executive officer of a body corporate means: • a director of the body corporate; or • the chief executive officer (however described) of the body corporate; or • the chief financial officer (however described) of the body corporate; or • the secretary of the body corporate. Federal Court 49. This definition would provide that Federal Court means the Federal Court of Australia. Fit and proper person test 50. This definition would be a signpost definition to draw the reader's attention to section 87 for when an eligible person passes provide that fit and proper person test. Freehold land rights land 51. This definition would provide that freehold land rights land means land, where: • a freehold estate exists over the land, and the grant of the freehold estate took place under a law of a State or a Territory that makes provision for the grant of such things only to, or for the benefit of, Aboriginal persons or Torres Strait Islanders; or • a freehold estate exists over the land, and the grant of the freehold estate took place under a law of the Commonwealth that makes provision for the grant of such things only to, or for the benefit of, Aboriginal persons or Torres Strait Islanders; or • the land is vested in a person, and the vesting took place under a law of the Commonwealth that makes provision for the vesting of land only in, or for the benefit of, Aboriginal persons or Torres Strait Islanders. 13

Holder 52. This definition would provide that holder of a biodiversity certificate means the person recorded in the Register as the holder of the certificate. Indigenous land use agreement 53. This definition would provide that indigenous land use agreement has the same meaning as in the Native Title Act. The Native Title Act currently provides that indigenous land use agreement has the meaning given by sections 24BA, 24CA and 24DA of that Act. Inspector 54. This definition would provide that inspector means a person appointed under section 148. Land rights land 55. This definition would provide that land rights land means land, where: (a) a freehold estate exists, or a lease is in force, over the land, where the grant of the freehold estate or lease took place under legislation that makes provision for the grant of such things only to, or for the benefit of, Aboriginal persons or Torres Strait Islanders; or (b) the land is vested in a person, where the vesting took place under legislation that makes provision for the vesting of land only in, or for the benefit of, Aboriginal persons or Torres Strait Islanders; or (c) neither paragraph (a) nor (b) applies, and the land is held expressly for the benefit of, or is held in trust expressly for the benefit of, Aboriginal persons or Torres Strait Islanders; or (d) the land is reserved expressly for the benefit of Aboriginal persons or Torres Strait Islanders; or (e) the land is specified in the rules. Lease 56. This definition would provide that lease, in relation to land rights land, includes: • a lease enforceable in equity; and • a contract that contains a statement to the effect that it is a lease; and • anything that, at or before the time of its creation, is, for any purpose, by a law of the Commonwealth, a State or a Territory, declared to be or described as a lease. Maintained project 57. This would be a signpost definition to draw the reader's attention to paragraph 120(1)(a) for the meaning of maintained project in relation to a biodiversity maintenance declaration. 14

National Native Title Register 58. This definition would provide that National Native Title Register has the same meaning as in the Native Title Act. Native title 59. This definition would provide that native title has the same meaning as in the Native Title Act. Native title land 60. This definition would provide that an area of land is native title land if there is an entry on the National Native Title Register specifying that native title exists in relation to the area. Natural disturbance 61. This definition would provide that natural disturbance, in relation to a registered biodiversity project, means a flood, bushfire, drought, pest attack, disease or an event specified in the rules, where the event could not reasonably be prevented by the project proponent for the project. Paid work 62. This definition would provide that paid work means work for financial gain or reward (whether as an employee, a self-employed person or otherwise). This term is used in relation to paid work that conflicts or could conflict with the proper performance of the duties of an ABSMAC member. Permanence period 63. This definition would provide that the permanence period of a registered biodiversity project means the permanence period identified in the notice of approval of registration under paragraph 16(6)(e), subject to any variation under rules made for the purposes of paragraph 21(1)(d). Project 64. This definition would provide that project includes a set of activities. Project area 65. This definition would provide that project area, in relation to a biodiversity project, means the area of land, or areas of land, on which the project has been, is being, or is to be carried out. Project proponent 66. This definition would provide that project proponent, in relation to a registered biodiversity project, means the eligible person who is recorded in the Register as the project proponent for the project. 15

Protocol determination 67. This definition would provide that protocol determination means a determination under subsection 45(1). Register 68. This definition would provide that Register means the Agriculture Biodiversity Stewardship Market Register kept by the Regulator under subsection 127(1). Registered biodiversity project 69. This definition would provide that registered biodiversity project means a biodiversity project that is registered on the Register (other than a former registered biodiversity project in relation to which information is set out in the Register under rules made for the purposes of subsection 128(3)). Registered greenhouse and energy auditor 70. This definition would provide that registered greenhouse and energy auditor has the same meaning as in the National Greenhouse and Energy Reporting Act 2007 (NGER Act). The NGER Act currently provides that registered greenhouse and energy auditor means an individual who is registered in the register of greenhouse and energy auditors kept under section 75A of that Act. Registered indigenous land use agreement 71. This definition would provide that registered indigenous land use agreement means an indigenous land use agreement the details of which are entered on the Register of Indigenous Land Use Agreements. Registered native title body corporate 72. This definition would provide that registered native title body corporate has the same meaning as in the Native Title Act. The Native Title Act currently provides that registered native title body corporate means: • a prescribed body corporate whose name and address are registered on the National Native Title Register under paragraph 193(2)(e) or subsection 193(4) of that Act; or • a body corporate whose name and address are registered on the National Native Title Register under paragraph 193(2)(f) of that Act. Register of Indigenous Land Use Agreements 73. This definition would provide that Register of Indigenous Land Use Agreements has the same meaning as in the Native Title Act. The Native Title Act currently provides that Register of Indigenous Land Use Agreements means the register established and maintained under Part 8A of that Act. 16

Regulator 74. This definition would provide that Regulator means the Clean Energy Regulator. A note following this definition would draw to the attention of readers that the Clean Energy Regulator is established by the Clean Energy Regulator Act 2011 (CER Act). Regulatory approval 75. This definition would provide that regulatory approval, in relation to a biodiversity project, means an approval, licence or permit (however described) that: • relates to the project or to an element of the project; and • is required under a law of the Commonwealth (other than this Act), a State or a Territory that relates to land use or development, the environment or water. Regulatory Powers Act 76. This definition would provide that Regulatory Powers Act means the Regulatory Powers (Standard Provisions) Act 2014. Relevant land registration official 77. This definition would provide that relevant land registration official: • in relation to a biodiversity project that is or was a registered biodiversity project--means the Registrar of Titles or other proper officer of the State or Territory in which the project area or areas are situated; or • in relation to an area of land that is or was a biodiversity maintenance area-- means the Registrar of Titles or other proper officer of the State or Territory in which the area of land is situated. Relinquishment equivalence requirements 78. This would be a signpost definition to draw the reader's attention to subsection 117(2) for the meaning of relinquishment equivalence requirements. Relinquishment notice 79. This definition would provide that relinquishment notice means a notice given by the Regulator under any of the following provisions: • subsection 110(2) (false or misleading information); • subsection 111(2) (cancellation of registration of biodiversity project); • subsection 112(2) (reversal of biodiversity outcome other than due to natural disturbance or conduct etc.); • subsection 113(2) (reversal of biodiversity outcome due to natural disturbance or conduct and no mitigation happens). 17

Reviewable decision 80. This definition would provide that reviewable decision has the meaning given by section 173. Rules 81. This definition would provide that rules means rules made under section 197. Secretary 82. This definition would provide that Secretary means the Secretary of the Agriculture Department. Statutory authority 83. This definition would provide that statutory authority of the Commonwealth, a State or a Territory means an authority or body (including a corporation sole) established by or under a law of the Commonwealth, the State or the Territory (other than a general law allowing incorporation as a company or body corporate), but does not include: • an Aboriginal Land Trust established under the Aboriginal Land Rights (Northern Territory) Act 1976; or • the Wreck Bay Aboriginal Community Council established by the Aboriginal Land Grant (Jervis Bay Territory) Act 1986; or • a corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006; or • an authority or body that is established by or under a law of the Commonwealth, a State or a Territory, where it is also specified in the rules. Torrens system land 84. This definition would provide that land is Torrens system land if the title to the land is registered under a Torrens system of registration. Torres Strait Islander 85. This definition would provide that Torres Strait Islander has the same meaning as in the ATSI Act. The ATSI Act currently provides that Torres Strait Islander means a descendant of an indigenous inhabitant of the Torres Strait Islands. Vacancy 86. This definition would provide that vacancy, in relation to the office of an ABSMAC member, has a meaning affected by section 9. Section 8 Meaning of eligible land 87. For a project to be registered, and participate in the agriculture biodiversity stewardship market, all land in the project area or areas must be eligible land. For the purpose of the Bill, land would be eligible land if it is agricultural land in Australia, 18

unless the rules provide for a different meaning of eligible land. In the absence of further detail in the rules, it is intended that the ordinary meaning of agricultural land apply. The rules would not be able to provide for land outside Australia to be eligible land. 88. The scheme seeks to facilitate the significant biodiversity gains that can be made on marginalised or underutilised areas of agricultural land. This definition would allow all agricultural land in Australia to be eligible land for the purposes of the agriculture biodiversity stewardship market, including pastural land used for grazing. It will also allow for other land, that is not agricultural land within the ordinary meaning of that term, to be prescribed as eligible land in the rules. 89. This flexibility is necessary to ensure that all land associated with an agricultural property is eligible to be included in a project area or areas. For example, it is common that agricultural properties contain tracts of land, used for conservation or other purposes, that is not agricultural land within the ordinary meaning of that term. It is not intended that this land be excluded from the scheme. 90. The data that underpins zoning and land use information in Australia is complex and frequently updated. Prescribing the definition in the rules will allow eligibility requirements under the scheme to remain current and underpinned by the most up to date information. 91. A note would be included in this section that provides that a change in the meaning of eligible land would not affect a registered biodiversity project. The effect of this would be to ensure that where the rules prescribe a meaning of eligible land, this meaning would apply to future biodiversity projects and would not apply retrospectively to projects that were already registered. Section 9 Vacancy in the office of an Agriculture Biodiversity Stewardship Market Advisory Committee member 92. For the purposes of a reference in this Bill to a vacancy in the office of an ABSMAC member, or a reference to a vacancy in the Acts Interpretation Act, there would be taken to be three offices of ABSMAC member and one Chair of the ABSMAC. 93. This would have the effect that there would be a vacancy in the ABSMAC if there were fewer than four members of the ABSMAC (including the Chair of the ABSMAC) at a given point in time. Section 10 Electronic notice transmitted to the Regulator 94. This section would provide the circumstances in which a notice would be an electronic notice transmitted to the Regulator, for the purposes of a reference in this Bill. The notice would need to be transmitted to the Regulator by means of an electronic communication, in accordance with particular information technology requirements (if required by the Regulator), and comply with rules made for the purposes of this section. 19

95. The rules would be able to make provision for or in relation to the security and authenticity of notices transmitted to the Regulator by means of an electronic communication, including but not limited to, the following: • encryption; and • authentication of identity. 96. It would be appropriate for the rules to make provisions for or in relation to security and authenticity of notices because electronic communication as it would apply under the scheme may change over time. This could include changes in technology, security requirements and methods. 97. Where a notice is transmitted to the Regulator by means of an electronic communication, the notice would be taken to have been transmitted on the day on which the electronic communication is dispatched, for the purposes of this Bill. This would apply despite section 14A of the Electronic Transactions Act 1999, regarding the time of receipt of an electronic communication. This section is not intended to limit the regulations that may be made under that Act. 20

PART 2--REGISTERED BIODIVERSITY PROJECTS 98. This Part of the Bill would provide for the registration, variation and cancellation of biodiversity projects. A project proponent would be able to apply to the Regulator for the registration of a biodiversity project. The Regulator would need to be satisfied that certain requirements have been met before approving the registration of a biodiversity project, and the registration may be subject to certain conditions. This Part would also provide for excluded biodiversity projects, which are not eligible to be registered. Division 1--Introduction Section 11 Simplified outline of this Part 99. The simplified outline is included to assist the reader to understand the substantive provisions of this Part; however, it is not intended to be comprehensive. It is intended that the reader will rely on the substantive provisions of this Part to which the outline relates. Division 2--Registration of biodiversity project Section 12 Application for approval of registration of biodiversity project 100. An eligible person would be able to apply to the Regulator for the approval of a registration of a biodiversity project on the Register. Under section 7, an eligible person would include an individual, a body corporate (including registered native title bodies corporate), a trust or a corporation sole. 101. Applications would only be able to be made on or after a day determined by the Agriculture Minister by legislative instrument. This is necessary to allow appropriate time for key elements of the scheme to be established prior to the commencement of consideration of applications. This would include resources, systems and processes within the responsibility of the Regulator, the establishment of the ABSMAC and development of protocols in accordance with statutory requirements, and creation of information resources for scheme participants by the Department and Regulator. Section 13 Form of application 102. The application for a registration of a biodiversity project would need to be in writing, in an approved form and include the information required by the rules or applicable protocol determination. The application would also need to specify the proposed project area, the other project proponents (if applicable), the protocol determination that is proposed to cover the project and the proposed activity period and proposed permanence periods (consistent with any requirements in the protocol determination). 103. Information required by the rules may include the details of the proponent or proponents and their skills and expertise to undertake the project, location information or signed statements. Further requirements may be defined in the protocol determinations because specific information may be necessary at the time of registration to ensure that a project area will be suitable for a particular kind of project defined under a protocol determination. 21

104. The application would also need to be accompanied by a prescribed audit report, if the application is in respect of a proposed project type specified in the rules or the applicable protocol determination requires it. This report would need to be prepared by a registered greenhouse and energy auditor appointed as an audit team leader for the purpose. 105. If there is proposed to be more than one project proponent, the application would need to be accompanied by evidence of the consent of the other persons to being a project proponent. 106. Where an indigenous land use agreement is relevant to the Regulator's decision, then the application would need to be accompanied by a copy of the relevant parts of the agreement. In some circumstances, indigenous land use agreements may contain commercially sensitive information. The application would only need to be accompanied by parts of the indigenous land use agreement that are relevant to the Regulator's decision. 107. Further, the application would need to be accompanied by the requisite fee specified in the rules. A fee would not be such as to amount to taxation. The purpose of any fee is to enable the Regulator to recover costs associated with processing the application. Section 14 Further information 108. Where an application has been made for registration of a biodiversity project, the Regulator would be able to give written notice of further information that is required to be provided by the applicant in connection with the application. The further information must be provided within the period specified in the notice. 109. If the applicant fails to provide the requested information, the Regulator would be able to either refuse to consider the application or refuse to take any action, or further action, in relation to it. Section 15 Withdrawal of application 110. An application for registration of a biodiversity project would be able to be withdrawn at any time before the Regulator makes a decision. Withdrawal of such an application would not prevent the applicant from making a fresh application. 111. Where an application is withdrawn, any fees paid in relation to the application would be refunded by the Regulator, on behalf of the Commonwealth. This provision recognises that it would normally be preferable for the Regulator to advise the applicant of deficiencies in their application and to allow the applicant to withdraw and re-submit an improved application without cost, rather than proceeding to reject the application. Section 16 Approval of registration of biodiversity project 112. Where an application has been made for the registration of a biodiversity project, the Regulator would have a discretion to approve the registration and register the project on the Register, or refuse to approve the registration. 22

113. The Regulator would be required to notify an applicant in writing of a decision to approve or refuse to approve the registration of a biodiversity project. Where the registration is approved, the Regulator would also have to notify the relevant land registration official. This is intended to enable a notification to be placed on the relevant land title that would alert anyone taking an interest in the project land that it is subject to obligations under this Bill. 114. The Regulator would only be able to approve the registration of a biodiversity project if satisfied that all of the following criteria are met: • the project is, or will be, carried out in Australia; • all land included, or to be included, in the project area is eligible land; • the project is of a kind specified, for the purposes of paragraph 45(1)(a). in a protocol determination that is specified in the application for registration; • the activity period and permanence period for the project are worked out in accordance with the protocol determination; • any conditions set out in the applicable protocol determination under paragraph 45(1)(b) are met; • the applicant is to be registered as the project proponent or one of the project proponents; • the project proponent, or each of the project proponents, is an eligible person and passes the fit and proper person test; • the project area or areas are in the same State or Territory, is either Torrens system land or Crown land, and is not specified in the rules; • the project meets any eligibility requirements specified in the rules; and • the project is not an excluded biodiversity project. 115. The rules that would apply to approval for registration would include those relating to eligible land and requirements in relation to regulatory approvals and consent. 116. Where the registration is approved, the notice of the decision would need to identify the name of the project, the project area or areas (in accordance with the rules), the project proponent or proponents, the applicable protocol determination, the activity period and permanence period, and any attributes specified in the rules. The notice of the decision would also need to set out any conditions under sections 18 or 19 to which the registration is subject. 117. The Regulator would be required to take all reasonable steps to ensure that a decision is made on the application within 90 days after the application was made. The purpose of including this provision is to assist applicants to make arrangements relating to projects and contracts by providing an indication of the likely timeframe in which the Regulator would make a decision. 118. If the Regulator requires the applicant to give further information under subsection 14(1), the Regulator would be required to take all reasonable steps to ensure that a decision is made on the application within 90 days after the applicant gave the Regulator the information. 119. A decision under this section to approve, or refuse to approve, the registration of a biodiversity project would be a reviewable decision (see section 173). 23

Section 17 Suspension of processing of applications for registrations of biodiversity projects 120. The Agriculture Minister would be able to order the Regulator to suspend consideration of, or the making of a decision on, an application for approval of registration of a biodiversity project under section 12 which is proposed to be covered by a specific protocol determination in certain circumstances. This order would be a legislative instrument and would apply for a period of up to 12 months from the commencement of the order. 121. The Agriculture Minister would only be able to make the order where the ABSMAC has advised the Agriculture Minister that the specific protocol determination does not comply with one or more biodiversity integrity standards. The advice given by the ABSMAC would be either on its own initiative or at the request of the Agriculture Minister. The advice would also need to be published on the Agriculture Department's website, regardless of whether the advice is followed by the Agriculture Minister. 122. For the avoidance of doubt, the requirements in Subdivisions D and E of Division 2 of Part 4, which relate to requirements for the ABSMAC to consult in relation to the development and variation of protocols, would not apply to advice given by the ABSMAC under this section. This is because these requirements are likely to be an interim measure where the protocol determination would either be removed or varied to address any issues. 123. The Regulator would need to comply with an order given by the Agriculture Minister. Where the order applies to an application, the requirements relating to timing in subsection 16(7) would not apply. Section 18 Registration may be subject to condition about obtaining regulatory approvals 124. It is important for the Regulator to be satisfied that a project proponent has obtained all regulatory approvals for the registration of a biodiversity project. This means that the project has met, for example, all statutory Commonwealth, state and local government land use or development, environmental and water requirements. 125. If the Regulator decides to approve the registration of a biodiversity project but is not satisfied that all regulatory approvals have been obtained, then the Regulator would be required to set out a condition in the notice of approval of registration. This would provide that the registration is subject to the condition that a biodiversity certificate is not to be issued until the regulatory approvals have been obtained. 126. This is intended to provide project proponents with some certainty of the registration of their project, before going to the expense of obtaining regulatory approvals. It also allows the proponent additional time to obtain regulatory approvals for the project, but also informs potential purchasers of the proponent's needs to still gain regulatory approvals in order for a certificate to be issued. Once the necessary approvals have been obtained, the project proponent would be able to apply to the Regulator to vary the registration to remove the condition. 24

Section 19 Registration may be subject to condition about obtaining consents from eligible interest holders 127. If the Regulator decides to approve an application for registration of a biodiversity project and is satisfied that there are one or more persons (the relevant interest- holders) who hold an eligible interest in the project area or areas and who have not provided written consent to the application, the Regulator would be required to set out a condition in the notice of approval of registration. This would provide that the registration is subject to the condition that a biodiversity certificate is not to be issued until the written consent of each relevant interest holder is obtained. 128. The consent of the relevant interest-holders would need to be in a form approved by the Regulator, or in the form of a registered indigenous land use agreement. 129. The need to obtain the consent of relevant interest-holders will ensure that mortgagees, non-exclusive native title holders and others with rights in relation to the land are aware of the project and the statutory responsibilities, rights and liabilities that may arise as a result of the registration. Additionally, obtaining consent creates an opportunity for negotiation between the person who would obtain a direct benefit under the scheme (the project proponent) and the other relevant interest-holders. 130. For example, where native title interests co-exist with a pastoral lease, this would enable Traditional Owners to negotiate a benefit from, or the opportunity to participate in, the implementation of a project. Traditional land management practices would be able to support the protection or enhancement of biodiversity, and biodiversity projects could provide important opportunities to work on country. Division 3--Variation of registration Section 20 Voluntary variation of registration of biodiversity project--change in identity of project proponent 131. The rules would be able to make provision for and in relation to a power for the Regulator to vary the registration of a registered biodiversity project, at the request of the project proponent where there is a need to change, add or remove a project proponent. The rules would be able to provide for detailed instructions on the circumstances in which this applies and what would be required to satisfy the Regulator in order to vary registration. As these circumstances would be unique to the project, it is appropriate that this level of detail would be contained in the rules rather than in this Bill. 132. Before empowering the Regulator to vary the registration, the rules would need to require that: • an application for the variation is made by the project proponent (if any); • written consent to the variation is given by any eligible person that is to be added as a project proponent; • the Regulator is satisfied that any eligible person that is to be added as a project proponent passes the fit and proper person test; and • where a biodiversity certificate is in effect and the project proponent is not the holder of the certificate, then the holder of the certificate (if any) has been 25

notified of the proposed variation, and has been given the opportunity to make submissions. 133. The rules would be able to provide a power for the Regulator to require that the Commonwealth be given security in relation to the fulfilment of any requirements to relinquish biodiversity certificates that would be able to be imposed under Part 12, regardless of whether those circumstances exist at the time the variation is made. 134. The rules would also be able to provide a power for the Regulator to refuse an application unless the Regulator is satisfied that the remaining project proponents would have the capability and resources to carry out the project. 135. A decision under rules made for the purposes of this section to vary, or refuse to vary, the registration of a registered biodiversity project would be a reviewable decision (see section 173). 136. Biodiversity projects would typically operate for long periods, with many likely to provide for the maintenance of biodiversity in perpetuity. This section would enable a project proponent to transfer their project to another eligible person, for example, if they sell land together with a registered biodiversity project. Section 21 Voluntary variation of registration of biodiversity project--changes in project area etc. 137. The rules would be able to make provision for and in relation to a power for the Regulator to vary the registration of a registered biodiversity project, at the request of the project proponent. This would be in circumstances where the variation relates to the project area or areas, the applicable protocol determination that covers the project, or the project's activity period, or the project's permanence period. 138. The section provides that the protocol determination, that is intended to cover the varied registration of a biodiversity project, must be in force at the time of the variation taking effect. For example, a project proponent cannot apply to use a protocol that is still under development. 139. Before empowering the Regulator to vary the registration, the rules would need to require that: • an application for the variation is made by the project proponent; and • where a biodiversity certificate is in effect for the project and the project proponent is not the holder of the certificate, the holder of the certificate has given written consent to the variation. If there would be no material change to the certificate, the holder's consent would not be required. 140. The rules would be able to provide for the development and necessary detail of the requirements and processes that would support variations in project areas. Having this detail in the rules would allow for the flexibility of reasonable, effective and appropriate assurance mechanisms to be drafted for the particular project areas. For 26

example, this may include the submission of maps and other location information to consider changes to a project area. 141. A decision under rules made for the purposes of this section to vary, or refuse to vary, the registration of a registered biodiversity project would be a reviewable decision (see section 173). 142. This section would enable project proponents to vary their projects as circumstances change. A project proponent may wish to vary their project to apply updated or different protocols that provide, for example, more cost-effective methods of assessing changes in biodiversity or delivering biodiversity outcomes. Proponents may also want to incorporate new areas into their project or remove project areas, including when land is transferred or sold. Section 22 Voluntary variation of conditional registration of biodiversity project--condition of registration has been met 143. The rules would be able to make provision for and in relation to a power for the Regulator to vary the registration of a registered biodiversity project, at the request of the project proponent. This would be in circumstances where the variation relates to the removal of any conditions of the registration relating to obtaining regulatory approvals or the consent of eligible interest-holders (see sections 18 or 19). 144. Before empowering the Regulator to vary the registration, the rules would need to require that: • an application for the variation is made by the project proponent; and • the Regulator is satisfied that the condition of the registration has been met. 145. The rules would be able to provide for the development and necessary detail of the requirements and processes that would support variations of the registration in relation to conditions. Having this detail in the rules would allow for the flexibility of reasonable, effective and appropriate assurance and verification mechanisms. This would be particularly important as conditional registration relates to regulatory approval and eligible interest consent. 146. A decision under rules made for the purposes of this section to vary, or refuse to vary, the registration of a registered biodiversity project would be a reviewable decision (see section 173). Section 23 Procedures for voluntary variation of registration of biodiversity project 147. The rules that are made in relation to the variation of the registration of a registered biodiversity project (see section 20, 21 or 22) would be able to make provision for or in relation to any matters, including but not limited to, the following: • applications for variation under the rules; • the approval by the Regulator of a form for an application; • information or documents that must accompany an application; • verification by statutory declaration of statements in an application; 27

• consents that must be obtained for making an application; • authorising a person to issue a certificate to certify matters in relation to an application; • the requisite fee to accompany an application, where the fee is not such as to amount to taxation; • the withdrawal of an application; • empowering the Regulator to require further information to be given by the applicant in connection with an application, as well as to refuse to consider or take any action in relation to the application if the applicant fails to provide further information; • varying a biodiversity certificate issued in respect of the registered biodiversity project. 148. The rules would also need to provide that the Regulator would be required to give a copy of the variation to the applicant and the relevant land registration official, if a decision is made to vary the registration of a registered biodiversity project. Where a decision is made to refuse the variation, the rules would also need to provide that the Regulator would be required to notify the applicant in writing of the decision. 149. The rules would be able to provide for the development and necessary detail of the requirements and processes that would support variations of registration. Having this detail in the rules would allow for the flexibility of reasonable, effective and appropriate assurance and verification mechanisms. Division 4--Cancellation of registration of biodiversity project Subdivision A--Voluntary cancellation of registration of biodiversity project Section 24 Voluntary cancellation of registration of biodiversity project-- certificate in effect 150. The rules would be able to make provision for and in relation to a power for the Regulator to cancel the registration of a registered biodiversity project, at the request of the project proponent. 151. Before empowering the Regulator to cancel the registration, the rules would need to require that: • the original biodiversity certificate has been issued in respect of the registered biodiversity project (regardless of whether the certificate remains in effect); • an application for the cancellation is made by the project proponent; • either the original certificate is relinquished or one or more other biodiversity certificates are relinquished in accordance with section 118 and meet the relinquishment equivalence requirements set out in subparagraph 117(1)(b). 152. The rules that are made under this section would be able to make provision for or in relation to any matters, including but not limited to, the following: • applications for cancellation under the rules; • the approval by the Regulator of a form for an application; 28

• other conditions that must be satisfied for the Regulator to cancel the registration in accordance with those rules. 153. The rules would be able to provide for the development and necessary detail of the requirements and processes that would support the cancellation of a biodiversity project. Having this detail in the rules would allow for the flexibility of reasonable, effective and appropriate assurance mechanisms to be drafted. This would be particularly important where a certificate is in effect and there were third parties likely to be impacted. The process would need to be comprehensively defined to provide assurance to the market as to the circumstances of when this action would apply and how it would be managed. 154. A project proponent may decide that they no longer wish to proceed with the project, for example, because alternative land uses are more financially attractive. If a certificate has been issued but not sold or used, the project can be cancelled with few consequences. Once a project certificate has been sold or used, for example, to support biodiversity claims made to consumers or shareholders, cancelling the project registration would have consequences for the integrity of the market. 155. This section would provide for rules to be made for and in relation to a power for the Regulator to cancel the registration of a registered biodiversity project, at the request of the project proponent. It would ensure that biodiversity certificates that have been purchased or used are underpinned by biodiversity projects consistent or equivalent to the certificate description. 156. A decision under rules made for the purposes of this section to cancel, or refuse to cancel, the registration of a registered biodiversity project would be a reviewable decision (see section 173). Section 25 Voluntary cancellation of registration of biodiversity project--no certificate in effect 157. The rules would be able to make provision for and in relation to a power for the Regulator to cancel the registration of a registered biodiversity project, at the request of the project proponent. 158. Before empowering the Regulator to cancel the registration, the rules would need to require that: • no biodiversity certificate has been issued in relation to the registered biodiversity project; and • an application for the cancellation is made by the project proponent for the project. 159. The rules that are made under this section would be able to make provision for or in relation to any matters, including but not limited to, the following: • applications for cancellation under the rules; • the approval by the Regulator of a form for an application. 29

160. The rules would be able to provide for the development and necessary detail of the requirements and processes that would support the cancellation of a biodiversity project. Having this detail in the rules would allow for the flexibility of reasonable, effective and appropriate assurance and verification mechanisms to be drafted. The process would need to be comprehensively defined to provide assurance to the market as to the circumstances of when this action would apply and how it would be managed. 161. A decision under rules made for the purposes of this section to cancel, or refuse to cancel, the registration of a registered biodiversity project would be a reviewable decision (see section 173). Section 26 Procedures for voluntary cancellation of registration of biodiversity project 162. The rules that are made in relation to the cancellation of the registration of a registered biodiversity project, at the request of the project proponent (see section 24 or 25) would be able to make provision for or in relation to any matters, including but not limited to, the following: • applications for cancellation under the rules; • the approval by the Regulator of a form for an application; • information or documents that must accompany an application; • verification by statutory declaration of statements in an application; • consents that must be obtained for making an application; • authorising a person to issue a certificate to certify matters in relation to an application; • the requisite fee to accompany an application, where the fee is not such as to amount to taxation; • the withdrawal of an application; • empowering the Regulator to require further information to be given by the applicant in connection with an application, as well as to refuse to consider or take any action in relation to the application if the applicant fails to provide further information; • varying a biodiversity certificate issued in respect of the registered biodiversity project. 163. The rules would also need to provide that the Regulator would be required to give notice of the cancellation to the applicant, the relevant land registration official and the holder of the certificate (where the holder is a different person to the project proponent), if a decision is made to cancel the registration of a registered biodiversity project. The rules would also be able to provide that the Regulator would be required to give notice of the cancellation to other people. Where a decision is made to refuse the cancellation, the rules would also need to provide that the Regulator would be required to notify the applicant in writing of the decision. 164. The rules would be able to provide for the development and necessary detail of the requirements and processes that would support the cancellation of a biodiversity project. Having this detail in the rules would allow for the flexibility of reasonable, 30

effective and appropriate assurance mechanisms to be drafted. The process would need to be comprehensively defined to provide assurance to the market. Subdivision B--Unilateral cancellation of registration of biodiversity project Section 27 Unilateral cancellation of registration of biodiversity project-- condition of registration has not been met 165. The rules would be able to make provision for and in relation to a power for the Regulator to unilaterally cancel the registration of a registered biodiversity project. 166. Before empowering the Regulator to cancel the registration, the rules would need to require that: • the registration is subject to a condition relating to obtaining regulatory approvals or the consent of relevant interest-holders (see section 18 or 19); • the Regulator is satisfied that the condition has not been met; • at least 5 years have passed since the project was first registered; and • the Regulator has consulted with the project proponent prior to deciding to cancel the registration. 167. The rules would be able to provide for the development and necessary detail of the requirements and processes that would support the cancellation of the registration of a biodiversity project. Having this detail in the rules would allow for the flexibility of reasonable, effective and appropriate assurance mechanisms to be drafted. This would be particularly important where the Regulator is taking action in response to non- compliance and is necessary to providing assurance to the market. 168. A decision under rules made for the purposes of this section to cancel the registration of a registered biodiversity project would be a reviewable decision (see section 173). Section 28 Unilateral cancellation of registration of biodiversity project--project not commenced, or unlikely to result in issuing of biodiversity certificate 169. The rules would be able to make provision for and in relation to a power for the Regulator to unilaterally cancel the registration of a registered biodiversity project. 170. Before empowering the Regulator to cancel the registration, the rules would need to require that: • a certificate has not yet been issued in respect of the registered biodiversity project; and • the Regulator has consulted with the project proponent prior to deciding to cancel the registration. 171. The rules would also need to require that either: • 5 years have passed since the project was first registered and the Regulator is not satisfied that the project has begun to be carried out; or 31

• the Regulator is satisfied that the project is not being, and is unlikely to be, carried out in a way that would result in a biodiversity certificate being issued. 172. The rules would be able to provide for the development and necessary detail of the requirements and processes that would support the cancellation of the registration of a biodiversity project. Having this detail in the rules would allow for the flexibility of reasonable, effective and appropriate assurance mechanisms to be drafted. This would be particularly important where the Regulator is taking action in response to a project not commencing or being unlikely to result in the issuing of a certificate and is necessary to providing assurance to the market. 173. A decision under rules made for the purposes of this section to cancel the registration of a registered biodiversity project would be a reviewable decision (see 173). Section 29 Unilateral cancellation of registration of biodiversity project-- eligibility requirements not met etc. 174. The rules would be able to make provision for and in relation to a power for the Regulator to unilaterally cancel the registration of a registered biodiversity project. 175. Before empowering the Regulator to cancel the registration, the rules would need to require that: • the Regulator is satisfied that the project does not meet a requirement set out in the criteria for approval of registration (see subsection 16(4)) or specified in the rules; and • the Regulator has consulted with the project proponent prior to deciding to cancel the registration. 176. The rules would be able to provide for the development and necessary detail of the requirements and processes that would support the cancellation of the registration of a biodiversity project. Having this detail in the rules would allow for the flexibility of reasonable, effective and appropriate assurance mechanisms to be drafted. This would be particularly important where the Regulator is taking action in response to non- compliance and is necessary to providing assurance to the market. 177. A decision under rules made for the purposes of this section to cancel the registration of a registered biodiversity project would be a reviewable decision (see section 173). Section 30 Unilateral cancellation of registration of biodiversity project--project proponent ceases to pass the fit and proper person test 178. The rules would be able to make provision for and in relation to a power for the Regulator to unilaterally cancel the registration of a registered biodiversity project. 179. Before the empowering the Regulator to cancel the registration, the rules would need to require that: • the Regulator is satisfied that either the project proponent does not pass the fit and proper person test, or any of the project proponents do not pass the fit and proper person test (if there are multiple project proponents); 32

• at the end of a 90-day period after such satisfaction is reached, the Regulator is not satisfied that each project proponent passes the fit and proper person test; and • the Regulator has consulted with the project proponent prior to deciding to cancel the registration. 180. The rules would be able to provide for the development and necessary detail of the requirements and processes that would support the cancellation of the registration of a biodiversity project. Having this detail in the rules would allow for the flexibility of reasonable, effective and appropriate assurance mechanisms to be drafted. This would be particularly important where the Regulator is taking action in response to a proponent ceasing to pass the fit and proper person test and is necessary to provide assurance to the market. 181. A decision under rules made for the purposes of this section to cancel the registration of a registered biodiversity project would be a reviewable decision (see section 173). Section 31 Unilateral cancellation of registration of biodiversity project--project proponent ceases to exist etc. 182. The rules would be able to make provision for and in relation to a power for the Regulator to unilaterally cancel the registration of a registered biodiversity project in circumstances where the project proponent ceases to exist. 183. For example, this may occur where the project proponent dies and the inheritor of the land is not eligible to be the project proponent. It may also occur where the project proponent is a corporate entity, that entity ceases to exist. 184. Before empowering the Regulator to cancel the registration, the rules would need to require that the Regulator is satisfied that any of the following circumstances exist: • the project proponent has died or ceased to exist, and there are no other project proponents for the project; • the project is not being carried out (unless this is in accordance with a protocol determination that covers the project). 185. The rules would also need to require that: • at the end of that 90-day period after the above circumstances began to exist, the Regulator is not satisfied that the circumstances have ceased to exist; and • the Regulator make reasonable efforts to consult the project proponent for the project before deciding to cancel the registration. 186. A decision under rules made for the purposes of this section to cancel the registration of a registered biodiversity project would be a reviewable decision (see section 173). Section 32 Unilateral cancellation of registration of biodiversity project--false or misleading information 187. The rules would be able to make provision for and in relation to a power for the Regulator to unilaterally cancel the registration of a registered biodiversity project. 33

188. Before empowering the Regulator to cancel the registration, the rules would need to require that certain information that was false or misleading in a material particular was given by a person to the Regulator in connection with the project. The information would also need to be contained in, or given in connection with, an application under the Bill or rules, or contained in a biodiversity project report or a notification under Division 3 of Part 9 (notification requirements). 189. The rules would also need to require that the Regulator consult with the project proponent for the project before deciding to cancel the registration. 190. The rules would be able to provide for the development and necessary detail of the requirements and processes that would support the cancellation of the registration of a biodiversity project. Having this detail in the rules would allow for the flexibility of reasonable, effective and appropriate assurance mechanisms to be drafted. This would be particularly important where the Regulator is taking action in response to a project being registered as a result of the provision of information that was false or misleading in a material particular and is necessary to provide assurance to the market. 191. A decision under rules made for the purposes of this section to cancel the registration of a registered biodiversity project would be a reviewable decision (see section 173). Section 33 Notice of unilateral cancellation of registration of biodiversity project 192. The rules that are made in relation to the unilateral cancellation of the registration of a registered biodiversity project (see section 27, 28, 29, 30, 31 or 32) would be required to set out certain matters in relation to notification. 193. The rules would need to provide that the Regulator would be required to give notice of the cancellation to the relevant land registration official and the holder of the certificate (where the holder is a different person to the project proponent), if a decision is made to cancel the registration of a registered biodiversity project. The rules would also be able to provide that the Regulator would be required to give notice of the cancellation to other people. 194. The rules would be able to provide the necessary detail required in relation to how a notification process would be managed by the Regulator, including providing copies of relevant documents. It would be appropriate for the rules to provide this level of detail. Division 5--Excluded biodiversity projects Section 34 Excluded biodiversity projects 195. The rules would be able to prescribe the kinds of biodiversity projects that are an excluded biodiversity project for the purposes of the Bill. 196. In deciding to make such rules, the Agriculture Minister would need to consider whether there is a material risk that the kind of project will have a material adverse impact on any matters relating to the availability of water, biodiversity (other than those kinds to be addressed by the project), employment, the local community and land access for agricultural production. 34

197. Similar to the CFI Act, it is expected that excluded biodiversity projects would include for example, projects to plant a species in an area where it is a known weed species. 198. The purpose of this provision would be to enable the Agriculture Minister to ensure that biodiversity projects do not have unintended, adverse impacts, and will instead deliver benefits, for landholders, rural communities and agricultural production. It would be appropriate for the rules to prescribe this level of detail. 35

PART 3--MULTIPLE PROJECT PROPONENTS 199. This Part of the Bill would provide for arrangements for registered biodiversity projects that have more than one project proponent, including the obligations that may be imposed on and discharged by the multiple project proponents. For example, this would provide flexibility for projects undertaken by landholders of adjacent properties to establish wildlife corridors. 200. It would also allow multiple project proponents to nominate a nominee for the service of documents, and for the taking of eligible voluntary actions. Division 1--Introduction Section 35 Simplified outline of this Part 201. The simplified outline is included to assist the reader to understand the substantive provisions of this Part; however, it is not intended to be comprehensive. It is intended that the reader will rely on the substantive provisions of this Part to which the outline relates. Division 2--References to project proponents Section 36 References to project proponents 202. Where there are 2 or more registered project proponents for a registered biodiversity project, then each of the multiple project proponents is taken to be a project proponent for the purposes of the Bill. Any references to the project proponent in the Bill, rules or any other instrument made under the Bill, would be read as a reference to each of the multiple project proponents. 203. The intention is that this would allow all multiple project proponents to not only share in the benefits of a registered biodiversity project and but also be jointly and severally liable for responsibilities relating to the project. 204. The objective of this is to allow participation by a broad range of landholders and by multiple project proponents in varying circumstances whilst ensuring that statutory responsibilities under the scheme are being upheld. This will balance flexibility and participation with the need to ensure the integrity of the scheme. Division 3--Nominee of multiple project proponents Section 37 Nomination of nominee by multiple project proponents--nomination accompanying application 205. Where multiple project proponents apply for a project, they would be able to nominate one proponent as the nominee by jointly giving notice to the Regulator of the nomination in relation to a biodiversity project. This would reduce the burden on multiple proponents to undertake joint projects and would allow for streamlined interactions with the Regulator. 206. The notice would need to be given at the same time that an application for registration of a biodiversity project, or an application to add a project proponent to an already 36

registered biodiversity project is made. The notice would also need to be in writing and in the approved form. 207. Where the application for registration of a biodiversity project is granted by the Regulator, the nomination would take effect at the time the biodiversity project is registered. Where the application to add a project proponent to an already registered biodiversity project is granted by the Regulator, the nomination would take effect at the time the variation takes effect. Where either of these applications are not granted, then the nomination would not take effect. Section 38 Nomination of nominee by multiple project proponents--other nominations 208. Other than the circumstances set out in section 37, multiple project proponents of a registered biodiversity project would be able to jointly give notice to the Regulator to nominate one of the project proponents as nominee for the project. The notice would need to be in writing and in the approved form. 209. The nomination would take effect at the time it is given to the Regulator and would replace any other nomination under this Part that was in force for the project. 210. A note following subsection 38(1) would draw to the reader's attention to section 42, which would provide the circumstances in which the Regulator may cancel the registration of a registered biodiversity project that has multiple project proponents, where a nominee ceases to be nominated. Section 39 Revocation and cessation of nomination 211. A nomination under sections 37 or 38 would cease to be in force if a project proponent revokes the nomination for a registered biodiversity project by written notice to the Regulator. 212. A nomination would also cease to be in force if the project proponent who is the nominee ceases to be one of the project proponents for the registered biodiversity project. 213. A note following this section would draw to the reader's attention to section 42, which would provide the circumstances in which the Regulator may cancel the registration of a registered biodiversity project that has multiple project proponents, where a nominee ceases to be nominated. Section 40 Service of documents on nominee 214. The nominee for a registered biodiversity project would be the person on whom documents are served relating to the registered biodiversity project, where the documents are required or permitted to be served under the Bill to the project proponent. Documents given to the nominee would be taken to have been given to each of the multiple project proponents. 37

Section 41 Eligible voluntary action taken by nominee 215. The nominee for a registered biodiversity project would be able to take an eligible voluntary action on behalf of the multiple project proponents. 216. Any relevant application, nomination, request or notice in relation to the eligible voluntary action, which is made, withdrawn or given on behalf of the multiple project proponents would be treated for the purpose of the Bill and any instrument under the Bill as if those actions were taken by the multiple project proponents jointly. Where an application is made by the nominee, a reference to an applicant in the Bill or any instrument under the Bill would be taken to be a reference to each of the multiple project proponents. 217. The multiple project proponents would only be entitled to take eligible voluntary actions in accordance with the nominee taking such actions. Section 42 Unilateral cancellation of registration of biodiversity project--failure of multiple project proponents to nominate a nominee 218. Where a nomination made by multiple project proponents under sections 37 or 38 ceases to be in force, and the Regulator is not provided with a new nomination within 90 days, the rules would be able to make provision for and in relation to a power for the Regulator to cancel the registration of a registered biodiversity project. 219. For example, this would enable the Regulator to cancel projects in circumstances where multiple project proponents cannot agree or make joint decisions in relation to the project. 220. The rules would need to require the Regulator to consult with the multiple project proponents before deciding to cancel the registration. 221. The rules would need to provide that the Regulator would be required to give notice of the cancellation to the relevant land registration official and the holder of the certificate (where the holder is a different person to the project proponent) if a decision is made to cancel the registration of a registered biodiversity project. The rules would also be able to provide that the Regulator would be required to give notice of the cancellation to other people. 222. A decision under rules made for the purposes of this section to cancel the registration of a registered biodiversity project would be a reviewable decision (see section 173). Division 4--Obligations of multiple project proponents Section 43 Obligations of multiple project proponents 223. Any obligations imposed on the multiple project proponents under the Bill, rules or another instrument made under the Bill would be imposed on each of the multiple project proponents. Such obligations would be able to be discharged by any of the project proponents, with the exception of specified obligations which the rules would be able to exempt. For example, a rule may be made under section 99 which would set out a notification obligation in relation to factors that affect a proponent passing the fit and proper person test. It would not necessarily be reasonable to expect one proponent 38

to be aware of such factors that would affect another project proponent passing the fit and proper person test. 224. The intention is that the Regulator would be able to take action against any of the multiple proponents in relation to enforcing any obligation under the Bill. 39

PART 4--PROTOCOL DETERMINATIONS 225. This Part of the Bill would establish a framework for protocol determinations, which set out requirements on how registered biodiversity projects are to be carried out. Protocol determinations would be legislative instruments, and would be able to be made or varied by the Agriculture Minister after consideration of certain matters. Division 1--Introduction Section 44 Simplified outline of this Part 226. The simplified outline is included to assist the reader to understand the substantive provisions of this Part; however, it is not intended to be comprehensive. It is intended that the reader will rely on the substantive provisions of this Part to which the outline relates. Division 2--Protocol determinations Subdivision A--Making of protocol determinations Section 45 Protocol determinations 227. The Agriculture Minister would be able to make a protocol determination. The determination would be a legislative instrument within the meaning of subsection 8(1) of the Legislation Act. Protocol determinations would not be exempt from disallowance or sunsetting. 228. The protocol determination would be expressed to apply to a specified kind of biodiversity project. It would set out conditions for project registration, conditions to be met for an application to be made for a biodiversity certificate and the method of working out the time after which such applications may be made. Further, it would set out conditions to be met for a biodiversity certificate to be issued for a project and matters to be included in the entry in the Register for the project or biodiversity certificate. It would also set out activities that are to be carried out for the project and how the activity period and permanence period for the project is to be worked out. 229. A protocol determination that applies to a registered biodiversity project would be able to provide that the project proponent is subject to specific requirements relating to activities to be carried in the project area and activities that are not to be carried out in the project area. It would also be able to provide for specific requirements regarding the inclusion of information in each biodiversity project report about the 40

project, notification of matters to the Regulator, record-keeping requirements or monitoring requirements in relation to the project. 230. A protocol determination would be able to make different provision in relation to different kinds of biodiversity projects to which the determination applies. This would not limit the scope of subsection 33(3A) of the Acts Interpretation Act. 231. A protocol determination would be able to require the project proponent to notify the Regulator of specified matters relating to the project. 232. Subsection 14(2) of the Legislation Act would not apply to protocol determinations made under this section. Subsection 14(2) of the Legislation Act provides that, unless the contrary intention appears, the legislative instrument may not make provision in relation to a matter by applying, adopting or incorporating (with or without modification) any matter contained in an instrument or other writing as in force or existing from time to time. This section would provide a contrary intention to subsection 14(2) of the Legislation Act, in that protocol determinations would be able to make reference to any matter contained in an instrument or other writing as in force or existing from time to time, if necessary to do so. 233. A protocol determination would also be able to make provision by conferring a power on the Regulator to make an instrument of an administrative character. Such an instrument made by the Regulator would not be a legislative instrument within the meaning of subsection 8(1) of the Legislation Act. It is intended that this provision would assist the reader and indicate that an exemption from the Legislation Act is not sought or required. 234. This approach is necessary to enable protocol determinations to reference up-to-date policy or operational documents that would apply to that type of project, for example, pest and weed management guidelines for particular regions or ecosystems, or fencing construction requirements that would apply across most or all protocol determinations. Additionally it would be necessary to ensure that protocol determinations provide sufficient information to allow the projects to be carried out effectively, which may require incorporation of other instruments such as standards or industry codes. 235. It is appropriate for a protocol determination to be a legislative instrument, as the content of protocol determinations would be informed by the advice of the ABSMAC, which undertakes a statutory process that includes public consultation and consideration of submissions (see section 56). Protocol determinations are an instrument of a legislative character. Section 46 Civil penalties--requirements in protocol determination 236. This section would provide for two circumstances in which an eligible person would be liable to a civil penalty in relation to a failure to comply with the requirements in a protocol determination that covers a registered biodiversity project. 237. An eligible person would be liable to a civil penalty if they are a project proponent of the registered biodiversity project, where a biodiversity certificate has been issued in in respect of the project, and either: 41

• the eligible person or any of the other project proponents fail to comply with a requirement in the applicable protocol determination (under subsection 45(3)); or • any person carries out an activity that is prohibited from being carried out by the applicable protocol determination (under paragraph 45(3)(b)) and the eligible person does not take all reasonable steps to ensure that the prohibited activity is not carried out. The eligible person would bear the evidential burden in relation to proving that all reasonable steps have been taken. This reversal is justified and consistent with the Guide to Framing Commonwealth Offences, as the matter to be proved (that is, all reasonable steps have been taken) is a matter that would be peculiarly in the knowledge of the defendant. 238. It would also be appropriate for the project proponent to be liable for any activities carried out by other persons that are prohibited from being carried out under the protocol determination. This is because the project proponent would be expected to ensure that the requirements of the protocol determination are met, including taking all reasonable steps to ensure the actions of any other persons do not compromise compliance with the requirements of the protocol determination. In the absence of such a measure, this would create a significant risk of project failure without consequence and could undermine the scheme. 239. The maximum civil penalty that a court may order a person who is an individual to pay where that person is liable to a civil penalty under either of these provisions would be 2,000 penalty units. General provisions relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 240. This maximum civil penalty is intended to be proportionate to the harm that is likely to result should a person fail to comply. As this is a voluntary scheme with project proponents and others participating on a voluntary basis, this civil penalty provision is aimed at protecting an emerging market that will facilitate tangible environmental outcomes as well as a new income stream for participants. This maximum civil penalty amount is appropriate and proportionate to the potential outcome of non- compliance and would provide the courts with the necessary scope to apply penalties that appropriately reflect the circumstances of non-compliance. 241. Without such a strong deterrence, the integrity of the scheme would be threatened if there was no serious consequence for a failure to comply with the terms of a protocol determination. A protocol determination is a legislative instrument that contains specific, specialised and technical advice prepared by experts, which is used to underpin the integrity of participation in the scheme. Section 47 Procedure for making a protocol determination 242. This section would set out the mandatory and discretionary considerations for the Agriculture Minister to have regard to in deciding whether to make a protocol determination. 243. This section would provide that the Agriculture Minister must have regard to whether a proposed protocol determination complies with the biodiversity integrity standards and any advice that the ABSMAC has given under subsection 53(2) in relation to the making of the determination. In addition, this section would provide that the 42

Agriculture Minister may have regard to whether significant adverse environmental, agricultural, economic or social impacts are likely to arise from the kind of project covered by the determination and other matters (if any) that the Agriculture Minister considers relevant. 244. It is anticipated that whether the proposed protocol determination complies with the biodiversity integrity standards and any advice that the ABSMAC has given under subsection 54(2) would provide the Agriculture Minister with a detailed and comprehensive analysis relevant to their decision making. The discretionary considerations allow for circumstances in which it would be appropriate for the Agriculture Minister to be presented with additional information for consideration; over and above the already robust materials that must be provided. It is also anticipated that advice may be required from experts outside of the ABSMAC. 245. The Agriculture Minister would not be able to make a protocol determination unless the determination is assessed and endorsed by the ABSMAC as complying with the biodiversity integrity standards. 246. The Agriculture Minister would need to request advice from the ABSMAC on whether the protocol determination should be made before it is made. The Agriculture Minister would, as soon as practicable after deciding to either make or not make a protocol determination, need to arrange for a copy of any advice given by the ABSMAC in relation to that protocol determination to be published on the Agriculture Department's website. 247. Subsection 33(3) of the Acts Interpretation Act provides that where an Act confers a power to make, grant or issue a legislative instrument, that power includes the power to repeal, rescind, revoke, amend or vary the instrument in the same way. It is intended that subsection 33(3) of the Acts Interpretation Act would not apply to a protocol determination as the Bill contains specific provisions concerning the variation, expiry and revocation of protocol determinations. Subdivision B--Variation of protocol determinations Section 48 Variation of protocol determinations 248. There would be a mechanism in the Bill for protocol determinations to be varied. Variation of a protocol determination may occur because, for example, there is new scientific evidence to support refinements to the protocol. 249. The Agriculture Minister would be able to vary a protocol determination, by making a legislative instrument. The Agriculture Minister would be required to consider various factors when deciding whether to vary a protocol determination. These factors would be the same as the factors that the Agriculture Minister would need to consider when deciding whether to make a protocol determination. 250. Unless the variation is of a minor nature, the Agriculture Minister would need to request advice from the ABSMAC on whether the protocol determination should be varied before it is varied. The Agriculture Minister would not be able to vary a protocol determination unless the varied determination is assessed and endorsed by the ABSMAC as complying with the biodiversity integrity standards. The Agriculture 43

Minister would, as soon as practicable after deciding to either vary or not vary a protocol determination, need to arrange for a copy of any advice given by the ABSMAC in relation to that protocol determination to be published on the Agriculture Department's website. 251. It is appropriate for the variation of a protocol determination to be a legislative instrument, as this decision would be informed by the advice of the ABSMAC, which would consider the appropriateness of variation and any implications of doing so. Variations of a protocol determinations are an instrument of a legislative character. 252. The ability for the Agriculture Minister to make variations of a minor nature without advice of the ABSMAC is intended to allow minor issues or errors to be addressed quickly. Examples of such variations are changes with no material impact on the biodiversity integrity standards or corrections of unintended errors in a protocol. Section 49 When variation takes effect 253. A variation of a protocol determination would generally take effect on the day after the instrument varying the protocol determination is registered on the Federal Register of Legislation or, on a later day if specified in the instrument. 254. A variation of a protocol determination would not apply to an existing registered biodiversity project if the project's registration is in effect at the time of the variation unless an application under section 21 (Regulator may approve an application to replace a protocol determination) has been approved. 255. If an application has been made for the registration of a biodiversity project under section 12, but is not yet been approved, and the application proposes that the project is to be covered by the protocol determination, then the project would be covered by the varied protocol determination. 256. The rules would be able to provide for the Regulator to notify an eligible person that an application under this Bill, or instrument made under this Bill, is affected by a variation of a protocol determination. The rules would also be able to provide for the Regulator to give the eligible person an opportunity to either withdraw or vary the application before the Regulator considers the application. Where an application is withdrawn in such circumstances and a fee has been paid in relation to the application, the Regulator would be required to refund the application fee. 257. The rules may, for example, detail the actions of the Regulator in relation to notification, the timeframe in which an eligible person may nominate withdrawal or variation of an application or how a fee would be refunded. Subdivision C--Duration, expiry and revocation of protocol determinations Section 50 Duration of protocol determinations 258. A protocol determination would take effect from the day after it is registered on the Federal Register of Legislation or, on a later day if specified in the instrument. In other words, protocol determinations would apply prospectively, subject to the circumstances set out in section 52. 44

259. Unless revoked, the protocol determination would remain in force for the period specified in the protocol determination or by a legislative instrument. At the end of such a period, the protocol determination would expire. 260. The Agriculture Minister would be able to renew a protocol determination, without change, if it expires. Provided that the protocol determination is still relevant and applicable, and if there are no practical or scientific grounds for amending the protocol, it is anticipated that protocol determinations would be renewed when they expire. 261. A protocol determination made under this section would be subject to the sunsetting arrangements in Part 4 of the Legislation Act. Applying the sunsetting arrangements in Part 4 of the Legislation Act to protocol determinations would provide an opportunity to help ensure that protocol determinations are kept up to date and only remain in force while they are fit for purpose, necessary and relevant. This would be in addition to the periodic reviews of protocol determinations that would be undertaken by the ABSMAC under section 157. Section 51 Revocation of protocol determinations 262. The Agriculture Minister would be able to revoke a protocol determination, by making a legislative instrument. Before doing so, the Agriculture Minister would need to request advice from the ABSMAC about whether to revoke the determination. 263. The Agriculture Minister would be required to consider various factors when deciding whether to revoke a protocol determination. These factors would include whether the determination complies with the biodiversity integrity standards, the advice given by the ABSMAC and other matters that the Agriculture Minister considers relevant. 264. There are limited circumstances in which it is envisaged that a protocol determination might be revoked. One circumstance would be if there is scientific evidence that the protocol was having unintended significant adverse environmental effects. Another circumstance would be where a protocol determination does not apply to any projects and is unlikely to apply to future projects. 265. The Agriculture Minister would, as soon as practicable after deciding to either revoke or not revoke a protocol determination, need to arrange for a copy of any advice given by the ABSMAC in relation to that protocol determination to be published on the Agriculture Department's website. 266. It is appropriate for the revocation of a protocol determination to be a legislative instrument, as this decision would be informed by the advice of the ABSMAC, which would consider the appropriateness of revocation and any implications of doing so. Revocations of a protocol determinations are an instrument of a legislative character. Section 52 Effect of protocol determination ceasing to have effect - existing registered biodiversity projects 267. Except in relation to the subsection 21(2) provisions covering voluntary variations of registration of biodiversity projects (due to changes in project area or protocol determinations), where a protocol determination otherwise ceases to have effect, it 45

would continue to apply to any existing registered biodiversity projects to which it relates, as if the protocol determination had not ceased. 268. However, applications for new biodiversity projects could not be made on the basis of any repealed protocol determinations. Section 53 Effect of protocol determination ceasing to have effect--applications for registration 269. Where a protocol determination ceases to have effect, the Regulator must refuse any applications for registration of a biodiversity project under section 12 that would have otherwise been covered by the ceased protocol determination. 270. The rules would be able to provide for the Regulator to notify the applicant that the Regulator proposes to refuse the application on the basis that the protocol determination has ceased to have effect. The rules would also be able to provide for the Regulator to give the applicant an opportunity to either withdraw or vary the application before the Regulator refuses the application. Where an application is withdrawn in such circumstances and a fee has been paid in relation to the application, the Regulator would be required to refund the application fee. 271. The rules may, for example, detail the actions of the Regulator in relation to notification, the timeframe in which an eligible person may nominate withdrawal or variation of an application or how a fee would be refunded. Subdivision D--Advice about making, varying or revoking protocol determinations Section 54 Advice by the Agriculture Biodiversity Stewardship Market Advisory Committee 272. Where the Agriculture Minister requests advice from the ABSMAC about whether to make, vary or revoke a protocol determination, the ABSMAC would need to give advice to the Agriculture Minister. 273. If the advice requested from the ABSMAC relates to whether the Agriculture Minister should make or vary a protocol determination, the ABSMAC would need to include, in the advice, the ABSMAC's opinion on whether the proposed protocol determination, or the proposed variation, complies with the biodiversity integrity standards. 274. When providing advice to the Agriculture Minister, the ABSMAC would need to consider the biodiversity integrity standards, any relevant matters specified by the Agriculture Minister in a direction in force under section 55, and any relevant advice provided by the Regulator to the ABSMAC. The ABSMAC would otherwise have discretion to consider any other matters that may be relevant in providing advice to the Agriculture Minister. 275. In developing its advice, it is intended that the ABSMAC would be able to seek advice from external experts on technical details and the evidence base in relation to the protocol determinations. This would ensure that the ABSMAC's advice reflects the best available knowledge and expertise. 46

276. The ABSMAC's advice would also take account of any modifications to the proposal which have been made in light of consultation and expert review after the original request is made. Section 55 Additional matters for the Agriculture Biodiversity Stewardship Market Advisory Committee to take into account 277. This section would provide that the Agriculture Minister would be able to give directions to the ABSMAC to have regard to one or more specified matters in giving advice about the making, variation or revocation of a protocol determination. 278. The direction would be a legislative instrument, but would not be subject to disallowance or sunsetting under the Legislation Act as such directions would be covered by the exemptions in item 12 in section 9 and item 3 in section 11 of the Legislation (Exemptions and Other Matters) Regulation 2015. Subdivision E--Consultation by the Agriculture Biodiversity Stewardship Market Advisory Committee Section 56 Consultation by the Agriculture Biodiversity Stewardship Market Advisory Committee 279. The ABSMAC would be required to undertaken public consultation before giving advice to the Agriculture Minister about whether to make or vary a protocol determination. Public consultation on the proposed determination or variation would occur during a period of 28 days after a notice inviting public consultation has been published on the Agriculture Department's website. The ABSMAC would have the ability to determine that a shorter consultation period, of no less than 14 days after the notice is published, is appropriate. 280. The ABSMAC would need to publish on the Agriculture Department's website any submissions received during the specified consultation period. However, the ABSMAC would not be able to publish a submission if the person making the submission has requested that the ABSMAC not to publish the submission on the basis that publication could reasonably be expected to substantially prejudice the commercial interests of the person or another person, or could prejudice a biodiversity outcome (for example, revealing information that might facilitate persons unlawfully entering a location to collect a rare flora). A request to ABSMAC for non-publication of a submission must be made in writing and in the approved form. 281. Consultation on proposed protocol determinations or variations to protocol determinations would allow issues to be raised by stakeholders and incorporated into the ABSMAC advice and final instruments where appropriate. Division 3--Biodiversity integrity standards Section 57 Biodiversity integrity standards 282. This section would set out biodiversity integrity standards which a protocol determination must comply with. These standards are as follows: 47

• a biodiversity project carried out in accordance with the protocol determination should result in enhancement or protection of biodiversity that would be unlikely to occur if the project was not carried out; and • a biodiversity project carried out in accordance with the protocol determination should be designed to achieve biodiversity outcomes that can be verified; and • any statements or information included in a Register entry or in a biodiversity certificate issued in relation to the project would be supported by clear and convincing evidence, and any estimates, projections or assumptions in such statements or information would be reasonably certain; and • any other standards prescribed by the rules are met, which are not limited by the other paragraphs. 283. The biodiversity integrity standards would form an important test for protocol determinations, providing assurance to the market that protocol determinations would provide for projects that deliver biodiversity outcomes, and that information about those outcomes could be relied upon by those who are purchasing biodiversity certificates. 284. Applying the requirements of the protocol determination should result in outcomes that are unlikely to occur in the absence of the project. This aspect of the standards is intended to ensure there is a connection between active management undertaken by the proponent and generation of the biodiversity outcome as described in the certificate and the register. The standards would also require that the outcomes should be verifiable. Together these two aspects of the standards would provide confidence to those that purchase biodiversity certificates to ensure that there is a connection between their investment and biodiversity outcomes on the ground. 285. The aspects of the standards relating to clear and convincing evidence and reasonable certainty are intended to ensure that information made available about the biodiversity outcomes is credible and can be relied upon by those who are purchasing biodiversity certificates. 48

PART 5--BIODIVERSITY CERTIFICATES 286. This Part would establish a new form of tradeable personal property known as a biodiversity certificate. It would set out the process for the issuing of biodiversity certificates, as well as provisions relating to the ownership and transfer of biodiversity certificates. 287. The creation of biodiversity certificates would allow unique biodiversity outcomes associated with individual projects to be described according to a consistent set of attributes, with that information being made available to the market in a standardised way to inform purchasing decisions. Division 1--Introduction Section 58 Simplified outline of this Part 288. The simplified outline is included to assist the reader to understand the substantive provisions of this Part; however, it is not intended to be comprehensive. It is intended that the reader will rely on the substantive provisions of this Part to which the outline relates. Division 2--Issue of biodiversity certificates Section 59 Application for biodiversity certificate 289. This section would allow for a project proponent of a registered biodiversity project to apply to the Regulator for the issue of a biodiversity certificate. 290. The application would need to meet specified requirements before it can be made, namely, that a biodiversity certificate has not previously been issued, that any conditions set out in the protocol determination have been met, and that any conditions set out in the rules are met. The application would also need to be made after the time worked out in accordance with the protocol determination. It is intended that these requirements would, firstly, prevent duplication in the issuing of biodiversity certificates and secondly, ensure compliance with relevant protocol determinations. Section 60 Form of application 291. This section would set out the requirements for the form of an application for a biodiversity certificate under section 59. The application would need to be in writing, in the approved form, specify the account number for an account in the Register and be accompanied by the biodiversity project report and any other information and documents specified in the rules or protocol determination. 292. Information required by the rules may include the name of the applicant or nominee for a project with multiple proponents, the status of the project against the protocol determination or signed statements regarding meeting specific requirements, such as requirements relating to biodiversity reports. Further requirements may be defined in the protocol determinations because defining when a biodiversity certificate can be applied for will be specific to the kind of biodiversity project covered by a protocol determination. 49

293. The application would also need to be accompanied by an audit report where prescribed by the rules. The audit report would need to be prepared by a registered greenhouse and energy auditor who has been appointed as an audit team leader for the purpose. 294. Further, the application would also need to be accompanied by any fee specified in the rules. Any fee would not amount to taxation. The purpose of any fee is to enable the Regulator to recover costs associated with processing the application. Section 61 Further information 295. Where a project proponent applies for a biodiversity certificate, the Regulator would be able to give written notice of further information that is required to be provided in connection with the application. The further information must be provided within the period specified in the notice. 296. If the project proponent fails to provide the requested information, the Regulator would be able to either refuse to consider the application or refuse to take any action, or further action, in relation to it. Section 62 Issue of biodiversity certificate 297. Where an application has been made for the issue of a biodiversity certificate under section 59, this section would provide for the issuing of the biodiversity certificate. 298. The Regulator would be required to issue the biodiversity certificate if satisfied that the project proponent passes the fit and proper person test (see Part 8), certain conditions relating to the registration of the registered biodiversity projects are met, any requirements specified in the applicable protocol determination are met and any requirements specified in the rules are met. The Regulator must issue a biodiversity certificate by making an account entry in the Register (see Part 14). 299. The biodiversity certificate, once issued, would need to set out the matters specified in the rules. 300. The Regulator would be required to take all reasonable steps to ensure that a decision is made on the application within 90 days after the application was made. The purpose of including this provision is assist applicants to make arrangements relating to projects and contracts by providing an indication of the likely timeframe in which the Regulator would make a decision. 301. If the Regulator requires the applicant to give further information under subsection 61(1), the Regulator would be required to take all reasonable steps to ensure that a decision is made on the application within 90 days after the applicant gave the Regulator the information. 302. The Regulator must notify the applicant in writing if a biodiversity certificate is issued or if an application is refused. 303. A decision under this section to issue, or refuse to issue, a biodiversity certificate would be a reviewable decision (section 173). 50

Section 63 Basis on which biodiversity certificates are issued 304. A biodiversity certificate would be issued on the basis of the following: • the certificate may be varied in accordance with rules made for the purposes of paragraph 23(1)(k) or 26(1)(k); • the certificate may be required to be relinquished under Part 12; • the certificate may be cancelled, revoked, terminated or varied, or be required to be relinquished, by or under later legislation; and • no compensation is payable if the certificate is so cancelled, revoked, terminated or varied, or required to be relinquished. Division 3--Property in biodiversity certificates Section 64 A biodiversity certificate is personal property 305. This section would provide that a biodiversity certificate is personal property. A biodiversity certificate would be able to be transmissible by assignment, by will and by devolution by operation of law, subject to the requirements for the transmission of biodiversity certificates in section 66. 306. This provision is modelled on section 150 of the CFI Act, which creates an Australian carbon credit unit as a form of personal property. Section 65 Ownership of biodiversity certificate 307. The holder of a biodiversity certificate would be the legal owner of the certificate. The holder of the certificate would also be able to deal with the certificate as its legal owner and give good discharges for any consideration for any such dealing, subject to this Bill. This would provide protection for a person who is a bona fide purchaser of the biodiversity certificate and without notice of any defects in the title of the holder. A note would explain that the holder of a biodiversity certificate is the person recorded in the Register as the holder of the certificate (see section 7). 308. Defects in title might arise, for example, if a biodiversity certificate was transferred in error and sold on by an unintended recipient before the error is detected, or transferred fraudulently in cases such as where evidence of a transmission by operation of law is false, or there is unauthorised access to a Registry account. This provision is intended to provide certainty about the ownership of biodiversity certificates. Section 66 Transmission of biodiversity certificates 309. A transmission of a biodiversity certificate, by assignment or other lawful means, would only be in force once the certificate has been transferred from the transferor's Register account into the transferee's Register account, in accordance with the rules made for the purposes of section 132 . The rule-making power in section132is intended to deal with transfers between accounts held by different people and also accounts held by the same person. 310. It is expected that a transfer would be initiated by an electronic instruction from the transferor transmitted to the Regulator. The Regulator would then remove the entry 51

for the certificate from one account and make an entry for that certificate in another account. Transmission by operation of law would bring additional issues. As an example, transmission of a certificate to a person as the trustee of a deceased person's estate. In this situation, it would be the transferee who would need to establish evidence of transmission and, if necessary, open a Registry account, which would be a process that would be defined through the rules. Section 67 Registration of equitable interests in relation to biodiversity certificates 311. The rules would be able to make provision for or in relation to the registration in the Register of equitable interests in relation to biodiversity certificates. However, the rules would not be able to provide for an equitable interest that is a security interest within the meaning of the Personal Property Securities Act 2009, and to which that Act applies. 312. The rules may, for example, define the equitable interests in relation to a biodiversity certificate that may be included in the Register and the process for doing so, including any application process. Section 68 Equitable interests in relation to biodiversity certificates 313. For the avoidance of doubt, the Bill would not affect the creation of, any dealings with, or the enforcement of equitable interests in relation to a biodiversity certificate. 52

PART 6--PURCHASE OF BIODIVERSITY CERTIFICATES BY THE COMMONWEALTH 314. This Part of the Bill would provide for the purchase by the Secretary of the Agriculture Department of biodiversity certificates generated by biodiversity conservation efforts across Australia. It would also provide for the powers of the Secretary to enter into contracts on behalf of the Commonwealth and the treatment of biodiversity certificates once purchased. 315. For the avoidance of doubt, this Part of the Bill is not intended to prohibit the Commonwealth from using other purchasing arrangements, such as the Commonwealth Procurement Rules, to buy biodiversity certificates. Division 1--Introduction Section 69 Simplified outline of this Part 316. The simplified outline is included to assist the reader to understand the substantive provisions of this Part; however, it is not intended to be comprehensive. It is intended that the reader will rely on the substantive provisions of this Part to which the outline relates. Division 2--Biodiversity conservation contracts Section 70 Biodiversity conservation contracts 317. This section would provide the Secretary may enter into contracts (known as biodiversity conservation contracts), on behalf of the Commonwealth, for the purchase by the Commonwealth of biodiversity certificates. The Secretary would be able to enter into such contracts regardless of whether the biodiversity certificates are in existence at the time the contract is entered into. 318. Where the Secretary enters into a biodiversity conservation contract with a person, the person would be a biodiversity conservation contractor. 319. The use of a market approach to offer biodiversity conservation incentives is endorsed by Article 11 of the Biodiversity Convention. Section 71 When biodiversity conservation contracts may be entered into 320. The Secretary would be able to enter into a a biodiversity conservation contract as the result of a biodiversity conservation purchasing process conducted under section 75. 321. The Secretary would not be permitted to enter into a contract unless the biodiversity conservation contractor was a project proponent for a registered biodiversity project. This requirement is intended to ensure a diverse biodiversity market and limit the potential for it to be dominated by third party entities that are not involved in the production of biodiversity certificates. 322. This section would also enable the rules to prescribe further circumstances in which the Secretary would not be permitted to enter into a biodiversity conservation contract. It is appropriate for the rules to set out additional circumstances as these 53

circumstances could change over time in accordance with statutory and government policy. Section 72 Secretary has powers etc. of the Commonwealth 323. This section would provide that the Secretary, on behalf of the Commonwealth, would be conferred with the same rights, responsibilities, duties and powers as the Commonwealth, in relation to the Commonwealth's capacity to be a party to a biodiversity conservation contract. 324. These rights, responsibilities, duties and powers would include, but not be limited to, any of the following: • an amount payable by or to the Commonwealth under a biodiversity conservation contract would be paid by or to the Secretary on behalf of the Commonwealth; and • the Secretary would be able to institute an action or proceeding on behalf of the Commonwealth in relation to a matter that concerns a biodiversity conservation contract. 325. It is intended that any amounts paid by the Secretary under a biodiversity conservation contract would come from annual appropriations made through the Federal Budget process. Section 73 Conferral of powers on the Secretary 326. For the avoidance of doubt, this section would provide that the Secretary may exercise a power conferred on it by a biodiversity conservation contract. 327. Biodiversity conservation contracts will be commercial contracts and include commercial terms and conditions, for example, conditions relating to non- performance or under-delivery by the contractor. There would also be express provision for the Secretary to commence a legal action or proceeding concerning contractual matters, if necessary (see section 72). Division 3--Biodiversity conservation purchasing processes Section 74 Biodiversity conservation purchasing process 328. This section would provide that a biodiversity conservation purchasing process means a tender process, a reverse auction or any other process for the purchase by the Commonwealth of biodiversity certificates. The process would be able to be conducted regardless of whether the biodiversity certificates are in existence at the time the process is conducted. Section 75 Conduct of biodiversity conservation purchasing processes 329. This section would provide that the Secretary, on behalf of the Commonwealth, would be able to conduct one or more biodiversity conservation purchasing processes. When conducting such processes, the Secretary would be required to have regard to certain principles and other matters specified in the rules. These may include policy 54

requirements developed in consultation with relevant Departments and agencies during rule drafting, to ensure due process in conducting the purchasing process. 330. The principles that would need to be considered by the Secretary are the following: • facilitating the Commonwealth receiving value for money when purchasing biodiversity certificates; • maximising the protection or enhancement of biodiversity as a result of the process; • ensuring that administrative costs are reasonable; • ensuring the integrity of the process; • encouraging competition; and • fair and ethical treatment of all participants. 331. For the avoidance of doubt, this section would also specify that a person being a project proponent for a project will not automatically entitle the person to participate in a biodiversity conservation purchasing process. The purchasing principles are not intended to prevent purchasing aimed at supporting specific biodiversity outcomes relating to such matters as habitat type or species protection. Division 4--Miscellaneous Section 76 Rules may provide for certain matters relating to purchased biodiversity certificates 332. This section would allow the rules to make provision for and in relation to certain matters in respect of biodiversity certificates purchased by the Commonwealth under biodiversity conservation contracts. 333. The matters that would be able to be provided for in the rules relate to: • transferring purchased certificates to a specified Commonwealth Register account; • prohibiting or restricting the transfer of biodiversity certificates from a specified Commonwealth Register account; • cancelling biodiversity certificates where there are entries in specified Commonwealth Register account. 334. The rules would allow for further details and clarity on the requirements including documents, information and assurance processes to support the transferring and cancelling of certificates in Commonwealth Register accounts. The details that support the defined requirements may change over time and it would be more appropriate for these details to be set out in the rules. Section 77 Certain instruments relating to Commonwealth procurement are not applicable 335. This section would provide that an instrument made under section 105B of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) would not apply in relation to the functions and powers of the Secretary under sections 70 or 75. 55

336. Section 105B of the PGPA Act provides for the making of instruments relating to procurement. This section would have the effect that an instrument relating to procurement made under the PGPA Act would not apply to the functions and powers of the Secretary in relation to biodiversity conservation contracts or the conduct of biodiversity conservation purchasing processes. Section 78 Biodiversity conservation contracts are not instruments made under this Act 337. This section would provide, for the avoidance of doubt, that a biodiversity conservation contract is taken not to be an instrument made under the Bill. A biodiversity conservation contract would not be of legislative character, but rather it would be a contract between the Secretary, on behalf of the Commonwealth, and the biodiversity conservation contractor for the purchase of biodiversity certificates. 56

PART 7--INTERESTS IN LAND 338. This Part of the Bill would set out the eligible interests in land for the purpose of the Bill. This would be relevant as the registration of a biodiversity project may be subject to a condition requiring the project proponent to obtain the consent of the holders of certain interests in land before a biodiversity certificate may be issued. Eligible interests in land would be in respect of Torrens system land, Crown land that is not Torrens system land and native title land. 339. This Part would also require the registration of certain kinds of biodiversity projects to be notified to the Crown lands Minister of the relevant State or Territory and recorded in certain title registers. Division 1--Introduction Section 79 Simplified outline of this Part 340. The simplified outline is included to assist the reader to understand the substantive provisions of this Part; however, it is not intended to be comprehensive. It is intended that the reader will rely on the substantive provisions of this Part to which the outline relates. Division 2--Eligible interest in an area of land Section 80 Eligible interest in an area of land--Torrens system land 341. In relation to an area of Torrens system land, all registered legal estates or interests in the area of land would be eligible interests for the purpose of the Bill. Other eligible interests would include mortgages or charges over other eligible interests where those interests are registered under the Torrens system of registration. 342. If the land is Crown land that is Torrens system land, the Crown lands Minister of the State or Territory holds an eligible interest, provided that the land is not exclusive possession native title land or land rights land. The rules would also be able to specify a person who holds an eligible interest in an area of Torrens system land. Providing for rules to be made in relation to this matter would assist to clarify who may be a person who holds an eligible interest in an area of Torrens system land. 343. Interests in Crown land, where the land is Torrens system land and land rights land, but not exclusive possession native title land, would be an eligible interest similar to other land interests. Specifically, where a lease is in force over the land rights land and the lease was granted under Commonwealth law to, or for the benefit of, Aboriginal persons or Torres Strait Islanders, the Minister who administers the relevant law would hold an eligible interest. Where the land rights land is held by the Commonwealth or a Commonwealth statutory authority, the Minister who administers the relevant legislation would hold an eligible interest. In any other case, where the land rights land is not freehold and is not exclusive possession native title land, the relevant Crown lands Minister of the State or Territory would hold an eligible interest. 57

Section 81 Eligible interest in an area of land--Crown land that is not Torrens system land 344. In relation to an area of Crown land that is not Torrens system land, the Crown Lands Minister of the State or Territory would hold an eligible interest in the area of land, unless the area is exclusive possession native title land or land rights land. 345. Other eligible interests in Crown land that is not Torrens system land would be legal estates or interests granted by the Crown in any capacity or created under a law of the Commonwealth, State or Territory, or other estates or interests derived from those estates or interests. A mortgage or charge of such legal estates or interests would also be an eligible interest. 346. The rules would also be able to specify a person who holds an eligible interest in an area of Crown land that is not Torrens system land. 347. Interests in Crown land, where the land is not Torrens system land and is land rights land, but is not exclusive possession native title land, would be an eligible interest similar to other land interests. Specifically, where a lease is in force over the land rights land and the lease was granted under Commonwealth law to, or for the benefit of, Aboriginal persons or Torres Strait Islanders, the Minister who administers the relevant law would hold an eligible interest. Where the land rights land is held by the Commonwealth or a Commonwealth statutory authority, the Minister who administers the relevant legislation would hold an eligible interest. In any other case, where the land rights land is not freehold and is not exclusive possession native title land, the relevant Crown lands Minister of the State or Territory would hold an eligible interest. Section 82 Eligible interest in an area of land--native title land 348. Where a registered native title body corporate for an area of land that is native title land exists, that body corporate would hold an eligible interest. Division 3--Freehold land rights land Section 83 Regulator to notify Crown lands Minister of approval of registration of biodiversity project 349. The Regulator must notify, in writing, the relevant State or Territory Crown lands Minister of the approval of registration of certain biodiversity projects, as soon as practicable after giving the approval. This requirement would apply to biodiversity projects, where the project area or areas are freehold land rights land in a State or Territory, and Crown land that is not Torrens system land. Division 4--Entries in title registers Section 84 Entries in title registers--general 350. For a registered biodiversity project, the relevant land registration official would be able to make entries or notations in relation to the existence of a registered biodiversity project, the fact that requirements may arise under the Bill and any other matters relating to the Bill, where it is considered appropriate by the officer to draw 58

those matters to the attention of any person. These entries or notations would be able to be made in or on registers or other documents kept by the official. Section 85 Entries in title registers--biodiversity maintenance areas 351. For one or more areas of land that are biodiversity maintenance areas declared under a biodiversity maintenance declaration in Part 13, the relevant land registration official would be able to make entries or notations in relation to the existence of a biodiversity maintenance declaration, where it is considered appropriate by the officer to draw those matters to the attention of any person. These entries or notations would be able to be made in or on registers or other documents kept by the official. 59

PART 8--FIT AND PROPER PERSON TEST 352. This Part of the Bill would set out the elements of the definition of fit and proper person that must be satisfied in order of a person to pass the fit and proper person test. If a person does not pass the fit and proper person test, the person would not satisfy the criteria for approval of registration of a biodiversity project. The Regulator would also be able to cancel the registration of an existing biodiversity project if a person ceases to be a fit and proper person. Section 86 Simplified outline of this Part 353. The simplified outline is included to assist the reader to understand the substantive provisions of this Part; however, it is not intended to be comprehensive. It is intended that the reader will rely on the substantive provisions of this Part to which the outline relates. Section 87 Fit and proper person test 354. This section would provide for different fit and proper person tests for an individual, body corporate and trust. A corporation sole is not intended to be subject to the fit and proper person test to align with the Regulator's operational practices. 355. An individual would pass the fit and proper person test if they are not an insolvent under administration and they are a fit and proper person having regard to any events specified in the rules that may have happened to the individual or any other matters specified in the rules. 356. A body corporate would pass the fit and proper person test if it is not a Chapter 5 body corporate and it is a fit and proper person for the purpose of any events specified in the rules that have happened to it or one of its executive officers, or any other matter specified in the rules. 357. The rules would provide the detail, clarity and flexibility as to the events in relation to the fit and proper person test that the Regulator must have regard to. For example, breaches of certain Acts or regulations or convictions of specific offences. There is the potential for events to change with statutory amendments or Government policy and including this detail in the rules would allow flexibility and efficiency. 358. A Chapter 5 body corporate is currently defined in the Corporations Act to mean a body corporate: • that is being wound up; or • in respect of property of which a receiver, or a receiver and manager, has been appointed (whether or not by a court) and is acting; or • that is under administration; or • that has executed a deed of company arrangement that has not yet terminated; or • that is under restructuring; or • that has made a restructuring plan that has not yet terminated; or • that has entered into a compromise or arrangement with another person the administration of which has not been concluded. 60

359. A trust would pass the fit and proper person test if the trustee or trustees of the trust passes the fit and proper test for an individual or a body corporate. 360. The policy intention of the fit and proper person test is to: • ensure that biodiversity projects are only managed by (and biodiversity scheme participants only include) fit and proper persons; and • exclude persons with a record or fraud, dishonestly and environmental offences. 361. The fit and proper person test would enable the relevant decision-maker to determine the individual's, body corporate's or trust's competence, capacity and integrity in relation to the applicable specified events and other matters at relevant stages including: • at the time an application for registration of an eligible biodiversity projects is made or an account in the biodiversity scheme register is opened; • prior to issuing a relinquishment notice under subparagraph 111(1)(b)(ii) of the Bill; • at any time where the Regulator is empowered to do so under the Bill and the rules. 362. The rules relating to assessment of fit and proper person test would not affect the operation of Part VIIIC of the Crimes Act regarding the disclosure and consideration of spent convictions. 61

PART 9--REPORTING AND NOTIFICATION REQUIREMENTS 363. This Part of the Bill would set out the provisions relating to reporting and notification requirements. There would be a requirement for biodiversity project reports to accompany an application for the issue of a biodiversity certificate and to be provided at intervals of up to 5 years after a biodiversity certificate has been issued by the Regulator. This Part would also provide for requirements to notify the Regulator of various matters. Division 1--Introduction Section 88 Simplified outline of this Part 364. The simplified outline is included to assist the reader to understand the substantive provisions of this Part; however, it is not intended to be comprehensive. It is intended that the reader will rely on the substantive provisions of this Part to which the outline relates. Division 2--Reporting requirements Section 89 Biodiversity project reports--first report 365. This section applies if a project proponent for a registered biodiversity project applies under section 59 for the Regulator to issue a biodiversity certificate in respect of the project. 366. The application would need to be accompanied by a written report about the project (known as a biodiversity project report), in accordance with section 91. This section would include a note to see paragraph 60(1)(g) which requires that an application for a biodiversity certificate be accompanied by a biodiversity project report. 367. The biodiversity project report must relate to a period (known as the reporting period for the report) that begins when the project was registered, and ends within 6 months before the application is made. Section 90 Biodiversity project reports--subsequent reports 368. This section would apply to a registered biodiversity project if the Regulator issues a biodiversity certificate in relation to the project (whether or not the certificate is in effect). 369. The project proponent would be required to give the Regulator a written report (known as a biodiversity project report) in accordance with section 91. The report would need to be expressed to be the reporting period for the report (the reporting period for the report), begin immediately after the end of the previous reporting period for the project for a report (under this section or section 89) and either, end no later than the end of the activity period for the project, or in any other case, end between 1 month and 5 years after the period begins. 370. It is expected that most project proponents would report every five years (the maximum reporting period) as this is likely to be most cost effective for those project proponents. This section would provide for flexibility with reporting, especially in 62

circumstances where project proponents would request to report more frequently. For example, because they have a contract that enables them to demonstrate and receive payment for biodiversity gains at briefer intervals. 371. A project proponent would be liable to a civil penalty if they do not comply with the requirement to give a biodiversity project report for a reporting period or before the end of the period mentioned in paragraph 91(1)(g). The requirement in paragraph 91(1)(g) would require that a subsequent biodiversity project report under section 90 for a reporting period must be given to the Regulator within either 6 months after the end of the reporting period or the number of months specified in the applicable protocol determination (if that number of months is greater than 6 months). It is assumed that the reporting period ends at the earliest of 5 years after the reporting period begins and the end of the activity period for the project. 372. The maximum civil penalty that a court may order a person who is an individual to pay where that person is liable to a civil penalty would be 200 penalty units. There would also be continuing civil penalty provision for the purposes of section 93 of the Regulatory Powers Act. The maximum civil penalty that a court may order a person who is an individual to pay for each day that a contravention of this reporting requirement continues would be 5% of the maximum civil penalty that could be imposed (i.e. 5% of 200 penalty units). General provisions relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 373. As this would be a voluntary scheme, civil penalties would be aimed at protecting an emerging market that is intended to generate tangible environmental outcomes as well as a new income stream for participants. The maximum civil penalty amount would be set to achieve the aim of deterrence for non-compliance and would provide the courts with the necessary scope to apply penalties that appropriately reflect circumstances of non-compliance. Without such a strong mechanism to achieve deterrence, the integrity of the scheme would be threatened as the Regulator would not have the necessary information from the biodiversity project reports to ensure reliability and transparency for those engaged with the scheme. Given the importance of ensuring that biodiversity project reports are provided in a timely manner, it is also appropriate for a continuing civil penalty provision to apply, calculated by reference to each day that the report is not provided to the Regulator after the end of the reporting period. Section 91 Requirements for biodiversity project reports 374. A biodiversity project report that is about a registered biodiversity project for a reporting period would be required to meet certain requirements. The report would need to: • be given in the manner and form prescribed by the rules; • set out the information specified in the rules or applicable protocol determination; and • be accompanied by other such documents as specified in the rules or applicable protocol determination. 63

375. Information or documents that would be specified in the rules or a provision of a protocol determination may relate to a matter arising before, during or after the reporting period. 376. The report would also need to be accompanied by an audit report where prescribed by the rules. The audit report would need to be prepared by a registered greenhouse and energy auditor who has been appointed as an audit team leader for the purpose. 377. Subsequent project reports under section 90 would be required to be given to the Regulator within 6 months after the end of the reporting period, or within the number of months specified in the protocol determination that covers the project, whichever is greater. 378. For the avoidance of doubt, a report for a period may deal with matters that occur before the start of the period. 379. The rules would provide the opportunity to provide further detail and clarity about requirements such as reports needing to be provided in electronic form, details of progress in relation to the protocol determination or requirements around supporting documents such as monitoring reports or data. As some requirements would be specific to the protocol determination, for example confirmation of species planted and survival, it is appropriate for additional details to be provided in the rules. Division 3--Notification requirements 380. This Division would provide for notification requirements where there has been a change of circumstances or certain events occur. There would also be associated civil penalty provisions for contravention of the notification requirements. Section 92 Notification requirement--project proponent ceases to have right to carry out project 381. This section would apply to an eligible person in either of the following circumstances: • the eligible person is the project proponent and ceases to have a right that is necessary for the project to be carried out; or • the eligible person is one of the project proponents, and any of the project proponents cease to have a right that is necessary for the project to be carried out, and the cessation results in no project proponents having the right. 382. The eligible person would be required to notify the Regulator of the cessation within 90 days after the cessation occurs. The notification would need to be in writing. 383. The eligible person would be liable to a civil penalty if they do not comply with the requirement to notify the Regulator of the cessation. The maximum civil penalty that a court may order a person who is an individual to pay where that person is liable to a civil penalty would be 200 penalty units. There would also be continuing civil penalty provision for the purposes of section 93 of the Regulatory Powers Act. The maximum civil penalty that a court may order a person who is an individual to pay for each day that a contravention of this requirement continues would be 5% of the maximum civil 64

penalty that could be imposed (i.e. 5% of 200 penalty units). General provisions relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 384. This maximum civil penalty is intended to be proportionate to the harm that is likely to result should a person fail to comply with the notification requirement. It is necessary for participants in the scheme to ensure that any cessation of the right to carry out the project is notified to the Regulator in a timely and accurate manner. For example, where the project proponent ceases to have the right to restore native forest on the project area, which is necessary to carry out the project, would be highly relevant to the Regulator's compliance activities. The maximum civil penalty amount would also provide for sufficient deterrence against any potential non-compliance with the notification requirement, which would have the potential to undermine the integrity of the scheme. It would also provide the courts the necessary scope to apply penalties that appropriately reflect the circumstances of any non-compliance. Given the importance of ensuring that the information is notified to the Regulator in a timely manner, it is also appropriate for a continuing civil penalty provision to apply, calculated by reference to each day that this requirement is contravened. Section 93 Notification requirement--withdrawal or cessation of regulatory approval 385. This section would apply to the project proponent of a registered biodiversity project if a regulatory approval that was required for the project to be carried out has been withdrawn or ceases to have effect for any reason. 386. For example, regulatory approval may be withdrawn or cease because land has been re-zoned or committed to use for an alternative purpose such as mining or defence purposes. 387. The eligible person would be required to notify the Regulator of the withdrawal or cessation within 90 days after the withdrawal or cessation occurs. The notification would need to be in writing. Regulatory approval would be defined in section 7 of the Bill. 388. The eligible person would be liable to a civil penalty if they do not comply with the requirement to notify the Regulator of the withdrawal or cessation. The maximum civil penalty that a court may order a person who is an individual to pay where that person is liable to a civil penalty would be 200 penalty units. There would also be continuing civil penalty provision for the purposes of section 93 of the Regulatory Powers Act. The maximum civil penalty that a court may order a person who is an individual to pay for each day that a contravention of this requirement continues would be 5% of the maximum civil penalty that could be imposed (i.e. 5% of 200 penalty units). General provisions relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 389. This maximum civil penalty is intended to be proportionate to the harm that is likely to result should a person fail to comply with the notification requirement. It is necessary for participants in the scheme to ensure that any withdrawal or cessation of regulatory approval is notified to the Regulator in a timely and accurate manner. For example, the issue of whether regulatory approval that was required for the project 65

remains in effect would be highly relevant to the Regulator's compliance activities. The maximum civil penalty amount would also provide for sufficient deterrence against any potential non-compliance with the notification requirement, which would have the potential to undermine the integrity of the scheme. It would also provide the courts the necessary scope to apply penalties that appropriately reflect the circumstances of any non-compliance. Given the importance of ensuring that the information is notified to the Regulator in a timely manner, it is also appropriate for a continuing civil penalty provision to apply, calculated by reference to each day that this requirement is contravened. Section 94 Notification requirement--death of project proponent 390. This section would apply if a person who is a project proponent for a registered biodiversity project dies. 391. The person's legal personal representative would be required to notify the Regulator of the death within 90 days of the death. The notification would need to be in writing. 392. The person's legal personal representative would be liable to a civil penalty if they do not comply with the requirement to notify the Regulator of the death. The maximum civil penalty that a court may order a person who is an individual to pay where that person is liable to a civil penalty would be 60 penalty units. There would also be continuing civil penalty provision for the purposes of section 93 of the Regulatory Powers Act. The maximum civil penalty that a court may order a person who is an individual to pay for each day that a contravention of this requirement continues would be 5% of the maximum civil penalty that could be imposed (i.e. 5% of 60 penalty units). General provisions relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 393. This maximum civil penalty is intended to be sufficient to deter non-compliance with the notification requirements, given that the seriousness of the contravention is likely to be at the lower end of the scale. Given the importance of ensuring that the information is notified to the Regulator in a timely manner, it is also appropriate for a continuing civil penalty provision to apply, calculated by reference to each day that this requirement is contravened. Section 95 Notification requirement--protocol determination 394. This section would apply if the project proponent for the registered biodiversity project was subject to a requirement to notify the Regulator of one or more matters relating to a registered biodiversity project under an applicable protocol determination. For example, one matter that would require a specific notification requirement would be incidence of certain diseases or pests. 395. It would be appropriate for the protocol determination to be able to make provision for notification requirements for one or more matters relevant to the biodiversity project, as these matters would be unique to the specific type of project dealt with in the protocol determination. The protocol determinations would be legislative instruments and subject to Parliamentary scrutiny through the disallowance process. Sunsetting would also apply in accordance with the Legislation Act. 66

396. By delegating the content of this notification requirement to protocol determinations the necessary detail could be included with a greater level of flexibility permitted to tailor the requirements to the specific type of project dealt with in the protocol determination. As each biodiversity project would apply to different activities in a different region or ecosystem, notification requirements may need to reflect the distinctiveness and uniqueness which would not be possible if contained in the Bill. 397. The project proponent would be required to comply with the requirement to notify the Regulator. The project proponent would be liable to a civil penalty if they do not comply with the requirement. The maximum civil penalty that a court may order a person who is an individual to pay where that person is liable to a civil penalty would be 60 penalty units. There would also be continuing civil penalty provision for the purposes of section 93 of the Regulatory Powers Act. The maximum civil penalty that a court may order a person who is an individual to pay for each day that a contravention of this requirement continues would be 5% of the maximum civil penalty that could be imposed (i.e. 5% of 60 penalty units). General provisions relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 398. This maximum civil penalty is intended to be sufficient to deter non-compliance with the notification requirements, given that the seriousness of the contravention is likely to be at the lower end of the scale. Given the importance of ensuring that the information is notified to the Regulator in a timely manner, it is also appropriate for a continuing civil penalty provision to apply, calculated by reference to each day that this requirement is contravened. Section 96 Notification requirement--reversal of biodiversity outcome 399. This section would require the project proponent for a registered biodiversity project to notify the Regulator of a significant reversal of the biodiversity outcome relating to that project within 60 days of the project proponent becoming aware of the conduct. The notification would need to be in writing. 400. The reversal of the biodiversity outcome would apply only in circumstances where it is taken to be a significant reversal. Section 98 would set out circumstances that would be taken to be significant reversals in biodiversity outcome. An example of a significant reversal in biodiversity outcome would be where the applicable protocol determination provides for the restoration of native forest and the project proponent clears trees on the project areas. Another example would be inadvertent clearing of some or all of the project area by the proponent, especially in situations where clearing resulted in significant loss of habitat. 401. The project proponent would be liable to a civil penalty if they do not notify the Regulator of the conduct. The maximum civil penalty that a court may order a person who is an individual to pay where that person is liable to a civil penalty would be 200 penalty units. There would also be continuing civil penalty provision for the purposes of section 93 of the Regulatory Powers Act. The maximum civil penalty that a court may order a person who is an individual to pay for each day that a contravention of this requirement continues would be 5% of the maximum civil penalty that could be imposed (i.e. 5% of 200 penalty units). General provisions 67

relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 402. This maximum civil penalty is intended to be proportionate to the harm that is likely to result should a person fail to comply with the notification requirement. It is necessary for participants in the scheme to ensure that any significant reversal of the biodiversity outcome relating to that project is notified to the Regulator in a timely and accurate manner. For example, the clearing of trees on the project area where the applicable protocol determination provides for the restoration of native forest would be highly relevant to the Regulator's compliance activities. The maximum civil penalty amount would also provide for sufficient deterrence against any potential non- compliance with the notification requirement, which would have the potential to undermine the integrity of the scheme. It would also provide the courts the necessary scope to apply penalties that appropriately reflect the circumstances of any non- compliance. Given the importance of ensuring that the information is notified to the Regulator in a timely manner, it is also appropriate for a continuing civil penalty provision to apply, calculated by reference to each day that this requirement is contravened. Section 97 Notification requirement--event or conduct that causes, or is likely to cause, reversal of biodiversity outcome 403. This section would require the project proponent for a registered biodiversity project to notify the Regulator of certain events within 60 days of the project proponent becoming aware of the events. The notification would need to be in writing. These events would be: • a natural disturbance that causes, or is likely to cause, a significant reversal of the biodiversity outcome related to the project; • conduct engaged in by the project proponent, or any other person, that causes, or is likely to cause, a significant reversal of the biodiversity outcome related to the project. 404. The reversal of the biodiversity outcome would apply only in circumstances where it is taken to be a significant reversal. For example, a major bushfire or cyclone could result in significant loss of habitat and endangered species. Section 98 would set out circumstances that would be taken to be significant reversals in biodiversity outcomes. 405. The project proponent would be liable to a civil penalty if they do not notify the Regulator of the natural disturbance. The maximum civil penalty that a court may order a person who is an individual to pay where that person is liable to a civil penalty would be 200 penalty units. There would also be continuing civil penalty provision for the purposes of section 93 of the Regulatory Powers Act. The maximum civil penalty that a court may order a person who is an individual to pay for each day that a contravention of this requirement continues would be 5% of the maximum civil penalty that could be imposed (i.e. 5% of 200 penalty units). General provisions relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 68

406. This maximum civil penalty is intended to be proportionate to the harm that is likely to result should a person fail to comply with the notification requirement. It is necessary for participants in the scheme to ensure that any relevant events or conduct is notified to the Regulator in a timely and accurate manner. For example, the issue of whether a natural disturbance or conduct engaged in by any person has caused, or is likely to cause, a reversal of biodiversity outcome related to the project would be highly relevant to the Regulator's compliance activities. The maximum civil penalty amount would also provide for sufficient deterrence against any potential non- compliance with the notification requirement, which would have the potential to undermine the integrity of the scheme. It would also provide the courts the necessary scope to apply penalties that appropriately reflect the circumstances of any non- compliance. Given the importance of ensuring that the information is notified to the Regulator in a timely manner, it is also appropriate for a continuing civil penalty provision to apply, calculated by reference to each day that this requirement is contravened. Section 98 Significant reversals in biodiversity outcomes--notification requirements 407. The rules would be able to prescribe circumstances in which there has been a reversal of biodiversity outcome to which a registered biodiversity project relates and whether or not the reversal of the biodiversity outcome is taken to be significant. Rules made prescribing these circumstances would be for the purposes of paragraphs 96(1)(b) and 97(1)(b). 408. For completeness, this section would not limit section 114, which would provide for significant reversals in biodiversity outcomes for the purposes of relinquishment requirements. 409. It would be appropriate for rules to prescribe these circumstances to allow the necessary detail to be included with a greater level of flexibility permitted to tailor the requirements to the specific type of project dealt with in the protocol determination. As each biodiversity project would apply to different activities in a different region or ecosystem, notification requirements may need to reflect their distinctiveness and uniqueness. Section 99 Notification requirements--event relevant to whether a project proponent passes the fit and proper person test 410. This section would apply to a project proponent of a registered biodiversity project if an event relevant to a project proponent being a fit and proper person occurred. The event would depend on whether the project proponent was an individual, body corporate or a trust. 411. If the project proponent is an individual, the project proponent would be required to notify the Regulator of an event that happened in relation to the individual as set out in the rules under subparagraph 87(1)(a)(i) or if the individual becomes insolvent under administration. This notification requirement would also apply to a project proponent that is a trust, where such an event happens in relation to a trustee who is an individual. 69

412. If the project proponent is a body corporate, the project proponent would be required to notify the Regulator of an event that happened in relation to the body corporate as set out in the rules made for the purposes of subparagraph 87(2)(a)(i) or an event that happened in relation to an executive officer of the body corporate as set out in the rules under subparagraph 87(2)(a)(ii) or if the body corporate becomes a Chapter 5 body corporate. This notification requirement would also apply to a project proponent that is a trust, where such an event happens in relation to a trustee who is body corporate. 413. Any events set out in the rules made for the purposes of subparagraphs 87(1)(a)(i), (2)(a)(i) or (2)(a)(ii), which consists of a breach of this Bill or an instrument under this Bill, or a climate change law (within the meaning of the CER Act) would be disregarded for the purposes of this section. The purpose of this provision would be to reduce the unnecessary burden on the project proponent in circumstances where the event would already be known by the Regulator. For example, the Regulator would already be aware of a breach of this Bill, therefore a requirement to notify the Regulator about these matters would create an unnecessary burden on the project proponent. 414. The project proponent would be required to notify the Regulator of the event within 90 days after the event. The notification would need to be in writing. 415. The eligible person would be liable to a civil penalty if they do not comply with the requirement to notify the Regulator of the event. The maximum civil penalty that a court may order a person who is an individual to pay where that person is liable to a civil penalty would be 200 penalty units. There would also be continuing civil penalty provision for the purposes of section 93 of the Regulatory Powers Act. The maximum civil penalty that a court may order a person who is an individual to pay for each day that a contravention of this requirement continues would be 5% of the maximum civil penalty that could be imposed (i.e. 5% of 200 penalty units). General provisions relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 416. This maximum civil penalty is intended to be proportionate to the harm that is likely to result should a person fail to comply with the notification requirement. It is necessary for participants in the scheme to ensure that any events relevant to them being a fit and proper person is notified to the Regulator in a timely and accurate manner. For example, the issue of whether the project proponent becomes insolvent under administration or becomes a Chapter 5 body corporate (whichever the case may be) would be highly relevant to the Regulator's compliance activities. The maximum civil penalty amount would also provide for sufficient deterrence against any potential non-compliance with the notification requirement, which would have the potential to undermine the integrity of the scheme. It would also provide the courts the necessary scope to apply penalties that appropriately reflect the circumstances of any non- compliance. Given the importance of ensuring that the information is notified to the Regulator in a timely manner, it is also appropriate for a continuing civil penalty provision to apply, calculated by reference to each day that this requirement is contravened. 70

Section 100 The rules may impose notification requirements 417. The rules would be able to make provision to require the project proponent of a registered biodiversity project to notify the Regulator of a matter within a specified period, provided that the matter was relevant to the operation of this Bill. 418. It would be appropriate for the rules to be able to make provision for notification requirements for a matter relevant to the operation of this Bill. This would provide the discretion and flexibility that is necessary to allow the market to develop whilst ensuring that all matters relevant to the operation of the Bill can be captured. The rules would not be exempt from disallowance under the Legislation Act; and would therefore be subject to Parliamentary scrutiny. The rules would also not be exempt from sunsetting. 419. If a person was subject to a requirement under the rules would need to comply with that requirement within the specified period. The person would be liable to a civil penalty if they did not comply with the requirement to notify the Regulator of a matter. The maximum civil penalty that a court may order a person who is an individual to pay where that person is liable to a civil penalty would be 60 penalty units. There would also be continuing civil penalty provision for the purposes of section 93 of the Regulatory Powers Act. The maximum civil penalty that a court may order a person who is an individual to pay for each day that a contravention of this requirement continues would be 5% of the maximum civil penalty that could be imposed (i.e. 5% of 60 penalty units). General provisions relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 420. This maximum civil penalty is intended to be sufficient to deter non-compliance with the notification requirements, given that the seriousness of the contravention is likely to be at the lower end of the scale. Given the importance of ensuring that the information is notified to the Regulator in a timely manner, it is also appropriate for a continuing civil penalty provision to apply, calculated by reference to each day that this requirement is contravened. 71

PART 10--INFORMATION-GATHERING POWERS 421. This Part of the Bill would set out the information-gathering powers that may be exercised by the Regulator in order to monitor general compliance or to undertake more specific investigations into suspected breaches. 422. The provisions in this Part are not intended to abrogate the privilege against self- incrimination. Section 101 Simplified outline of this Part 423. The simplified outline is included to assist the reader to understand the substantive provisions of this Part; however, it is not intended to be comprehensive. It is intended that the reader will rely on the substantive provisions of this Part to which the outline relates. Section 102 Regulator may obtain information or documents 424. This section would apply if the Regulator believes on reasonable grounds that a person has information or a document that is relevant to the operation of the Bill or the associated provisions. 425. The Regulator would be able to require the person give such information, produce such documents, or produce copies of such documents to the Regulator. The Regulator would need to provide the person with notice in writing. 426. The information, documents or copies must be provided within the period and in the manner specified in the notice. The person would have at least 14 days after the notice is given to provide the information, documents or copies. 427. The term associated provisions is defined to include provisions of the proposed rules, protocol determinations and specified provisions of the Criminal Code in so far as those sections may relate to the Bill, the rules or a protocol determination. 428. A person who fails to comply with a requirement to the extent that the person is capable of doing so would be liable to a civil penalty. The maximum civil penalty that a court may order a person who is an individual to pay where that person is liable to a civil penalty would be 60 penalty units. There would also be continuing civil penalty provision for the purposes of section 93 of the Regulatory Powers Act. The maximum civil penalty that a court may order a person who is an individual to pay for each day that a contravention of this requirement continues would be 5% of the maximum civil penalty that could be imposed (i.e. 5% of 60 penalty units). General provisions relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 429. This maximum civil penalty is intended to be sufficient to deter non-compliance with the requirement to provide information, given that the seriousness of the contravention is likely to be at the lower end of the scale. Given the importance of ensuring that the information is provided to the Regulator in a timely manner, it is also appropriate for a continuing civil penalty provision to apply, calculated by reference to each day that this requirement is contravened. 72

430. This section would not be limited by any other provision of the Bill that relates to the powers of the Regulator to obtain information or documents. Section 103 Copying documents--compensation 431. Where a person is required to make copies of documents and produce those copies to the Regulator, the person would be entitled to reasonable compensation paid by the Regulator. The Regulator would provide compensation on behalf of the Commonwealth. Section 104 Copies of documents 432. The Regulator would be able to inspect, and make copies of, documents that a person is required to produce and to retain a copy of documents produced. Section 105 Regulator may retain documents 433. The Regulator would be able to take documents produced and retain them the documents for as long as is necessary. 434. The Regulator would be required to supply a certified copy of such documents to the person otherwise entitled to possession. Until a certified copy is supplied, the person otherwise entitled to possession would be able to inspect and make copies of the document, or authorise another person to do so, at such times and places that the Regulator thinks appropriate. 435. The certified copy would also be able to be received in all courts and tribunals as evidence as if it were the original document. 73

PART 11--AUDITS 436. This Part of the Bill would provide that the Regulator may require audits to be carried out concerning one or more aspects of a person's compliance with the Bill and associated provisions. 437. A robust audit framework would provide buyers of biodiversity certificates confidence in the value of a certificate and in the biodiversity outcomes that an associated registered biodiversity project has achieved or will achieve. Section 106 Simplified outline of this Part 438. The simplified outline is included to assist the reader to understand the substantive provisions of this Part; however, it is not intended to be comprehensive. It is intended that the reader will rely on the substantive provisions of this Part to which the outline relates. Section 107 Compliance audits 439. This section would enable the Regulator to require the project proponent of a registered biodiversity project to appoint an auditor to review their compliance with this Bill or associated provisions. 440. This section would apply if a person is, or has been, the project proponent for a registered biodiversity project and the Regulator has reasonable grounds to suspect that the project proponent has contravened, is contravening, or is proposing to contravene, this Bill or the associated provisions. 441. The Regulator may require the person to appoint an audit team leader, to arrange for the audit team leader to carry out an audit on one or more aspects of the person's compliance with the Bill or the associated provisions, to arrange for a written report setting out the results of the audit to be given to the project proponent and to give a copy of the audit report to the Regulator on or before a specified day. The Regulator would need to provide the person with notice in writing about the requirement. 442. Where an audit team leader is required, the person would be able to appoint a registered greenhouse and energy auditor of their own choice, or the Regulator would be able to specify one or more registered greenhouse and energy auditors to would undertake the audit. The audit provisions would rely upon the existing audit framework established under the National Greenhouse and Energy Reporting Act 2007. 443. The notice given by the Regulator would also need to specify the type of audit, the matters to be covered, the form of the audit report and the kinds of details it is to contain. 444. The person would be required to comply with the requirements of the notice. A person who fails to comply with the requirements of the notice would be liable to a civil penalty. The maximum civil penalty that a court may order a person who is an individual to pay where that person is liable to a civil penalty would be 200 penalty units. There would also be continuing civil penalty provision for the purposes of 74

section 93 of the Regulatory Powers Act. The maximum civil penalty that a court may order a person who is an individual to pay for each day that a contravention of this requirement continues would be 5% of the maximum civil penalty that could be imposed (i.e. 5% of 200 penalty units). General provisions relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 445. This maximum civil penalty is intended to be proportionate to the harm that is likely to result should a person fail to comply with the requirements of the notice. It is necessary for audits to be conducted in order to facilitate the Regulator's compliance activities, and to ensure that claimed biodiversity outcomes are accurate and substantiated. The maximum civil penalty amount would also provide for sufficient deterrence against any potential non-compliance with requirements for conducting an audit, which would have the potential to undermine the integrity of the scheme. It would also provide the courts the necessary scope to apply penalties that appropriately reflect the circumstances of any non-compliance. Given the importance of ensuring that the information is provided to the Regulator in a timely manner, it is also appropriate for a continuing civil penalty provision to apply, calculated by reference to each day that this requirement is contravened. 446. The person would also be required to provide the audit team leader, and any person assisting the team leader, with all reasonable facilities and assistance necessary for the effective exercise of their duties under the Bill. 447. The person would be liable to a civil penalty if they do not comply with the requirement to provide reasonable facilities and assistance. The maximum civil penalty that a court may order a person who is an individual to pay where that person is liable to a civil penalty would be 60 penalty units. This maximum civil penalty is intended to be sufficient to deter non-compliance with this requirement, given that the seriousness of the contravention is likely to be at the lower end of the scale. General provisions relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 448. Where an audit under this section does not reveal any evidence of non-compliance by the project proponent with the Bill or applications, the project proponent would be able to make a request to the Regulator to have their costs reimbursed. 449. The Regulator would be able to reimburse reasonable costs if satisfied that the person would suffer financial hardship if they were not reimbursed for such costs. 450. The request for reimbursement would need to be made in writing, in the approved form, and accompanied by information and documents specified in the rules. This is intended to prevent undue impacts on small projects, where the costs of undertaking the audit could be significant relative to the scale of the project. For example, types of documents that may specified by the rules may include financial records such as invoices for audits and evidence of income. 451. A decision under this section to reimburse, or refuse to reimburse, a person for reasonable costs incurred by the person in complying with an audit notice would be a reviewable decision (see section 173). 75

Section 108 Other audits 452. This section would enable the Regulator to appoint auditors directly. This type of audits would be known as "other audits". These audits are intended to be used for routine monitoring of compliance and may be based on the Regulator's assessments of compliance, risks, statistical sampling of projects, and other approaches. 453. If a person is, or has been a project proponent for a registered biodiversity project, the Regulator would be able to appoint a registered greenhouse and energy auditor as an audit team leader to carry out an audit of the person's compliance with one or more aspects of the Bill or associated provisions. 454. The Regulator would be required to notify the project proponent of appointing an audit team leader in writing at a reasonable time before the audit is to be undertaken. The notice would be required to specify the audit team leader, the period in which the audit is to take place, the type of audit to be carried out, and the matters to be covered by the audit. 455. The person would be required to provide the audit team leader, and any person assisting the team leader, with all reasonable facilities and assistance necessary for the effective exercise of their duties under the Bill 456. The person would be liable to a civil penalty if they do not comply with the requirement. The maximum civil penalty that a court may order a person who is an individual to pay where that person is liable to a civil penalty would be 60 penalty units. This maximum civil penalty is intended to be sufficient to deter non-compliance with the requirement, given that the seriousness of the contravention is likely to be at the lower end of the scale. General provisions relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 76

PART 12--RELINQUISHMENT REQUIREMENTS 457. This Part of the Bill would make provision for the relinquishment of biodiversity certificates in certain circumstances, namely where: • certificates were issued as a result of false or misleading information; or • the registration of the biodiversity project for which the certificate was issued is cancelled; or • there has been a significant reversal of a biodiversity outcome. Division 1--Introduction Section 109 Simplified outline of this Part 458. The simplified outline is included to assist the reader to understand the substantive provisions of this Part; however, it is not intended to be comprehensive. It is intended that the reader will rely on the substantive provisions of this Part to which the outline relates. Division 2--Relinquishment notices Section 110 Relinquishment notice--false or misleading information 459. This section would apply to a person if a biodiversity certificate (known as the original biodiversity certificate) has been issued in relation to a biodiversity project and information given by the person to the Regulator in connection with the project was false or misleading in a material particular. This would apply to a biodiversity certificate regardless of whether the person still holds the certificate and whether the certificate remains in effect. 460. The information given would need to have been contained in an application, or given in connection with an application, under this Bill or rules, contained in a biodiversity project report or contained in a notification under Division 3 of Part 9 (notification requirements). 461. The issue of the biodiversity certificate must have been directly or indirectly substantially attributable to the false or misleading information given by the person. 462. Where a biodiversity certificate has been issued and information given by the person was false or misleading, the Regulator would be able to give a relinquishment notice to the person in relation to the original biodiversity certificate. 463. A decision under this section to give a relinquishment notice would be a reviewable decision (see section 173). Section 111 Relinquishment notice--cancellation of registration of biodiversity project 464. This section would apply if a biodiversity certificate (known as the original biodiversity certificate) has been issued in relation to a biodiversity project, the registration of the project was cancelled under rules made for the purposes of certain 77

provisions and the permanence period of the project has not ended. This would apply to a biodiversity certificate regardless of whether the certificate remains in effect. 465. These purposes include the eligibility requirements not being met, project proponent ceasing to pass the fit and proper test, project proponent ceasing to exist, false or misleading information being provided, or failure of multiple project proponent to nominate a nominee. 466. Where a biodiversity certificate has been issued in relation to a biodiversity project and the registration was cancelled under the rules, the Regulator would be able to give a relinquishment notice in relation to the original biodiversity certificate to any person who was the project proponent immediately before the registration was cancelled. 467. A decision under this section to give a relinquishment notice would be a reviewable decision (see section 173). Section 112 Relinquishment notice--reversal of biodiversity outcome other than due to natural disturbance or conduct etc. 468. This section would apply if a biodiversity certificate (known as the original biodiversity certificate) has been issued in relation to a biodiversity project, subject to rules there has been a significant reversal of biodiversity outcome to which the project relates and permanence period of the project has not ended. This would apply to a biodiversity certificate regardless of whether the certificate remains in effect. 469. This would only be in circumstances where the reversal is not attributable to natural disturbance, reasonable actions taken to reduce the risk of bushfire, or conduct engaged in by a person (that is not within the reasonable control of the project proponent). 470. Where a biodiversity certificate has been issued and there has been a significant reversal of the biodiversity, the Regulator would be able to give a relinquishment notice in relation to the original biodiversity certificate to the project proponent. For projects with multiple project proponents, a note following this section refers readers to Part 3, specifically sections 40 and 43. 471. A decision under this section to give a relinquishment notice would be a reviewable decision (see section 173). Section 113 Relinquishment notice--reversal of biodiversity outcome due to natural disturbance or conduct and no mitigation happens 472. This section would apply if a biodiversity certificate (known as the original biodiversity certificate) has been issued in relation to a biodiversity project, subject to rules there has been a significant reversal of biodiversity outcome to which the project relates and the permanence period of the project has not ended. This would apply to a biodiversity certificate whether or not the certificate remains in effect. 473. This would only be in circumstances where the reversal is attributable to natural disturbance or conduct engaged in by another person (that is not within the reasonable control of the project proponent), and the Regulator is satisfied that the project 78

proponent has not taken reasonable steps to mitigate the effect of the natural disturbance or conduct. 474. Where a biodiversity certificate has been issued and there has been a significant reversal of biodiversity outcome without the project proponent taking reasonable steps to mitigate the effect, the Regulator would be able to give a relinquishment notice in relation to the original biodiversity certificate to the project proponent. For projects with multiple project proponents, a note following this section refers readers to Part 3, specifically sections 40 and 43. 475. A decision under this section to give a relinquishment notice would be a reviewable decision (see section 173). Section 114 Significant reversal in biodiversity outcomes--relinquishment requirements 476. The rules would be able to prescribe circumstances in which there has been a reversal of biodiversity outcome to which a registered biodiversity project relates and whether or not the reversal of the biodiversity outcome is taken to be significant. Rules made prescribing these circumstances would be for the purposes of paragraphs 112(1)(b) and 113(1)(b). 477. For completeness, this section would not limit section 98, which would provide for significant reversals in biodiversity outcomes for the purposes of notification requirements. 478. It would be appropriate for rules to prescribe these circumstances to allow the necessary detail to be included with a greater level of flexibility permitted to tailor the requirements to the specific type of project. As each biodiversity project would apply to different activities in a different region or ecosystem, relinquishment requirements may need to reflect their distinctiveness and uniqueness. Section 115 Form and content of relinquishment notice 479. This section would provide that a relinquishment notice must be in writing and include the information prescribed by the rules. Division 3--Complying with a relinquishment notice Section 116 Requirement for compliance with relinquishment notice 480. This section would set out certain requirements and timeframes for compliance with a relinquishment notice. 481. Once a relinquishment notice is given to a person, the notice would need to be complied with under section 117 before the end of 6 months after the notice was given. The Regulator would be able to extend the period for compliance by up to 6 months if satisfied that: • not doing so would lead to significant hardship for the notice recipient; or 79

• the notice recipient cannot relinquish the original biodiversity certificate under paragraph 117(1)(a) and there are no equivalent certificates available under paragraph 117(1)(b) for the notice recipient to obtain. 482. The Regulator would only be able to extend the period once in respect to any relinquishment notice. 483. The rules would be able to provide for and in relation to a person applying to the Regulator to grant an extension to the period and the Regulator considering, and making a decision, on such an application. For example, the rules may include information or supporting evidence that must be provided for the Regulator to consider granting an extension. 484. A decision under this section to refuse to extend the period to comply with a relinquishment notice would be a reviewable decision (see section 173). 485. A person would be liable to a civil penalty if the person is given a relinquishment notice under this Part and the notice is not complied with before the specified period (or any extension of the period). 486. For the purposes of subsection 82(5) of the Regulatory Powers Act, the pecuniary penalty for the civil penalty would be the greater of 2,000 penalty units and twice the market value if the court was able to determine the market value of the biodiversity certificate in relation to the relinquishment notice that was given. Section 93 of the Regulatory Powers Act in relation to continuing civil penalty provisions would not apply to this civil penalty. General provisions relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 487. Substantial penalties are required to provide an adequate deterrent against inaccurate compliance with relinquishment requirements. There are significant gains that could be made from contravening requirements under the scheme and without such strong deterrence the scheme could be undermined. As the scheme is a voluntary market, it is essential that those engaged with the scheme are held to a high degree of transparency and accountability. This maximum civil penalty amount is appropriate and proportionate to the potential outcome of non-compliance and would provide the courts with the necessary scope to apply penalties that appropriately reflect the circumstances of non-compliance. 488. In determining an appropriate pecuniary penalty amount, and without limiting the relevant matters that are required to be considered under subsection 82(6) of the Regulatory Powers Act, the court would be required to take into account: • the nature and extent of any harm to the environment that has been, might be or will be caused by the conduct or circumstances that resulted in the notice being given; • the nature and extent of any harm to the market has been, might be or will be caused by the conduct or circumstances that resulted in the notice being given; and • the nature and extent of any harm to the market has been, might be or will be caused by the failure to comply with the relinquishment notice. 80

489. To avoid doubt, a person may be liable to pay a pecuniary penalty even if: • the person is not the holder of any biodiversity certificate or the biodiversity certificate in relation to which the relinquishment notice was given; • the original biodiversity certificate in relation to the relinquishment notice is no longer in effect; • the person is not the holder of one or more biodiversity certificates that, if relinquished, would result in the relinquishment notice being complied with; or • no biodiversity certificate exists that, if relinquished, would result in the relinquishment notice being complied with. Section 117 Compliance with relinquishment requirement--relinquishing equivalent biodiversity certificate or certificates 490. This section would provide that a relinquishment notice that relates to a biodiversity certificate (known as the original biodiversity certificate) would be complied with if the original biodiversity certificate is relinquished, in relation to the notice, in accordance with section 118, or both of the following apply: one or more other biodiversity certificates are relinquished in accordance with section 118, and the relinquished certificate or certificates meet the relinquishment equivalence requirements in relation to the original biodiversity certificate. 491. This section would enable the rules to prescribe the circumstances in which a biodiversity certificate meets the relinquishment equivalence requirements, or 2 or more biodiversity certificates meet the relinquishment equivalence requirements. It is intended that the rules defining the equivalence between biodiversity certificates are intended to be developed in close consultation with stakeholders and scientific experts. 492. It is appropriate for the test for the equivalency between one biodiversity certificate and another to be set out in legislative instruments rather than primary legislation as its operation will depend on how both protocols and the broad biodiversity market develops. The general principles used for developing the test are expected to be: • equivalent certificates should use the same or similar protocols; and • equivalent certificates should have similar land area, deliver a similar type of biodiversity benefit and quantum of biodiversity gain and have a similar permanence period. 493. The rules would be subject to Parliamentary scrutiny and disallowance, as well as sunsetting under the Legislation Act. Section 118 How biodiversity certificates are relinquished 494. This section would provide that if a person is the holder of a biodiversity certificate, the person may relinquish the certificate by an electronic notice transmitted to the Regulator. 495. A notice given to the Regulator by the registered holder of the certificate would need to specify the biodiversity certificate that is being relinquished, the account number of 81

the Registry account for the certificate and include any other information prescribed by the rules. 496. Depending on the purpose for which the certificate is being relinquished, the notice must also: • identify the relinquishment notice in relation to the certificate that is being relinquished (if being relinquished in order to comply with such a notice); • identify the registered biodiversity project that the certificate relates to (if being voluntarily relinquished in order to satisfy a condition for cancellation of registration of a biodiversity project where a certificate is in effect); • identify the biodiversity maintenance declaration that the certificate relates to (if being voluntarily relinquished for the purposes of revoking a biodiversity maintenance declaration). 497. The relinquishment of a particular biodiversity certificate would only be effective for one of the above purposes. 498. Where a person relinquishes a biodiversity certificate under this section, the certificate would be cancelled, and the Regulator would need to remove the entry for the certificate from the person's Registry account. The Register would also be required to set out a record of each notice to relinquish the certificate. 82

PART 13--BIODIVERSITY MAINTENANCE DECLARATIONS 499. This Part of the Bill would provide for biodiversity maintenance declarations, which would be made by the Regulator where a relinquishment notice is, or is likely, to be given in relation to a biodiversity certificate. The declaration would also provide for certain activities that are prohibited in relation to a biodiversity maintenance area. Division 1--Introduction Section 119 Simplified outline of this Part 500. The simplified outline is included to assist the reader to understand the substantive provisions of this Part; however, it is not intended to be comprehensive. It is intended that the reader will rely on the substantive provisions of this Part to which the outline relates. Division 2--Biodiversity maintenance declarations Section 120 Biodiversity maintenance declaration 501. This section would provide the Regulator with a discretionary power to make, by legislative instrument, a declaration (known as a biodiversity maintenance declaration) in relation to a specified area of land (known as a biodiversity maintenance area), in specified circumstances. Broadly, these circumstances would relate to instances of non-compliance or likely non-compliance with a relinquishment notice given, or likely to be given, by the Regulator. 502. The Regulator would be able to make a declaration in relation to a specified area of land if: • the specified area of land is, or has been, the project area, or a part of it, for a biodiversity project (known as the maintained project); • the maintained project is, or has been, a registered biodiversity project; and • a biodiversity certificate (known as an original biodiversity certificate) has been issued; and • any of the following applies: o a relinquishment notice has been given and not complied with; o a relinquishment notice has been given and the Regulator is satisfied that it is likely that the notice will not been complied with; o the Regulator is satisfied that a relinquishment notice is likely to be given and the notice, if given, would not be complied with; o the Regulator is satisfied that it would be appropriate to give a relinquishment notice, but the notice cannot be given because the relevant person cannot be located, does not exist or for some other reason. 503. A biodiversity maintenance area specified in such a declaration may consist of a single area of land or multiple areas of land, which need not be continuous. The declaration would be able to specify one or more activities (known as declared prohibited activities) in relation to the biodiversity maintenance area. 83

504. Examples of how activities would be specified in the declaration would include, by reference to the area or areas of land on which the activity must not be carried out, the manner in which the activity must not be carried out, the time or times at which the activity must not be carried out, the period or periods during which the activity must not be carried out, or the person or persons who must not carry out the activity. 505. If the Regulator makes a biodiversity maintenance declaration, the Regulator would be required to take all reasonable steps to ensure that a notice of the making of the declaration is given to the project proponent for the maintained project, the relevant land registration official and any other person specified in the rules. A failure by the Regulator to comply with this requirement to give notice would not affect the validity of the declaration. A failure to comply with this requirement does not affect the validity of a biodiversity maintenance declaration. Section 121 Civil penalty for carrying out declared prohibited activity 506. This section would provide that a person must not carry out a declared prohibited activity in a biodiversity maintenance area. 507. A person who fails to comply and does carry out a prohibited activity would be liable to a civil penalty. The maximum civil penalty that a court may order a person who is an individual to pay where that person is liable to a civil penalty would be 2,000 penalty units. General provisions relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 508. This maximum civil penalty is intended to be proportionate to the harm that is likely to result should a person fail to comply. As this is a voluntary scheme with project proponents and others participating on a voluntary basis, this civil penalty provision is aimed at protecting an emerging market that will facilitate tangible environmental outcomes as well as a new income stream for participants. This maximum civil penalty amount is appropriate and proportionate to the potential outcome of non- compliance and would provide the courts with the necessary scope to apply penalties that appropriately reflect the circumstances of non-compliance. Without such a strong deterrence, the integrity of the scheme would be threatened as there would be contraventions of biodiversity maintenance declarations which are necessary for the longevity of the scheme. Section 122 When a biodiversity maintenance declaration ceases to be in force 509. This section would provide for the cessation of a biodiversity maintenance declaration. 510. Unless revoked sooner, a biodiversity maintenance declaration would cease to be in force upon whichever of the following events occurs first: • The end of the permanence period for the maintained project; or • The time the civil penalty order is paid in full to the Commonwealth, where a civil penalty order has been made under Part 4 of the Regulatory Powers Act, in relation to a civil penalty under subsection 116(5) of this Bill. 84

Section 123 Variation or revocation of biodiversity maintenance declaration 511. This section would apply if a biodiversity declaration is in force in relation to an area or areas of land. 512. The Regulator would be able to, by legislative instrument, vary or revoke a biodiversity maintenance declaration, either on the Regulator's own initiative or on application made by the Regulator by a person. 513. An application by a person to the Regulator for the variation or revocation of a declaration would need to be made in writing and in the approved form, and be accompanied by any fee specified in the rules. 514. The fee that accompanies the application to vary or revoke a declaration would not be such as to amount to taxation. The purpose of any fee is to enable the Regulator to recover costs associated with processing the application. 515. Where the Regulator varies or revokes a declaration, the Regulator would be required to take all reasonable steps to ensure that notice of the variation or revocation would be given to the following persons: • the project proponent for the maintained project; • the relevant land registration official; and • a person specified in the rules. 516. A failure to comply with these notification requirements would not affect the validity of a variation or revocation. The Regulator would also be required to give to the applicant written notice of a decision to refuse to vary or revoke a declaration. Section 124 Revocation of biodiversity maintenance declaration--voluntary relinquishment of biodiversity certificate 517. This section would provide for the revocation of a biodiversity maintenance declaration in circumstances where there is a voluntary relinquishment of a biodiversity certificate. 518. This would provide a mechanism for a subsequent landholder to secure the removal of biodiversity maintenance declaration, for example, because the landholder wanted to use the land for an alternative use. This could include the registration of a new biodiversity project. 519. Where a biodiversity maintenance declaration is in force and a person applies to the Regulator for the revocation of the biodiversity maintenance declaration, the Regulator would be required to revoke the declaration, provided that the relevant biodiversity certificate for the maintained project, or one or more other biodiversity certificates that meet the relinquishment equivalence requirements in relation to the biodiversity certificate for the maintained project, were voluntarily relinquished before the application was made. 520. The revocation of the biodiversity maintenance declaration by the Regulator would need to be made as a legislative instrument. 85

521. An application by a person to the Regulator for the revocation of a biodiversity maintenance declaration would need to be made in writing and in the approved form. 522. Where the Regulator revokes a biodiversity maintenance declaration, the Regulator would be required to take all reasonable steps to ensure notice of the revocation would be given to the following persons: • the project proponent for the maintained project; • the relevant land registration official; and • a person specified in the rules. 523. A failure to comply with these notification requirements would not affect the validity of a revocation. The Regulator would also be required to give to the applicant written notice of a decision to refuse to revoke a biodiversity maintenance declaration. Section 125 Delegation by the Regulator 524. The Regulator would have a discretionary power to delegate a power to make, vary or revoke a biodiversity maintenance declaration to a member of the Regulator. 525. The delegate would be required to comply with any written directions of the Regulator in performing a delegated function or exercising a delegated power. 526. It is the intention that the delegates would be senior officials of the Regulator, who have knowledge and expertise in biodiversity functions or responsibility and direct oversight of the scheme. This would improve the efficiency of the administration and management of the scheme, noting that the delegates would otherwise be prevented from being delegated any of the Regulator's powers to make, vary or revoke a biodiversity maintenance declaration. 86

PART 14--REGISTERS 527. This Part of the Bill would provide a framework for establishing a repository of information regarding registered biodiversity projects and biodiversity certificates. It would also establish an online platform to facilitate trading in biodiversity certificates and for other purposes. This would provide an efficient, reliable and low-cost method for tracking biodiversity certificates held and traded by scheme participants. Division 1--Introduction Section 126 Simplified outline of this Part 528. The simplified outline is included to assist the reader to understand the substantive provisions of this Part; however, it is not intended to be comprehensive. It is intended that the reader will rely on the substantive provisions of this Part to which the outline relates. Division 2--Agriculture Biodiversity Stewardship Market Register Section 127 Agriculture Biodiversity Stewardship Market Register 529. This section would require the Regulator to keep a register. The register would be known as the Agriculture Biodiversity Stewardship Market Register (the Register). The Register would be required to be maintained by electronic means and would be required to be made available for inspection on the Regulator's website. The Regulator would be required to ensure that the Register is up to date. Section 128 Entries in the Register--registered biodiversity projects and former registered biodiversity projects 530. This section would require the Register to set out certain matters for each registered biodiversity project. An entry in the Register for a registered biodiversity project would be required to include each of the following: • the project name; • the project area or areas for the project, subject to section 129; • a project description, including any details that would be prescribed by the rules; • the project proponent or proponents for the project; • the protocol determination that would cover the project; • whether the registration of the project would be subject to a condition under section 18, which deals with conditions about obtaining regulatory approvals; • whether the registration of the project would be subject to a condition under section 19, which deals with conditions about obtaining consent from eligible interest holders; • such other information under paragraph 45(1)(c), as is provided for by the applicable protocol determination; • any other information that the Regulator considers appropriate or that is prescribed by the rules. 87

531. The publication of information on the Register would be necessary to ensure that relevant information is accessible and available to participants under the scheme. This would ensure that participants are able to obtain accurate and up-to-date information about the status of registered biodiversity projects, and can have confidence in conducting their business affairs. It is also intended that the powers and functions in the Bill would be exercised in compliance with the Privacy Act 1988 (Privacy Act), which regulates the collection, use, disclosure and publication of personal information. 532. The rules would be able to provide for the Register to set out prescribed information for projects that have previously been registered, but have ceased to be registered. This would include projects that are no longer being carried out. 533. It would be appropriate for the rules to be able to make provision for or in relation to matters that are to be recorded in the Register about registered biodiversity projects. This would allow the Commonwealth to implement any necessary policy or regulatory reforms to maintain the relevance of information recorded in the Register. The rules would be subject to Parliamentary scrutiny and disallowance, as well as sunsetting under the Legislation Act. It is envisaged that the rules would prescribe the following types of personal information would be collected, used and disclosed: name of the proponent(s) and the project area including its location (unless section 129 applies) for scheme assurance and market information purposes, similar to the CFI Act. Section 129 Requests for information about project area not to be set out in the Register 534. The Register would not set out a project area for a registered biodiversity project in certain circumstances. This would be the case if the project proponent for the project has requested the Regulator not to set out a project area, and the Regulator is satisfied that setting this information out in the Register could reasonably be expected to substantially prejudice either: the commercial interests of the project proponent for the project, or another person; the biodiversity of the project area; or the safety of any person; and this prejudice would outweigh the public interest in the information being set out in the Register. Such a request by the project proponent would be required to be in writing and be in an approved form that would be approved by the Regulator in writing. In this context the use of the term 'safety' is not intended to be limited to physical safety. 535. The Regulator would be required to take all reasonable steps to ensure that, in relation to a request by a project proponent for the Register not to set out a project area for a registered biodiversity project, a decision is made on the request within 30 days after the request was made. 536. The Regulator would also be required to give written notice of the decision to the project proponent if the Regulator decides to refuse the request. Section 130 Entries in the Register--biodiversity certificates 537. In addition to recording information about projects in the Register, the Register would also be required to set out information about biodiversity certificates. This 88

requirement would apply to biodiversity certificates that would be in effect, and those which have ceased to be in effect. 538. The Register would be required to set out the following information, for each biodiversity certificate that would be in effect: • the biodiversity project to which the biodiversity certificate would relate; • the date of issue of the certificate; • the holder of the certificate; • any other information under paragraph 45(1)(g), as is provided for by the applicable protocol determination; and • any other information that is prescribed by the rules. 539. In the case of a biodiversity certificate that would have ceased to be in effect, the Register would be required to set out the following information: • the biodiversity project to which the biodiversity certificate would relate; • the date of issue of the certificate; • any other information under paragraph (1)(g), as is provided for by the applicable protocol determination; and • any other information that is prescribed by the rules. 540. The publication of information on the Register would be necessary to ensure that relevant information is accessible and available to participants under the scheme. This would ensure that participants are able to obtain accurate and up-to-date information about the status of biodiversity certificates, and can have confidence in conducting their business affairs. It is also intended that the powers and functions in the Bill would be exercised in compliance with the Privacy Act, which regulates the collection, use, disclosure and publication of personal information. 541. It would be appropriate for the rules to be able to make provision for or in relation to matters that are to be recorded in the Register about biodiversity certificates. This would allow the Commonwealth to implement any necessary policy or regulatory reforms to maintain the relevance of information recorded in the Register. The rules would be subject to Parliamentary scrutiny and disallowance, as well as sunsetting under the Legislation Act. It is envisaged that the rules would prescribe the following types of personal information would be collected, used and disclosed: name of the proponent(s) and the project area including its location (unless section 129 applies) for scheme assurance and market information purposes, similar to the CFI Act. Section 131 Entries in the Register--accounts for holding biodiversity certificates 542. The rules would be able to provide for and in relation to empowering the Regulator to open accounts in the Register to hold biodiversity certificates. 543. This would allow the rules to set out the process for opening an account, such as verification of information and identification procedures. 89

Section 132 Rules may make provision in relation to the Register 544. The rules would be able to make provision for and in relation to the Register. This would include the rules making provision for or in relation to any of the following: • matters that would be recorded in the Register; • the manner in which information would be able to be communicated to or by the Regulator in relation to the Register; • requests to open, close, transfer or otherwise deal with accounts in the Register; • identification procedures that the Regulator would have a discretion to carry out, or would be required to carry out, in relation to a record in the Register; • joint accounts; • accounts that would be kept for the Commonwealth; • unilateral closure of accounts by the Regulator; • the holding of biodiversity certificates in accounts in the Register, and the transfer of certificates between accounts; • requiring the holders of accounts to notify the Regulator of specified events; • correction or rectification of the Register; • verification by statutory declaration of information provided to the Regulator in relation to the Register; and • fees for things that would be done by the Regulator in relation to the Register. 545. For clarification, a fee that would be provided for by the rules that would be made for the purposes of this section would not be such as to amount to taxation. The purpose of any fee is to enable the Regulator to recover costs associated with maintaining the Register. 546. It would be appropriate for the rules to be able to make provision for or in relation to matters in relation to the Register. This would allow the Commonwealth to implement any necessary policy or regulatory reforms to maintain the effective operation of the Register. The rules would be subject to Parliamentary scrutiny and disallowance, as well as sunsetting under the Legislation Act. It is envisaged that the rules would prescribe the following types of personal information would be collected, used and disclosed: name of the proponent(s) and the project area including its location (unless section 129 applies) for scheme assurance and market information purposes, similar to the CFI Act. Division 3--Online platform Section 133 Online Platform 547. Initially, it is envisaged that the online platform would operate to allow project proponents to advertise biodiversity certificates for purchase. Prospective purchasers will be able to view available certificates on the online platform and obtain contact details for project proponents. 548. The actual trade of the biodiversity certificates would initially be conducted privately between the proponent and purchaser. At a later stage, the operation of the online 90

platform would be able to be expanded so that trades can be conducted on the online platform itself. 549. The rules would be able to make provision for and in relation to empowering the Regulator to maintain an online platform for any of the following purposes: • facilitating the trading of either biodiversity certificates, or other certificates, units or credits (however described, and whether issued under a law of the Commonwealth, a State or a Territory, or in some other way), that would relate to biodiversity projects; • facilitating arrangements between project proponents, or prospective project proponents, of registered biodiversity projects and prospective purchasers of biodiversity certificates; • facilitating arrangements that would relate to biodiversity projects that would not be, and would not be intended to be, registered under this Bill; and • any other purpose incidental or related to any of the above. 550. The rules would not be able to require a person to use the online platform to be the project proponent of a registered biodiversity project, be issued with, hold or deal with a biodiversity certificate, or otherwise receive the benefit of any other provision of this Bill. 551. It would be appropriate for the rules to be able to make provision for or in relation to matters in relation to the online platform. This would allow the Commonwealth to implement any necessary policy or regulatory reforms to enable the effective operation of the online platform. The rules would be subject to Parliamentary scrutiny and disallowance, as well as sunsetting under the Legislation Act. 91

PART 15--PUBLICATION OF INFORMATION 552. This Part of the Bill would set out certain types of information to be published by the Regulator and Secretary about registered biodiversity projects and the operation of the Bill. Division 1--Introduction Section 134 Simplified outline of this Part 553. The simplified outline is included to assist the reader to understand the substantive provisions of this Part; however, it is not intended to be comprehensive. It is intended that the reader will rely on the substantive provisions of this Part to which the outline relates. Division 2--Information about biodiversity certificates Section 135 Information about biodiversity certificates 554. This section would require the Regulator to publish certain information on its website. This would ensure transparency of information about biodiversity certificates under the scheme. 555. The Regulator would be required to publish on its website, as soon as practicable after a biodiversity certificate is issued to a person, the name of the person and such other information relating to the certificates as is prescribed by the rules. This may include, for example, the kind of project to which the certificate relates. 556. The Regulator would be required to publish on its website, as soon as practicable after a variation of a biodiversity certificate is made, the name of the person and such other information relating to the certificates as is prescribed by the rules. This may include, for example, details of the kind of project to which the certificate relates or the date on which the certificate was varied. 557. The Regulator would be required to publish on its website, as soon as practicable after a biodiversity certificate is transferred from one account in the Register to another account in the Register, the name of the holder of each of those accounts and such other information relating to the certificates as is prescribed by the rules. This may include, for example, details of the kind of project to which the certificate relates or the date on which the certificate was transferred. 558. The publication of this information on the Regulator's website would be necessary to ensure that there is regular and accurate information to the market about the issuing, varying and transfer of biodiversity certificates. This ensures that participants would be able to obtain accurate and up-to-date information about the supply and status of biodiversity certificates, and have confidence in conducting their business affairs. 559. It would also be appropriate for the rules to be able to make provision for information relating to certificates to be published on the website. This would allow the Commonwealth to implement any necessary policy or regulatory reforms to maintain the relevance of information that is published. The rules would be subject to 92

Parliamentary scrutiny and disallowance, as well as sunsetting under the Legislation Act 560. It is also intended that the powers and functions in the Bill would be exercised in compliance with the Privacy Act, which regulates the collection, use, disclosure and publication of personal information. Section 136 Reports about activities of Regulator 561. This section would require that the Regulator publish reports about biodiversity certificates on its website. 562. The Regulator would be required to publish on its website, as soon as practicable after the end of a financial year, a report about the activities of the Regulation under this Bill that occurred during the financial year. The report would also need to deal with any matters prescribed by the rules. For example, the rules may specify information about specific kinds of activities to be included in these reports. 563. The purpose of requiring the publication of a report would be for the Regulator to provide regular and accurate information to the market about the issuance of biodiversity certificates. Section 137 Publication of concise description of the characteristics of biodiversity certificates 564. This section would require the Regulator to publish on its website a statement, which sets out a concise description of the characteristics of biodiversity certificates. The Regulator would also be required to keep this statement up to date. 565. Publishing information about the characteristics of biodiversity certificates would be to keep the market informed of the content of certificates to assist potential purchaser's engagement in the scheme. Division 3--Information about biodiversity certificates purchased by the Commonwealth Section 138 Information about biodiversity conservation purchasing processes 566. This section would provide that the Secretary would be able to publish specified information on the Agriculture Department's website about purchasing processes in relation to biodiversity certificates that are purchased by the Commonwealth. 567. After the Secretary conducts a biodiversity conservation purchasing process, the Secretary would have the discretionary power to publish any or all of the following information on the Agriculture Department's website: • when the biodiversity conservation purchasing process was conducted; • the total amount that the Commonwealth agreed to pay (irrespective of whether payment has been made) by way of purchasing biodiversity certificates through the process; • other summary information, if any, relating to the biodiversity conservation purchasing process as the Secretary considers appropriate; 93

• other statistics, if any, relating to the biodiversity conservation purchasing process as the Secretary considers appropriate. 568. This power to publish information about biodiversity conservation purchasing processes is discretionary because in some circumstances, such as where the Commonwealth only purchases a small number of certificates, it may be difficult to publish a meaningful report that does not reveal commercially sensitive information about the purchasing process, seller and sellers of the certificates. Section 139 Annual reports about purchases of biodiversity certificates 569. This section would provide that the Secretary would be able to publish reports on purchases of biodiversity certificates in a financial year on the Agriculture Department's website. 570. The Secretary would have the discretionary power to publish a report on the following matters: • the total number of biodiversity certificates that the Commonwealth has purchased, or agreed to purchase, under biodiversity conservation contracts entered into during the financial year; • the total amount that the Commonwealth would be liable to pay for the purchase of biodiversity certificates, where such contracts were entered into during the financial year; • the total number of biodiversity certificates transferred to the Commonwealth during the financial year as a result of such contracts and the total amount that the Commonwealth has paid during the financial year for such purchases; and • the total amount that the Commonwealth paid during the financial year, under biodiversity conservation contracts entered into during the financial year; • sufficient information to identify the registered biodiversity projects in relation to which biodiversity certificates were transferred to the Commonwealth during the financial year; • any other summary information and any other statistics that would relate to the purchase of biodiversity certificates by the Commonwealth under such contracts that the Secretary considers to be appropriate. 571. This power to publish information about biodiversity conservation purchasing processes is discretionary because as the time of introduction of the Bill to Parliament, there would be no source of appropriation, therefore limited information to prepare a report. Additionally, in the event of only a small number of contracts being entered into, a requirement to publish could reveal commercially sensitive information about the purchasing process, seller and sellers of the certificates. Division 4--Information about relinquishment requirements Section 140 Information about relinquishment requirements 572. This section would apply if the Regulator gives a person a relinquishment notice under Part 12. 94

573. This would ensure that, if a certificate has been used to support claims made to consumers or shareholders and the project that underpins the certificate has been replaced by an equivalent biodiversity certificate and project, this information is publicly available to provide assurance to the market. 574. The Regulator would be required to publish on its website specified information as soon practicable after giving the relinquishment notice. The specified information would include the name of the person and details of the relinquishment requirement. The intention of this requirement would be to provide the public and potential buyers with information about a person's obligations under the scheme. This information would also likely promote scheme compliance. 575. The Regulator would also be required to publish an appropriate annotation on its website where the decision to require the person to relinquish one or more biodiversity certificates would be subject to any of the following: • is under reconsideration by the Regulator under section 176; • has been affirmed or varied by the Regulator under section 176 and the decision as affirmed or varied would be the subject of an application for review by the AAT; • is the subject of an application for review by the AAT. 576. When a review of a decision has been finalised by the Regulator or the AAT (including any court proceedings arising out of the review), the Regulator would be required to publish an appropriate annotation on its website about that decision. 577. The publication of this information on the Regulator's website would be necessary to ensure that public information about the relinquishment of biodiversity certificates would be complete and would present a fair and accurate picture of efforts by project proponents to comply with scheme obligations. In addition, the information regarding internal reconsideration and external review would also enable the Regulator to be accountable for the quality of its decision making. The Regulator's website would show the decisions that the Regulator has been requested to reconsider, the decisions subject to review by the AAT and decisions affirmed, varied or set aside by the AAT. 578. In addition, it is intended that the powers and functions in the Bill would be exercised in compliance with the Privacy Act, which regulates the collection, use, disclosure and publication of personal information. Section 141 Information about relinquished certificates 579. This section would apply if the Regulator gives a person a relinquishment notice and the person relinquishes one or more biodiversity certificates under section 118 in order to comply with the notice. 580. The Regulator would be required to publish on its website, as soon as practicable after receiving notice of the relinquishment, information regarding the name of the person and such other information relating to the biodiversity certificate as the Regulator thinks appropriate. 95

581. The publication of information about the relinquishment of biodiversity certificates would present a fair and accurate picture of efforts by project proponents to comply with obligations under the scheme. It would also be appropriate for the rules to be able to make provision for information about relinquishment requirements to be published on the website. This would allow the Commonwealth to implement any necessary policy or regulatory reforms to maintain the relevance of information that is published. The rules would be subject to Parliamentary scrutiny and disallowance, as well as sunsetting under the Legislation Act. 582. It is also intended that the powers and functions in the Bill would be exercised in compliance with the Privacy Act, which regulates the collection, use, disclosure and publication of personal information. 96

PART 16--RECORD-KEEPING AND PROJECT MONITORING REQUIREMENTS 583. This Part of the Bill would set out record-keeping and project monitoring requirements for project proponents and other persons within the scheme. 584. These requirements would be necessary to ensure the integrity of the scheme and that sufficient records are kept to confirm and substantiate claimed biodiversity outcomes and to facilitate the Regulator's compliance activities. Additionally, these requirements would ensure that record-keeping and project monitoring costs for project proponents are kept to a reasonable minimum. Division 1--Introduction Section 142 Simplified outline of this Part 585. The simplified outline is included to assist the reader to understand the substantive provisions of this Part; however, it is not intended to be comprehensive. It is intended that the reader will rely on the substantive provisions of this Part to which the outline relates. Division 2--Record-keeping requirements Section 143 Record-keeping requirements--general 586. The rules would be able to require a person to make a record of specified information relevant to this Bill and retain that record (or a copy of that record) for 7 years after making the record. For example, the rules may define the type of records to be retained for the purposes of this section, which would relate to the specific requirements under the protocol determinations. 587. A person would be required to comply with a requirement under the rules, and would be liable to a civil penalty if they failed to comply. The maximum civil penalty that a court may order a person who is an individual to pay where that person is liable to a civil penalty would be 200 penalty units. General provisions relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 588. This maximum civil penalty is intended to be proportionate to the harm that is likely to result should a person fail to comply with the record-keeping requirements. It is necessary for sufficient records to be retained in order to facilitate the Regulator's compliance activities, and to ensure that claimed biodiversity outcomes are accurate and substantiated. The maximum civil penalty amount would also provide for sufficient deterrence against any potential non-compliance with record-keeping requirements, which would have the potential to undermine the integrity of the scheme. It would also provide the courts the necessary scope to apply penalties that appropriately reflect the circumstances of any non-compliance. 589. This section would not be limited by any other provisions of this Bill relating to keeping records or retaining records. 97

Section 144 Record keeping requirements--preparation of biodiversity project report 590. This section would apply if a person made a record of particular information and used the information to prepare a biodiversity project report. 591. The rules would be able to require a person to retain a record (or a copy of the record) for a period of 7 years after the biodiversity project report was given to the Regulator. This would include, for example, any requirements that would apply in relation to originals and copies. 592. A person would be required to comply with a requirement under the rules, and would be liable to a civil penalty if they failed to comply. The maximum civil penalty that a court may order a person who is an individual to pay where that person is liable to a civil penalty would be 200 penalty units. General provisions relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 593. This maximum civil penalty is intended to be proportionate to the harm that is likely to result should a person fail to comply with the record-keeping requirements. It is necessary for sufficient records to be retained in order to facilitate the Regulator's compliance activities, and to ensure that claimed biodiversity outcomes are accurate and substantiated. The maximum civil penalty amount would also provide for sufficient deterrence against any potential non-compliance with record-keeping requirements, which would have the potential to undermine the integrity of the scheme. It would also provide the courts the necessary scope to apply penalties that appropriately reflect the circumstances of any non-compliance. Section 145 Record keeping requirements--protocol determinations 594. This section would apply if a person is the project proponent for a registered biodiversity project and under the protocol determination that covers the project, the person is subject to a record-keeping requirement relating to the project. 595. A person would be required to comply with the requirement, and would be liable to a civil penalty if they failed to comply. The maximum civil penalty that a court may order a person who is an individual to pay where that person is liable to a civil penalty would be 200 penalty units. General provisions relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 596. This maximum civil penalty is intended to be proportionate to the harm that is likely to result should a person fail to comply with the record-keeping requirements set out in the applicable protocol determination. It is necessary for sufficient records to be retained in order to facilitate the Regulator's compliance activities, and to ensure that claimed biodiversity outcomes are accurate and substantiated. The maximum civil penalty amount would also provide for sufficient deterrence against any potential non- compliance with record-keeping requirements, which would have the potential to undermine the integrity of the scheme. It would also provide the courts the necessary scope to apply penalties that appropriately reflect the circumstances of any non- compliance. 98

Division 3--Project monitoring requirements Section 146 Project monitoring requirements--protocol determinations 597. This section would apply if a person is the project proponent for a registered biodiversity project and under the protocol determination that covers the project, the person is subject to a requirement to monitor the project. 598. A person would be required to comply with the requirement, and would be liable to a civil penalty if they failed to comply. The maximum civil penalty that a court may order a person who is an individual to pay where that person is liable to a civil penalty would be 200 penalty units. General provisions relating to civil penalties, including the pecuniary penalties, are set out in Division 4 of Part 17 of the Bill. 599. This maximum civil penalty is intended to be proportionate to the harm that is likely to result should a person fail to comply with project monitoring requirements set out in the applicable protocol determination. It is necessary for participants in the scheme to ensure that any material changes to the status of their project is identified in a timely and accurate manner. For example, the issue of whether there has been any reversal of biodiversity outcomes in relation to a biodiversity project (such as those due to natural disturbance or conduct engaged in by a person) would be highly relevant to the Regulator's compliance activities. The maximum civil penalty amount would also provide for sufficient deterrence against any potential non-compliance with project monitoring requirements, which would have the potential to undermine the integrity of the scheme. It would also provide the courts the necessary scope to apply penalties that appropriately reflect the circumstances of any non-compliance. 99

PART 17--ENFORCEMENT 600. This Part of the Bill would provide for the appointment of inspectors and set out the powers that may be exercised by inspectors. It would also trigger relevant provisions under the Regulatory Powers Act, in relation to monitoring, investigation, civil penalties, infringement notices, enforceable undertakings and injunctions. Division 1--Introduction Section 147 Simplified outline of this Part 601. The simplified outline is included to assist the reader to understand the substantive provisions of this Part; however, it is not intended to be comprehensive. It is intended that the reader will rely on the substantive provisions of this Part to which the outline relates. Section 148 Appointment of inspectors 602. This section would enable the Chair of the Regulator to appoint, in writing, certain persons as an inspector for the purposes of the Bill. The Chair of the Regulator may appoint a member of the staff of the Regulator or a member or special member of the Australian Federal Police as an inspector. 603. For a member of the staff of the Regulator to be appointed as an inspector, the staff member must be an SES employee (or acting SES employee) or an APS employee who holds or performs the duties of an Executive Level 1 or 2 position (or an equivalent position). 604. The Chair of the Regulator would only be able to appoint a person as an inspector if the Chair is satisfied that the person has the necessary knowledge or experience to properly exercise the relevant powers. 605. This section would also provide that in exercising their powers, a person appointed as an inspector must comply with any direction of the Chair. 606. Where a direction to comply is given in writing, that direction would not be a legislative instrument for the purposes of subsection 8(1) of the Legislation Act, as it would not be of legislative character. Such a direction would not determine or alter the content of law, as it would only apply to a particular case, rather than having a general application. It is intended that this provision would assist the reader and indicate that an exemption from the Legislation Act is not sought or required. Division 2--Monitoring powers Section 149 Monitoring powers 607. This section would trigger the standard monitoring powers in Part 2 of the Regulatory Powers Act. Part 2 of the Regulatory Powers Act creates a framework for monitoring whether the provisions of an Act or a legislative instrument have been or are being complied with. This would include powers of entry and inspection. 100

608. Monitoring powers triggered under Part 2 of the Regulatory Powers Act would be able to be exercised for the purpose of: • monitoring compliance with offence provisions and civil penalty provisions in the Bill, as well as offence provisions of the Crimes Act or the Criminal Code relating to the Bill; and • monitoring information given in compliance, or purported compliance with provisions of the Bill, the rules or a protocol determination. 609. This section would also identify the authorised applicant, authorised person, issuing officer, relevant chief executive and relevant court for the purposes of Part 2 of the Regulatory Powers Act. There would be no related provisions for the purposes of section 10 of the Regulatory Powers Act. 610. An inspector appointed under the Act would be an authorised applicant and an authorised person. This means that an inspector would be able to exercise the monitoring powers set out at Part 2 of the Regulatory Powers Act. 611. An authorised person would also be able to be assisted by other persons in exercising powers or performing functions or duties under Part 2 of the Regulatory Powers Act in relation to provisions mentioned above. For example, it may be reasonable and necessary for inspectors to be supported by a technical expert to access a computer or an ecologist to determine the interaction of plants and animals with the environment. 612. A magistrate would be an issuing officer. The relevant court would be the Federal Court of Australia, or a court of a State or Territory that has jurisdiction in relation to matters under the Bill or the associated provisions. 613. As the relevant chief executive, the Chair of the Regulator would be able to delegate their powers and functions under, or incidental to, Part 2 of the Regulatory Powers Act to an SES employee or acting SES employee that is a member of staff of the Regulator. In exercising powers or performing functions under this delegation, the delegate must comply with any directions of the Chair of the Regulator. The delegation of powers would be appropriate to ensure the efficient operation of the Regulator by allowing decision making to be made at an appropriate level. Given the significance of these decisions, the delegation arrangements will be limited to allowing SES officers to exercise these powers. It would be intended that an instrument of delegation prepared by the Chair of the Regulator would include appropriate limitations and be prepared in consultation with relevant parties. 614. Unlike the exercise of investigation powers, inspectors would not need to suspect on reasonable grounds that there may be material on the premises related to a contravention of an offence or civil penalty provision before exercising relevant monitoring powers. However, an inspector would need to have either the consent of the occupier or a monitoring warrant to enter premises to exercise the monitoring powers under Part 2 of the Regulatory Powers Act (subsection 18(2) of the Regulatory Powers Act). 615. The general monitoring powers set out in Part 2 of the Regulatory Powers Act would also permit an inspector or a person assisting the inspector to, among other things: 101

• search premises, measure or test anything on the premises; • make images or recordings of the premises or anything on the premises • inspect or make copies of documents; • take necessary equipment and materials onto the premises for the purpose of exercising powers; • operate electronic equipment on the premises; • secure electronic equipment for up to 24 hours in order to obtain expert assistance to operate the equipment; and • require persons on the premises to answer questions and request the production of documents. 616. This section would also provide for the monitoring powers in Part 2 of the Regulatory Powers Act to extend to every external Territory. Division 3--Investigation powers Section 150 Investigation powers 617. This section would trigger the standard investigation powers in Part 3 of the Regulatory Powers Act. Part 3 of the Regulatory Powers create a framework for investigating the contravention of offence provisions and civil penalty provisions. 618. The investigation powers that would be triggered under Part 3 of the Regulatory Powers Act would be able to be exercised for the purpose of investigating compliance with the offence provisions and civil penalty provisions of the Bill as well as offence provisions of the Crimes Act or the Criminal Code relating to the Bill. 619. This section would also identify the authorised applicant, authorised person, issuing officer, relevant chief executive and relevant court for the purposes of Part 3 of the Regulatory Powers Act. There would be no related provisions for the purposes of section 40 of the Regulatory Powers Act. 620. An inspector would be both an authorised applicant and an authorised person. This means that an inspector would be able to exercise the investigation powers set out in Part 3 of the Regulatory Powers Act. 621. An authorised person would also be able to be assisted by other persons in exercising powers or performing functions or duties under Part 3 of the Regulatory Powers Act in relation to provisions mentioned above. For example, it may be reasonable and necessary for an inspector to be supported by a technical expert to access a computer or an ecologist to determine the interaction of plants and animals with the environment. 622. A magistrate would be an issuing officer. The relevant court would be the Federal Court of Australia, or a court of a State or Territory that has jurisdiction in relation to matters under the Bill or the associated provisions. 623. As the relevant chief executive, the Chair of the Regulator would be able to delegate their powers and functions under, or incidental to, Part 3 of the Regulatory Powers Act to an SES employee or acting SES employee that is a member of staff of the Regulator. In exercising powers or performing functions under this delegation, the 102

delegate must comply with any directions of the Chair of the Regulator. The delegation of powers would be appropriate to ensure the efficient operation of the Regulator by allowing decision making to be made at an appropriate level. Given the significance of these decisions, the delegation arrangements will be limited to allowing SES officers to exercise these powers. It would be intended that an instrument of delegation prepared by the Chair of the Regulator would include appropriate limitations and be prepared in consultation with relevant parties. 624. The investigation powers triggered under Part 3 of the Regulatory Powers Act would allow an authorised person or a person assisting to enter a premises to exercise investigation powers if they suspect on reasonable grounds that there is evidential material on the premises (subsection 48(1) of the Regulatory Powers Act). However, they can only do so with the consent of the occupier or under an investigation warrant (subsection 48(2) of the Regulatory Powers Act). 625. The investigation powers set out in Part 3 of the Regulatory Powers Act would also permit an authorised person to, among other things: • search the premises and seize any evidential material on the premises; • inspect, examine and test any evidential material; • make images or recordings of the premises or anything on the premises • take necessary equipment and materials onto the premises for the purpose of exercising powers; • operate electronic equipment on the premises; • secure electronic equipment for up to 24 hours in order to obtain expert assistance to operate the equipment; and • require persons on the premises to answer questions and request the production of documents. 626. These investigation powers would allow non-compliance to be detected by inspectors and allow further action to be taken to ensure greater compliance with the Bill. 627. This section would also provide for the investigation powers in Part 3 of the Regulatory Powers Act to extend to every external Territory. Division 4--Civil penalty provisions Section 151 Civil penalty provisions 628. This section of the Bill would trigger the civil penalty provisions regime under Part 4 of the Regulatory Powers Act. Part 4 of the Regulatory Powers Act creates a framework for allowing the civil penalty provisions of an Act to be enforced by obtaining an order for a person to pay a pecuniary penalty for contravention of the provision. Each civil penalty provision of this Bill would be enforceable under Part 4 of the Regulatory Powers Act. 629. The Chair of the Regulator would be the authorised applicant for the purposes of Part 4 of the Regulatory Powers Act and would be able to delegate their powers under Part 4 of that Act to an SES employee or acting SES employee that is a member of staff of the Regulator. The delegation of powers would be appropriate to ensure the efficient operation of the Regulator by allowing decision making to be made at an appropriate 103

level. Given the significance of these decisions, the delegation arrangements will be limited to allowing SES officers to exercise these powers. It would be intended that an instrument of delegation prepared by the Chair of the Regulator would include appropriate limitations and be prepared in consultation with relevant parties. 630. The relevant court would be the Federal Court of Australia, or a court of a State or Territory that has jurisdiction in relation to matters under the Bill or the associated provisions. 631. As the authorised applicant, the Chair of the Regulator would be able to apply to a relevant court for an order that a person pay a civil penalty for the contravention of a civil penalty provision of the Bill (subsection 82(1) of the Regulatory Powers Act). 632. This section would also provide for the civil penalty provisions regime in Part 4 of the Regulatory Powers Act to extend to every external Territory. However, the civil penalty provisions regime in Part 4 of the Regulatory Powers Act would not operate so as to make the Crown liable to a pecuniary penalty. Division 5--Infringement notices Section 152 Infringement notices 633. This section would provide that all civil penalty provisions of the Bill are subject to an infringement notice under Part 5 of the Regulatory Powers Act. This section would trigger the standard provisions under Part 5 of the Regulatory Powers Act. 634. Part 5 of the Regulatory Powers Act creates a framework for the use of infringement notices where an infringement officer reasonably believes that a provision has been contravened under an Act. Infringement notices are appropriate to provide an alternative means of managing high-volume, low-penalty contraventions. They do not constitute more than an allegation of contravention based on a reasonable belief of an infringement officer. 635. A person who is given an infringement notice may choose to pay an amount as an alternative to having court proceedings brought against them for contravention against an Act. The infringement notice amount is the lesser of one-fifth of the maximum penalty for the contravention, and either 12 penalty units for an individual or 60 penalty units for a body corporate (subsection 104(2) of the Regulatory Powers Act). 636. An inspector or an SES employee or acting SES employee that is a member of staff of the Regulator would be an infringement officer for the purposes of Part 5 of the Regulatory Powers Act. 637. As the relevant chief executive, the Chair of the Regulator would be able to delegate their powers and functions under Part 5 of the Regulatory Powers Act to a member of staff of the Regulator who is an SES employee (or acting SES employee). In exercising powers or performing functions under this delegation, the delegate must comply with any directions of the Chair of the Regulator. The delegation of powers would be appropriate to ensure the efficient operation of the Regulator by allowing decision making to be made at an appropriate level. Given the significance of these decisions, the delegation arrangements will be limited to allowing SES officers to 104

exercise these powers. It would be intended that an instrument of delegation prepared by the Chair of the Regulator would include appropriate limitations and be prepared in consultation with relevant parties. 638. This section would also provide for the infringement notice scheme in Part 5 of the Regulatory Powers Act to extend to every external Territory. Division 6--Enforceable undertakings Section 153 Enforceable undertakings 639. This section would trigger the standard provisions of Part 6 of the Regulatory Powers Act. Part 6 of the Regulatory Powers Act allows an enforceable undertaking to be sought, agreed to, and enforced in relation to provisions of an Act. An enforceable undertaking is a written undertaking agreed to by a person to, for example, take a specified action, that can be enforced in a relevant court. 640. The enforceable undertaking powers that would be triggered under Part 6 of the Regulatory Powers Act would be able to be exercised for the purpose of accepting and enforcing undertakings relating to compliance with the offence provisions and civil penalty provisions of the Bill as well as offence provisions of the Crimes Act or the Criminal Code relating to the Bill. 641. The Chair of the Regulator would be the authorised person for the purposes of Part 6 of the Regulatory Powers Act. This means the Chair of the Regulator would be able to seek an enforceable undertaking under Part 6 in relation to a provision of the Bill. The Chair of the Regulator would be able to delegate their powers under Part 6 of the Regulatory Powers Act to an SES employee or acting SES employee that is a member of staff of the Regulator. The delegation of powers would be appropriate to ensure the efficient operation of the Regulator by allowing decision making to be made at an appropriate level. Given the significance of these decisions, the delegation arrangements will be limited to allowing SES officers to exercise these powers. It would be intended that an instrument of delegation prepared by the Chair of the Regulator would include appropriate limitations and be prepared in consultation with relevant parties. 642. The relevant court would be the Federal Court of Australia, or a court of a State or Territory that has jurisdiction in relation to matters under the Bill or the associated provisions. 643. This section would also provide for the enforceable undertaking scheme in Part 6 of the Regulatory Powers Act to extend to every external Territory. Division 7--Injunctions Section 154 Injunctions 644. This section would trigger the standard provisions of Part 7 of the Regulatory Powers Act. Part 7 of the Regulatory Powers Act allows an injunction to be sought to enforce the provisions of an Act. An injunction (including an interim injunction) is a court order that may be used to restrain a person from contravening a provision of an Act or to compel compliance with a provision of an Act. 105

645. The civil penalty in section 121 for carrying out a declared prohibited activity would be enforceable under Part 7 of the Regulatory Powers Act. 646. The Chair of the Regulator would be the authorised person for the purposes of Part 7 of the Regulatory Powers Act. This means the Chair of the Regulator would be able to seek an injunction under Part 7 in relation to the civil penalty in section 121. The Chair of the Regulator would be able to delegate their powers under Part 7 of the Regulatory Powers Act to an SES employee or acting SES employee that is a member of staff of the Regulator. The delegation of powers would be appropriate to ensure the efficient operation of the Regulator by allowing decision making to be made at an appropriate level. Given the significance of these decisions, the delegation arrangements will be limited to allowing SES officers to exercise these powers. It would be intended that an instrument of delegation prepared by the Chair of the Regulator would include appropriate limitations and be prepared in consultation with relevant parties. 647. The relevant court would be the Federal Court of Australia, or a court of a State or Territory that has jurisdiction in relation to matters under the Bill or the associated provisions. 648. This section would also provide for the powers in Part 7 of the Regulatory Powers Act to extend to every external Territory. 106

PART 18--AGRICULTURE BIODIVERSITY STEWARDSHIP MARKET ADVISORY COMMITTEE 649. This Part of the Bill would set out the provisions relating to the Agriculture Biodiversity Stewardship Market Advisory Committee (ABSMAC). It would provide for the establishment of the ABSMAC, as well as setting out its functions, membership, appointment of members and the other terms and conditions on which the members hold office. Assistance would be provided to the ABSMAC by the Regulator and the Agriculture Department. Division 1--Introduction Section 155 Simplified outline of this Part 650. The simplified outline is included to assist the reader to understand the substantive provisions of this Part; however, it is not intended to be comprehensive. It is intended that the reader will rely on the substantive provisions of this Part to which the outline relates. Division 2--Establishment and functions of the Agriculture Biodiversity Stewardship Market Advisory Committee Section 156 Agriculture Biodiversity Stewardship Market Advisory Committee 651. This section would provide for the establishment of the ABSMAC. The note following this section would clarify to readers that the ABSMAC is not a Commonwealth entity for the purposes of the PGPA Act. Section 157 Functions of the Agriculture Biodiversity Stewardship Market Advisory Committee 652. The ABSMAC would have the functions set out in this section, including advising the Agriculture Minister about matters that relate to biodiversity projects that are referred by the Agriculture Minister to the Committee and about the suspension of the consideration by the Regulator of applications for registration of biodiversity projects. The ABSMAC would also monitor the compliance of protocol determinations with the biodiversity integrity standards, and undertake periodic reviews of protocol determinations including any related public consultation. 653. The ABSMAC would have any other functions that are conferred on it by this Bill or any instruments made under this Bill, and would be able to do anything incidental or conducive to the performance of its specified functions. Division 3--Membership of the Agriculture Biodiversity Stewardship Market Advisory Committee Section 158 Membership of the Agriculture Biodiversity Stewardship Market Advisory Committee 654. The ABSMAC would consist of four to six members, including the Chair. 107

Section 159 Appointment of Agriculture Biodiversity Stewardship Market Advisory Committee 655. The Agriculture Minister would appoint the members of the ABSMAC by written instrument. The Agriculture Minister would need to be satisfied that anyone appointed to the ABSMAC has substantial experience or knowledge in at least one relevant field of expertise (that is, agriculture, biological or ecological science, and environmental markets). As the ABSMAC's overarching functions would include ensuring the professional integrity of protocol determinations used under the scheme, it is envisaged that an individual with strong general environmental credentials would be appointed to the ABSMAC. 656. The Chair of the ABSMAC would not be an employee of the Commonwealth or Commonwealth authority, or a person who holds a full-time office under Commonwealth law. 657. The Agriculture Minister would also need to ensure that one ABSMAC member (other than the Chair) is an SES employee, or holds or performs the duties of an Executive Level 2 position, in the Agriculture Department. The main purpose of appointing a departmental officer to the ABSMAC would be to ensure that proposed protocol determinations are consistent with international biodiversity obligations which are the responsibility of the Commonwealth. Section 160 Period for appointment for Agriculture Biodiversity Stewardship Market Advisory Committee members 658. The Chair of the ABSMAC would be appointed for the period specified in the instrument of appointment, provided that it is a period of up to five years. Members of the ABSMAC (other than the Chair) would be appointed for the period specified in the instrument of appointment, provided that it is a period of up to two years. By virtue of section 33AA of the Acts Interpretation Act, the members of the ABSMAC (including the Chair) can be reappointed. 659. An ABSMAC member would hold office on a part-time basis. Section 161 Acting Agriculture Biodiversity Stewardship Market Advisory Committee members 660. The Agriculture Minister would be able to appoint an acting Chair or acting member of the ABSMAC when there is a vacancy in the office of the Chair or in the office of a member. Acting appointments would also be able to be made when the Chair or a member is absent from duty, absent from Australia or unable to perform the duties of the office. 661. A person would only be eligible to be appointed an acting Chair or acting member of the ABSMAC if they are otherwise eligible for appointment as a member of the ABSMAC. Section 33AB of the Acts Interpretation Act sets out rules that apply to such acting appointments. 108

Section 162 Procedures 662. This section would allow rules to prescribe the procedures to be followed at or in relation to meetings of the ABSMAC. Such rules would include the following matters: • the convening of meetings of the ABSMAC; • the number of ABSMAC members to constitute a quorum; • the selection of an ABSMAC member to preside at meetings of the ABSMAC in the absence of the Chair of the ABSMAC; and • the manner in which questions arising at an ABSMAC meeting are to be decided. 663. The ABSMAC may also elect to adopt the procedures set out in this section for the passing of resolutions. Such procedures would allow a resolution to be taken to have been passed at an ABSMAC meeting, where a majority of ABSMAC members indicate agreement with a resolution, in the absence of a meeting, and all ABSMAC members were informed of the proposed resolution or reasonable efforts had been made to inform all ABSMAC members of the proposed resolution. In order to elect for such procedures to apply, the ABSMAC would need to so determine and also determine the method by which ABSMAC members would indicate agreement with such resolutions. 664. This section is not intended to be prescriptive in relation to how the ABSMAC would make decisions. Subject to some minimum procedural requirements which may be prescribed in the rules, the ABSMAC would be able to regulate proceedings at its meetings as it considers appropriate. 665. An ABSMAC member who is an APS employee in the Agriculture Department would not be entitled to vote for a resolution at a meeting of the ABSMAC, agree with a resolution in absence of a meeting, or be counted for the purposes of determining a majority vote of the ABSMAC or agreement with such a resolution of the ABSMAC. Section 163 Disclosure of interests to the Agriculture Minister 666. This section would establish a general requirement that an ABSMAC member must give written notice to the Agriculture Minister of all pecuniary or other interests that conflict, or could conflict, with the proper performance of their duties. Section 164 Disclosure of interests to the Agriculture Biodiversity Stewardship Market Advisory Committee 667. This section would establish a specific requirement that an ABSMAC member must disclose to a meeting of the ABSMAC any pecuniary or other interest in a matter before the ABSMAC. Such a disclosure must be made as soon as possible by the member once the relevant facts are known and the disclosure must be recorded in the minutes of the meeting. The member would also need to absent themselves from any deliberation or decision with respect to that matter unless the ABSMAC determines otherwise. 109

Section 165 Other paid work 668. An ABSMAC member would not be permitted to engage in any paid work that conflicts, or could conflict, with the proper performance of their duties. 669. This is not intended to be read as a prohibition on the Agriculture Department related employment of the Agriculture Department member of the ABASC appointed under paragraph 159(4). Appropriate administrative arrangements are intended to operate so as to manage any actual or perceived conflicts of interest. Section 166 Remuneration 670. An ABSMAC member would be paid remuneration at a rate determined by the Remuneration Tribunal, which is the independent tribunal established under the Remuneration Tribunal Act 1973 to handle the remuneration of key Commonwealth offices. Where no determination has been made by the Tribunal, members would be paid remuneration at the rate prescribed in rules. Members would also be paid allowances at the rate prescribed by the rules. 671. It would be appropriate for the rate for allowances to be prescribed in rules as the rate may change over time. Section 167 Leave of absence 672. The Agriculture Minister would be able to grant leave of absence to the Chair of the ABSMAC on terms and conditions that the Agriculture Minister determines. The Chair of the ABSMAC would be able to grant leave of absence to an ABSMAC member on terms and conditions decided by the Chair. Section 168 Resignation 673. An ABSMAC member would be able to resign by giving the Agriculture Minister a written resignation. The resignation would take effect on the day it is received by the Agriculture Minister or on a later day stated in the resignation. Section 169 Termination of appointment 674. The Agriculture Minister would be able to terminate the appointment of an ABSMAC member, but only on specified grounds. These grounds would relate to misbehaviour, physical or mental incapacity, bankruptcy, repeated absence from meetings of the ABSMAC, engagement in paid work that conflicts or could conflict with the member's duties, or failure to disclose interests as required. 675. The Agriculture Minister would also be able to terminate the appointment of the Chair of the ABSMAC if the Chair is an employee of the Commonwealth, an authority of the Commonwealth or holds a full-time office under a Commonwealth law. Section 170 Other terms and conditions 676. In the event that any terms and conditions of employment would need to be specified and are not already dealt with in this Bill or the rules, the Agriculture Minister would be able to determine such matters. 110

Section 171 Assistance to Agriculture Biodiversity Stewardship Market Advisory Committee 677. In the performance of its functions, the ABSMAC would be able to be provided with assistance by the Regulator, the Agriculture Department or any other Department, agency or authority of the Commonwealth. Such assistance may include the provision of information, advice or resources and facilities to the ABSMAC. 111

PART 19--REVIEW OF DECISIONS 678. This Part of the Bill would allow certain decisions (known as reviewable decisions) to be reviewed internally and by the Administrative Appeals Tribunal (AAT). This Part would ensure that a person who is affected by a reviewable decision, and believes an incorrect decision has been made, is able to apply to have the decision reviewed. Division 1--Introduction Section 172 Simplified outline of this Part 679. The simplified outline is included to assist the reader to understand the substantive provisions of this Part; however, it is not intended to be comprehensive. It is intended that the reader will rely on the substantive provisions of this Part to which the outline relates. Division 2--Decisions of the Regulator Section 173 Reviewable decisions 680. This section would provide for a list of decisions of the Regulator which are reviewable decisions. There would be two avenues of merits review: internal reconsideration by the Regulator and external review by the AAT. 681. The objective of merits review is to ensure that decisions are correct and preferable according to the facts on which the decision was based, and that all persons affected by a decision are treated fairly. Allowing access to merits review would encourage the quality, consistency, openness and accountability in decisions made by the Regulator. 682. Each of the following would be a reviewable decision: • decisions under section 16 to approve, or refuse to approve, the registration of a biodiversity project; • decisions under rules made for the purposes of section 20, 21 or 22 to vary, or refuse to vary, the registration of a registered biodiversity project; • decisions under rules made for the purposes of section 24 or 25 to cancel, or refuse to cancel, the registration of a registered biodiversity project; • decisions under rules made for the purposes of section 27, 28, 29, 30, 31, 32 or 42 to cancel the registration of a registered biodiversity project; • decisions under section 62 to issue, or refuse to issue, a biodiversity certificate; • decisions under subsection 107(7) to reimburse, or refuse to reimburse, a person for reasonable costs incurred in complying with an audit notice; • decisions under section 110, 111, 112 or 113 to give a relinquishment notice; • decisions under subsection 116(2) to refuse to extend the period to comply with a relinquishment notice; • decisions under a provision of the rules or another legislative instrument made under this Bill, if the provision is prescribed by the rules for the purposes of this paragraph. 112

683. Internal reconsideration and external merits review would not be available if a decision is not listed in this section as a reviewable decision. Any exceptions to merits review have been carefully considered and assessed as being consistent with Government policy on administrative review and the Commonwealth Administrative Review Council publication What Decisions should be Subject to Merit Review? 684. For example, the list does not include those decisions where the Regulator has no discretion, such as a decision of the Regulator to remove the entry for a certificate from a person's Registry account where a person relinquishes the certificate under section 118 or to refund an application fee where an application is withdrawn before it is registered under section 15. 685. The list also does not include decisions which are of a legislative character, for example, where they relate to the making of a protocol determination by the Agriculture Minister (see Part 4), or the making of a biodiversity maintenance declaration by the Regulator (see Part 13). 686. The list also does not include decisions which are intermediate steps towards decisions which are of a legislative character, for example, the Regulator being satisfied of certain matters listed in subparagraphs 120(1)(d)(ii)-(iv) before making a biodiversity maintenance declaration. 687. This section does not limit the rights of a person who is affected by a decision from seeking judicial review of the decision under the Administrative Decisions (Judicial Review) Act 1977 or common law principles. Section 174 Notice of decision and reconsideration rights to be given--decisions made by delegates of the Regulator 688. Where a reviewable decision is made by a delegate of the Regulator, the delegate would need to take reasonable steps to give notice to each person whose interests are affected by the decision of certain matters. Such matters would relate to the making of the decision and the person's right to have the decision reconsidered under this Part of the Bill. It is intended that a failure to provide notification under this section does not affect the validity of the decision. 689. This would allow the affected person to be informed of the decision of the delegate and to consider whether they are satisfied with the decision or whether they wish to apply for review of the decision. Section 175 Applications for reconsideration of decisions made by delegates of the Regulator 690. Where a reviewable decision is made by a delegate of the Regulator, the person affected by the decision would be able to first apply for internal reconsideration by the Regulator. This would provide an opportunity for the affected person to put their case directly to the Regulator, through a process that would generally be less costly and time consuming than external merits review. 691. An application for internal reconsideration would need to be made in the approved form, together with the reasons for the application and the requisite fee. The 113

application would also need to be made within 28 days after being informed of the decision or, if the Regulator extends the deadline, within the extended period. 692. The fee that accompanies the application for internal reconsideration must not be such as to amount to taxation. The purpose of any fee is to enable the Regulator to recover costs associated with processing the application. Section 176 Reconsideration by the Regulator 693. Where an application for internal reconsideration has been received, the Regulator would need to reconsider the original decision. The Regulator's reconsidered decision may be to affirm, vary or revoke the original decision, and would take effect by replacing the original decision. The Regulator would need to give to the applicant written notice of the reconsidered decision, together with a written statement of reasons within 28 days after making the reconsidered decision. Section 177 Deadline for reconsideration 694. The Regulator would be required to make a decision on the application for internal reconsideration within 90 days of receiving it. The Regulator would be taken to have made a decision affirming the original decision if the Regulator has not informed the applicant of the reconsidered decision before the end of the 90-day period. Section 178 Review by the Administrative Appeals Tribunal 695. If the person affected by a reviewable decision is not satisfied with the outcome of the Regulator's internal reconsideration of the decision, they would be able to apply to the AAT to review the decision. If the reviewable decision was not made by a delegate of the Regulator, the person affected by the decision would be able to apply directly to the AAT without going through the internal reconsideration process. 114

PART 20--MISCELLANEOUS 696. This Part of the Bill would set out a number of miscellaneous provisions relating to the operation of the Bill. Section 179 Miscellaneous functions of the Regulator 697. As well as the specific functions of the Regulator that would be provided in the Bill, the Regulator would have various general functions, set out as follows: • monitor and promote compliance with this Bill and associated provisions; • conduct and co-ordinate education programs about this Bill and associated provisions; • advise the Agriculture Minister on matters relating to this Bill and associated provisions; • advise the ABSMAC on matters relating to the making, variation or revocation of protocol determinations; • advise and assist persons (and their representatives) in relation to their obligations under this Bill and associated provisions; • advise and assist prospective applicants in connection with ensuring that applications are compliant with this Bill and associated provisions; • liaise with regulatory and other relevant bodies, whether in Australia or elsewhere, about cooperative arrangements for matters relating to this Bill and associated provisions; • advise and assist in relation to development of the market for biodiversity certificates or other certificates, units or credits (however described, and whether issued under a law of the Commonwealth, a State or a Territory, or in some other way), that would relate to biodiversity projects; and • collect, analyse, interpret and disseminate statistical information relating to the operation of this Bill and associated provisions. 698. These functions are expected to be a significant part of the Regulator's work in the period leading to the commencement of the scheme and the initial years of the scheme's operation. Section 180 Treatment of trusts 699. This section would provide that this Bill applies to a trust as if it were a person, subject to the following matters: • For trusts with a single trustee, any obligations imposed on, or offences committed by, the trust would be taken to have been imposed on or committed by the trustee; • For trusts with multiple trustees, any obligations imposed on, or offences committed by, the trust would be taken to have been imposed on or committed by each trustee. Any offences committed by the trust would be taken to have been committed by each trustee who was in any way knowingly concerned in or party to the relevant act or omission. 700. This section would apply to a contravention of a civil penalty provision in a corresponding way to the way it would apply to an offence. 115

Section 181 Rules may provide for voluntary accreditation of advisers etc. 701. The rules would be able to provide for and in relation to the voluntary accreditation of persons who provide advice and assistance in relation to the operation of this Bill, the carrying out of biodiversity projects, or the trading of biodiversity certificates. For clarification, the rules that would be made for this purpose would not require a person to be accredited in order to provide advice and assistance. This would allow rules to be made flexibly and efficiently where risks to the scheme were identified in relation to advisers to project proponents. 702. The rules that would be able to be made under this section would include, but not be limited to: • making it a condition of accreditation that a person pass a knowledge test on the biodiversity stewardship scheme that would be created by the Bill; • making it a condition of accreditation that a person meet the requirements of the fit and proper person test; • setting fees for applications made under the rules, where the fee is not such as to amount to taxation. Section 182 Information previously given to the Regulator 703. The Regulator would be able to use information previously provided by a person to the Regulator under the Bill or the rules, or under the CFI Act or a legislative instrument under that Act, to satisfy a subsequent requirement under this Bill or the rules for the same information. Section 183 Delegation by the Agriculture Minister 704. The Agriculture Minister would have a discretionary power to delegate all or any of the Agriculture Minister's powers and functions under the Bill or the rules to the Secretary, an SES employee, or acting SES employee, in the Agriculture Department. The Agriculture Minister would not have the power to delegate the power to make, vary or revoke a legislative instrument. 705. The delegate would be required to comply with any written directions of the Agriculture Minister in performing a delegated function or exercising a delegated power. 706. It is the intention that the delegates would be senior officials of the Department, who have knowledge and expertise in biodiversity functions or responsibility and direct oversight of the scheme. This would improve the efficiency of the administration and management of the scheme, noting that the delegates would otherwise be prevented from being delegated any of the Agriculture Minister's powers to make, vary or revoke a legislative instrument. Section 184 Delegation by the Secretary 707. The Secretary would have a discretionary power to delegate all or any of the Secretary's powers and functions under the Bill or the rules to an SES employee, or acting SES employee, in the Agriculture Department. 116

708. The delegate would be required to comply with any written directions of the Secretary in performing a delegated function or exercising a delegated power. 709. It is the intention that the delegates would be senior officials of the Department, who have knowledge and expertise in biodiversity functions or responsibility and direct oversight of the scheme. This would improve the efficiency of the administration and management of the scheme, noting that the delegates would otherwise be prevented from being delegated any of the Secretary's powers. Section 185 Concurrent operation of State and Territory laws 710. The Bill would not be intended to exclude or limit the operation of a law of a State or Territory that would be capable of operating concurrently with it. Section 186 Law relating to legal professional privilege not affected 711. The Bill would include an explicit provision indicating that it would not affect the law relating to legal professional privilege. This section would make it clear that legal professional privilege would not be abrogated by operation of any provisions of the Bill. 712. The doctrine of legal professional privilege has been described by the High Court in Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 as follows, It is now settled that legal professional privilege is a rule of substantive law which may be availed of by a person to resist the giving of information or the production of documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings. Section 187 Arrangements with States and Territories 713. The Agriculture Minister would have a discretionary power to enter into an arrangement with a relevant Minister of a State or Territory in relation to the administration of this Bill. This would include the following: • Arrangements for the performance of the functions of a magistrate under this Bill by a magistrate of that State or Territory; and • Arrangements for the exercise of the powers conferred by sections 84 and 85 on relevant land registration officials of that State or Territory. Section 188 Liability for damages 714. This section would provide that certain persons would not be liable to an action or other proceeding for damages for, or in relation to, an act or matter done in good faith or omitted to be done in the performance or purported performance of any function, or in the exercise or purported exercise of any power that would be conferred by the Bill or associated provisions. The persons include the Agriculture Minister, a delegate of the Agriculture Minister, the Secretary, a delegate of the Secretary, the Regulator, a delegate of the Regulator, an inspector, a person assisting an inspector, an audit team 117

leader, a person assisting an audit team leader, an ABSMAC member or a person assisting the ABSMAC. 715. The purpose of this section is to enable certain persons to perform their functions and exercise their powers without fear of being held liable for damages. This protection would only apply to certain persons who had acted in good faith. This type of provision is used in other Commonwealth legislation and enables persons with statutory functions to perform their functions without fear of legal action being taken against them, as long as they perform those functions in good faith. Section 189 Executive power of the Commonwealth 716. The Bill would not, by implication, limit the executive power of the Commonwealth. Section 190 Notional payments by the Commonwealth 717. Amounts that would be payable under the Bill or the rules would be notionally payable by the Commonwealth, or parts of the Commonwealth. 718. To accommodate this, the Minister responsible for administering the PGPA Act would have the discretionary power to give written directions for the purposes of this section. These directions would include those relating to transfers of amounts within or between accounts operated by the Commonwealth. Section 191 Compensation for acquisition of property 719. This section would provide that if the operation of this Bill, the rules or a protocol determination would result in an acquisition of property from a person other than on just terms, the Commonwealth would be liable to pay a reasonable amount of compensation to the person. The terms acquisition of property and just terms have the same meaning as in section 51(xxxi) of the Constitution. 720. This section would also provide that, if agreement between the Commonwealth and the person on the amount of compensation is not reached, then the person would be able to institute proceedings in the Federal Court or the Supreme Court of a State or Territory for the recovery of such reasonable amount of compensation from the Commonwealth as determined by the court. Section 192 Native title rights not affected 721. The Bill would not affect the operation of the Native Title Act. The approach to native title in this Bill would be intended to be consistent with the Native Title Act. Section 193 Racial Discrimination Act not affected 722. The Bill would not affect the operation of the Racial Discrimination Act 1975. Section 194 Approval of registration of biodiversity project--eligible land 723. Section 99 of the Constitution prohibits the Commonwealth from giving preference to a State or Territory (or any part of one) over another State or Territory (or part of another one). 118

724. This section would provide that if the Bill, in any of its operations, would be invalid under section 99 of the Constitution, by reason of the requirement at paragraph 16(4)(b) that the Regulator is satisfied that land included or to be included in a project area is eligible land, it is intended that this requirement would not apply. Section 195 Administrative decisions under the rules 725. The Bill would provide that the rules may make provision in relation to a matter by conferring a power to make a decision of an administrative character on the Regulator. Section 196 Review of operation of this Act etc. 726. The Agriculture Minister would be required to cause a review of the operation of the Bill and the rules, which would commence within 5 years after the day determined by the Agriculture Minister for the purposes of subsection 12(2).The review would be required include a review of the extent to which the objects in the Bill have been achieved and any other matters that the Agriculture Minister, in writing, directs the review to consider. 727. A direction given by the Agriculture Minister would not be a legislative instrument within the meaning of subsection 8(1) of the Legislation Act. It is intended that this provision would indicate that an exemption from the Legislation Act is not sought or required. 728. The review would be required to make provision for public consultation and those persons tasked with undertaking the review would be required to give the Agriculture Minister a written report of the review within 12 months of the review being commenced. 729. This section would also provide that the review report must set out any directions given by the Agriculture Minister and may set out recommendations to the Commonwealth Government. The Agriculture Minister would be required to cause a copy of the review report to be tabled in each House of the Parliament within 15 sitting days of that House after the review report is given to the Agriculture Minister. The Agriculture Minister would also be required to publish a copy of the review report on the Agriculture Department's website as soon as practicable after the report is given to the Agriculture Minister. 730. If the review report sets out one or more recommendations to the Commonwealth Government, the Agriculture Minister would be required, as soon as practicable after receiving the review report, to cause a statement to be prepared setting out the Commonwealth Government's response to each of the recommendations in the review report. Within 6 months after receiving the review report, the Agriculture Minister would be required to cause copies of the statement to be tabled in each House of the Parliament. Section 197 Rules 731. This section would provide for a general rule-making power. 119

732. This section would provide that the Agriculture Minister may, by legislative instrument, make rules prescribing matters required or permitted by the Bill to be prescribed by the rules, or necessary or convenient to be prescribed for carrying out or giving effect to the Bill. 733. This would provide the Agriculture Minister with the discretion and flexibility to set out in the rules matters, processes and circumstances that are not provided for in the Bill. This flexibility is necessary to allow the market to develop organically and to ensure that the matters, processes and circumstances can be accommodated quickly and effectively. The rules would not be exempt from disallowance under the Legislation Act; and would therefore be subject to Parliamentary scrutiny. The rules would also not be exempt from sunsetting. 734. This section would further provide that subsection 14(2) of the Legislation Act does not apply to rules made under this section. Subsection 14(2) of the Legislation Act provides that, unless the contrary intention appears, the legislative instrument may not make provision in relation to a matter by applying, adopting or incorporating any matter contained in an instrument or other writing as in force or existing from time to time. This section would provide a contrary intention to subsection 14(2) of the Legislation Act, in that the rules made for the purposes of this provision would be able to refer to any matter contained in an instrument or other writing as in force or existing from time to time, if necessary to do so. For example, the rules could refer to a technical fencing standard published by a relevant industry body as in force from time to time. 120

Statement of Compatibility with Human Rights Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 Agriculture Biodiversity Stewardship Market Bill 2022 This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of Human Rights (Parliamentary Scrutiny) Act 2011. Overview of the Bill The Bill will create a new legislative framework to support a national voluntary agriculture biodiversity stewardship market. This will enable agricultural landholders to undertake projects that enhance or protect biodiversity in native species and receive a tradeable certificate for doing so. It will facilitate private investment in projects that will support biodiversity protection and restoration. It will be primarily administered by the Clean Energy Regulator (the Regulator). The Bill will promote and encourage the growth and development of projects that have biodiversity benefits for the environment. It will ensure people undertaking those projects will be recognised by the market for delivering environmental services. In addition, it will provide an opportunity for farmers to utilise less productive areas of farmland by undertaking biodiversity projects in those areas of land. The Bill will: • create a nationally consistent framework to describe and measure biodiversity outcomes; • enable biodiversity certificates describing biodiversity projects to be purchased, transferred, claimed, used and publicly tracked; and • establish project assurance and compliance systems to provide certainty to the market. The Bill is modelled on the framework set out in the Carbon Credits (Carbon Farming Initiative) Act 2011 (CFI Act), which established a scheme for crediting and facilitating a voluntary market for carbon sequestration projects. A biodiversity certificate will be the central unit of value in the new market. However, unlike the role of the Australian Carbon Credit Unit in the framework under the CFI Act, a biodiversity certificate will be a heterogenous unit, rather than a homogenous one, and a single certificate will be issued for each project. A biodiversity certificate will allow unique biodiversity outcomes associated with individual projects to be described according to a consistent set of attributes. Different biodiversity projects will be characterised by reference to different requirements, under the applicable protocol determination, which would be made by the Agriculture Minister. The Bill also establishes the new Agriculture Biodiversity Stewardship Market Advisory Committee (ABSMAC) to advise the Agriculture Minister on certain matters relating to biodiversity projects, among other functions. 121

Details of biodiversity certificates and biodiversity projects will be set out in the new Agriculture Biodiversity Stewardship Market Register (the Register), which will be maintained by the Regulator. As the biodiversity certificate will be able to be owned and traded separately from the underlying land for the project, the Bill will also provide for an online platform to facilitate the trading of biodiversity certificates and for other purposes. Applications for a biodiversity certificate must meet certain requirements before the certificate can be issued by the Regulator. There will be various requirements and compliance mechanisms to ensure biodiversity outcomes are being delivered. These requirements include reporting, notification and record-keeping requirements, audit processes and biodiversity maintenance declarations. The Regulator will also have the power to gather information, issue relinquishment notices for biodiversity certificates and undertake enforcement action for instances of non-compliance with the framework. Persons who are affected by decisions made under the Bill will have access to internal reconsideration and external review of certain decisions. The Bill is also designed to draw upon, support and give effect to Australia's international obligations under the United Nations Convention on Biological Diversity (Biodiversity Convention). It will provide incentives for the enhancement or protection of Australia's unique flora and fauna, with the aim of preserving Australia's endemic biodiversity for future generations. Part 1 - Preliminary This Part sets out preliminary matters, including the objects, application of the Bill to external Territories and relevant definitions used throughout the Bill. Part 2 - Registered biodiversity projects This Part allows a project proponent to apply to the Regulator for the registration of a biodiversity project. The Regulator must be satisfied that certain requirements have been met before approving the registration of a biodiversity project, and the registration may be subject to certain conditions. Applications can be made by the project proponent for the variation of the registration where there is a relevant change in circumstances. The registration of the biodiversity project can also be cancelled, either unilaterally by the Regulator in limited circumstances if certain requirements are not met, or voluntarily at the request of the project proponent. The rules may also prescribe the kinds of biodiversity projects that have a material risk of adverse impact on certain matters and are therefore 'excluded biodiversity projects', which are not eligible to be registered. Part 3 - Multiple project proponents This Part provides arrangements for registered biodiversity projects that have more than one project proponent. Where there are multiple project proponents, obligations imposed under the Bill would apply to each of the proponents, and obligations can be discharged by any of the proponents. There are also processes to allow multiple project proponents to nominate one of the proponents as the nominee. The nominee will be served documents, on behalf of all 122

proponents. The nominee will also be taken to act on behalf of all proponents, whenever they take certain actions that are permitted but not required to be taken under the Bill. Part 4 - Protocol determinations The Part establishes a framework for making, varying, and revoking protocol determinations that apply to biodiversity projects. A protocol determination sets out requirements for the registration of certain kinds of biodiversity projects, including the activities that must be carried out for the project. The Agriculture Minister may, by legislative instrument, make or vary a protocol determination after considering various factors, provided that the ABSMAC has advised that the proposed determination complies with the biodiversity integrity standards (as defined in section 57). The ABSMAC must undertake public consultation before providing advice to the Agriculture Minister about whether to make or vary a protocol determination. The Agriculture Minister may also revoke a protocol determination in certain circumstances. Where a protocol determination ceases to have effect, the Regulator must refuse any existing applications for the registration of biodiversity projects that would have otherwise been covered by the ceased protocol determination. There is also a maximum civil penalty of 2,000 penalty units where: a biodiversity certificate has been issued in respect of a biodiversity project; and the project proponent fails to comply with a requirement that is imposed on the project by the protocol determination (see section 46). Part 5 - Biodiversity certificates This Part establishes a new form of tradeable personal property known as a biodiversity certificate. A project proponent of a registered biodiversity project may apply to the Regulator for the issue of a biodiversity certificate. The Regulator must be satisfied that certain requirements have been met before issuing the biodiversity certificate. The certificate is issued on the basis that it may be varied, cancelled, revoked, or required to be relinquished in certain circumstances. This Part also sets out the framework for legal ownership and transmission of biodiversity certificates, as well as equitable interests in relation to biodiversity certificates. Part 6 - Purchase of biodiversity certificates This Part allows the Secretary to enter into biodiversity conservation contracts, on behalf of the Commonwealth, for the purchase of biodiversity certificates. The Secretary may also conduct biodiversity conservation purchasing processes (such as tender processes) on behalf of the Commonwealth. The Secretary must have regard to certain principles and other matters when conducting such purchasing processes. The rules may provide for certain matters in relation to biodiversity certificates purchased by the Commonwealth under biodiversity conservation contracts. Part 7 - Interests in land This Part sets out the eligible interests in land for the purpose of the Bill. Whether consent has been provided by a person who holds an eligible interest in the project land is a factor to 123

be considered by the Regulator in deciding whether to impose a condition on the registration of a biodiversity certificate (see section 19 in Part 2). For Torrens system land, eligible interests in land include all registered legal estates or interests and mortgages or charges over such interests. Where Torrens system land is also Crown land, the Crown lands Minister of the State or Territory also holds an eligible interest. For Crown land that is not Torrens system land, the Crown lands Minister of the State or Territory holds an eligible interest in such land, unless the land is exclusive possession native title land, or land rights land. For native title land, a registered native title body corporate for the area of land holds an eligible interest. Entries may be made in title registers in relation to the existence of a registered biodiversity project or the existence of a biodiversity maintenance declaration in respect of the land. Part 8 - Fit and proper person test This Part provides for the requirements that must be satisfied for a person to pass the fit and proper person test. If each project proponent does not pass the fit and proper person test, the Regulator will not approve the registration of a biodiversity project (see section 16 of Part 2). The Regulator may also cancel the registration of an existing biodiversity project if one or more of the project proponents cease to be a fit and proper person (see section 30 of Part 2). The fit and proper person test will also be applied when a project proponent applies for a biodiversity certificate (see section 62 of Part 5). An individual will generally pass the fit and proper person test if they are not insolvent. A body corporate will generally pass the fit and proper person test if they are not a Chapter 5 body corporate (for example, being wound up, under administration or under restructuring, for the purposes of the Corporations Act 2001). Additional criteria may also be prescribed by the rules. The rules relating to the fit and proper person test do not otherwise affect the operation of Part VIIIC of the Crimes Act 1914 (the Crimes Act) regarding the disclosure and consideration of spent convictions. Part 9 - Reporting and notification requirements This Part sets out requirements for the provision of biodiversity project reports to the Regulator. Biodiversity project reports must accompany an application for the issue of a biodiversity certificate and be provided at intervals of up to 5 years after a biodiversity certificate has been issued by the Regulator. This Part also provides for requirements to notify the Regulator where there has been a change of circumstances or where certain events occur. This includes where the project proponent dies or ceases to have the right to carry out the project, or where there has been a significant reversal of the biodiversity outcome relating to that project due to natural disturbance or the conduct of a person. The rules may also provide for other matters relevant to the Bill to be notified by the project proponent to the Regulator. A person is liable to a civil penalty for non-compliance with various reporting and notification requirements under this Part (see sections 90, 92-97, 99 and 100). The maximum civil penalty is either 60 or 200 penalty units, depending on the seriousness of contravention and likely harm that would result. 124

Part 10 - Information-gathering powers This Part sets out the information-gathering powers that may be exercised by the Regulator to monitor general compliance with, or investigate suspected breaches of, the scheme. This includes powers to: obtain information or documents; seek the production of copies of documents; and inspect, make copies of, or retain documents. A person is liable to a maximum civil penalty of 60 penalty units if they fail to comply with a requirement that they are capable of complying with (see section 102). Part 11 - Audits This Part allows the Regulator to require audits to be carried out concerning a person's compliance with the Bill and associated provisions. The Regulator may require a compliance audit be completed where the Regulator has reasonable grounds to suspect the project proponent has contravened, is contravening, or is proposing to contravene, the statutory framework. For such audits, the auditor would be appointed by the project proponent, subject to certain auditing requirements being met. The Regulator may also directly appoint an auditor to carry out other audits relating to compliance with one or more aspects of the Bill or associated provisions. A person is liable to a maximum civil penalty of 200 penalty units if they fail to comply with the requirement that a compliance audit be completed (see subsection 107(5)). A person is also liable to a maximum civil penalty of 60 penalty units if they fail to provide reasonable facilities and assistance to the audit team for a compliance audit or other audit (see subsections 107(4) and 108(3)). Part 12 - Relinquishment requirements This Part provides for the relinquishment of biodiversity certificates in certain circumstances. The Regulator may give a relinquishment notice where: certificates were issued because a person provided false or misleading information; the registration of the biodiversity project was cancelled; or there has been a significant reversal of biodiversity outcomes. A relinquishment notice must be complied with before the end of 6 months after it is given. There is a maximum civil penalty of the greater of 2,000 penalty units or twice the market value of the biodiversity certificate as determined by the court, for non-compliance with a relinquishment notice (see subsection 116(7)). A relinquishment notice can be complied with by relinquishing the original biodiversity certificate or by relinquishing equivalent biodiversity certificates. Part 13 - Biodiversity maintenance declarations This Part of the Bill would provide for biodiversity maintenance declarations. There is a discretionary power for the Regulator to make, by legislative instrument, a biodiversity maintenance declaration, where a relinquishment notice is, or is likely, to be given in relation to a biodiversity certificate. The declaration would also prohibit certain activities in a biodiversity maintenance area. 125

A person must not carry out declared prohibited activities in the biodiversity maintenance area. There is a maximum civil penalty of 2,000 penalty units for non-compliance with this requirement (section 121). The biodiversity maintenance declaration ceases to be in force where certain events occur. It can also be revoked by the Regulator upon application. Part 14 - Registers This Part provides for the establishment and maintenance of the Register, which would be made available on the Regulator's website. The Register will hold details of registered biodiversity projects and biodiversity certificates. The rules may provide for other matters in relation to the Register, including: requests to open accounts in the Register; the holding of biodiversity certificates; the transfer or closure of accounts; and the transfer of biodiversity certificates between accounts. The rules may also provide for the maintenance of an online platform, which will facilitate the trading of biodiversity certificates and for other purposes. This will allow project proponents and prospective purchasers of biodiversity certificates to participate in the new market for the delivery of biodiversity outcomes. Part 15 - Publication of information This Part provides for the publication of information about the operation of the scheme. The Regulator will be required to publish certain information after a biodiversity certificate is issued, varied, or transferred to another account in the Register. There is also a requirement for the publication of an annual report about the activities of the Regulator, as well as the publication on the Regulator's website of a description of the characteristics of biodiversity certificates. In addition, certain information regarding the purchase of biodiversity certificates by the Commonwealth and annual reports about such purchases must be published by the Secretary on the Agriculture Department's website. Certain information relating to requirements for the relinquishment of biodiversity certificates must also be published on the Regulator's website. Part 16 - Record-keeping and project monitoring requirements This Part sets out record-keeping and project monitoring requirements for project proponents within the scheme. These requirements are necessary to ensure the integrity of the scheme and that sufficient records are kept for the substantiation of biodiversity outcomes and facilitation of the Regulator's compliance activities. The rules may require records relevant to the Bill or a biodiversity project report to be retained for a period of 7 years. There is a maximum civil penalty of 200 penalty units for non-compliance with these requirements (see sections 143 and 144). Where a protocol determination provides for a record-keeping or project monitoring requirement that applies to the project, a project proponent is also required to comply with that requirement. There is a maximum civil penalty of 200 penalty units for non-compliance with such requirements (see sections 145 and 146). 126

Part 17 - Enforcement This Part allows the Chair of the Regulator to appoint inspectors, who will have the necessary knowledge or experience to properly exercise powers under the Bill. It also triggers the standard provisions under the Regulatory Powers (Standard Provisions) Act 2014 (the Regulatory Powers Act), in relation to monitoring, investigation, civil penalties, infringement notices, enforceable undertakings and injunctions. Part 18 - Agriculture Biodiversity Stewardship Market Advisory Committee The Part establishes the ABSMAC and sets out its functions, which will include advising the Agriculture Minister about matters that relate to biodiversity projects and other matters that are referred to it by the Agriculture Minister. There will be a process for the appointment of the Chair of the ABSMAC and members of the ABSMAC. This Part also provides for other administrative matters relating to ABSMAC, including the conduct of meetings, disclosure of conflicts of interest, remuneration, leave of absence, resignation, and termination of appointment. Assistance will also be provided to the ABSMAC by the Regulator, the Agriculture Department or other Commonwealth agency or body as required. Part 19 - Review of decisions This Part allows for two avenues of merits review for certain decisions of the Regulator: internal reconsideration by the Regulator; and external review by the Administrative Appeals Tribunal (AAT). This ensures a person who is affected by a reviewable decision, and believes an incorrect decision has been made, is able to apply to have the decision reviewed. It does not limit the rights of a person who is affected by a decision from seeking judicial review of the decision under the Administrative Decisions (Judicial Review) Act 1977 (ADJR Act) or common law principles. Part 20 - Miscellaneous This Part sets out several miscellaneous provisions relating to the operation of the scheme. It provides for miscellaneous functions of the Regulator and the treatment of information previously given to the Regulator. It allows powers and functions to be delegated by the Agriculture Minister or the Secretary to appropriate senior officials of the Agriculture Department. This Part also allows the rules to provide for the voluntary accreditation of advisers who give advice or assistance under the scheme as well as a general rule-making power. In addition, this Part provides for elements of the legal framework underlying the scheme. This includes matters relating to the operation of State and Territory laws, legal professional privilege, arrangements with States and Territories, and payments and compensation by the Commonwealth. There is also a limitation on the liability for damages in respect of actions taken or functions performed under the Bill by certain persons in good faith. Under this Part, a review of the operation of this Bill and the rules is required to commence within 5 years after the day determined by the Agriculture Minister for the purposes of subsection 12(2). 127

Assessment of Compatibility with Human Rights The Bill may engage the following rights: • the right to a fair hearing and criminal process rights under Article 14 of the International Covenant on Civil and Political Rights (the ICCPR); • the prohibition on arbitrary interference with privacy under Article 17 of the ICCPR; • the rights of equality and to non-discrimination under Articles 2, 16 and 26 of the ICCPR; • the right to enjoy and benefit from culture under Article 15 of the International Covenant on Economic, Social and Cultural Rights (ICESCR); and • the right to work under Article 6(1) of the ICESCR. Right to a fair hearing (Article 14 of the ICCPR) The right to a fair hearing and equality before the courts contained in Article 14 of the ICCPR applies to criminal and civil proceedings, and in cases before both courts and tribunals. Article 14 provides that, in the determination of any criminal charge against the person, or of their rights and obligations in a suit of law, everyone shall be entitled to a fair and public hearing by a competent, independent, and impartial tribunal established by law. Review of decisions Under Part 19 of the Bill, a person who is affected by a reviewable decision has access to external merits review by the AAT if they are not satisfied with the outcome of the Regulator's internal reconsideration of a decision that was made by a delegate of the Regulator. The person affected by the decision can also apply directly to the AAT without going through the internal reconsideration process if the reviewable decision was made by the Regulator itself (rather than by a delegate). A person affected by the decision will also be able to access judicial review under the ADJR Act. This enables the review of certain administrative decisions on grounds including that a decision was not procedurally fair. The provisions under Part 19 provide access to external merits review by the AAT or judicial review, and do not otherwise affect the procedure by which those reviews are conducted. For this reason, Part 19 does not limit the right to a fair hearing contained in Article 14 of the ICCPR. Civil penalty provisions The Bill provides for several new civil penalty provisions where a person has contravened certain requirements. The civil penalty provisions are as follows: • subsection 46(1); • subsection 46(2); • subsection 90(3); • subsection 92(2); • subsection 93(2); 128

• subsection 94(2); • subsection 95(2); • subsection 96(2); • subsection 97(2); • subsection 99(2); • subsection 100(3); • subsection 102(4); • subsection 107(4); • subsection 107(5); • subsection 108(3); • subsection 116(5); • section 121; • subsection 143(2); • subsection 144(3); • subsection 145(2); and • subsection 146(2). Part 4 of the Regulatory Powers Act, as applied to this Bill by section 151 in Part 17, sets out the procedure by which civil proceedings are heard in relation to contraventions of civil penalty provisions. The person would be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law. The civil penalty provisions therefore do not limit the right to a fair hearing contained in Article 14 of the ICCPR. Infringement notices Section 152 of the Bill seeks to apply the standard infringement notice provisions in Part 5 of the Regulatory Powers Act to the civil penalty provisions of the Bill. An infringement notice issued under Part 5 of the Regulatory Powers Act is a notice of a pecuniary penalty imposed on a person. It sets out the particulars of an alleged contravention of a law. An infringement notice gives the person to whom the notice is issued the option of paying the penalty set out in the notice or electing to have the matter dealt with by a court. There are no criminal consequences associated with infringement notices for civil penalty provisions. For example, they do not carry the possibility of imprisonment if the person does not pay the penalty or attend court. Section 104 of the Regulatory Powers Act provides that an infringement notice is required to state that the person may choose not to pay the penalty and if they do so, proceedings seeking a civil penalty order may be brought against them in a court. Accordingly, the person must always be advised of the consequences of not paying the penalty, and of their right to have the matter dealt with by a court. As the person may elect to have the matter heard by a court, rather than pay the penalty, the right to a fair hearing provided for by Article 14(1) of the ICCPR is not limited. Enforceable undertakings Section 153 of the Bill seeks to apply the enforceable undertakings provisions in Part 6 of the Regulatory Powers Act to the offence and civil penalty provisions of the Bill, as well as offence provisions of the Crimes Act or the Criminal Code to the extent that it relates to the 129

Bill. The Chair of the Regulator will be able to accept and enforce undertakings relating to compliance with these provisions. Further, if the Chair of the Regulator is satisfied that a person has breached an undertaking, the Chair may apply to a relevant court for an order relating to the undertaking. As an order enforcing the undertaking can only be made by a relevant court under section 115 of the Regulatory Powers Act, the right to a fair hearing provided for by Article 14(1) of the ICCPR is not limited. Injunctions Section 154 of the Bill seeks to apply the injunctions provisions in Part 7 of the Regulatory Powers Act to the civil penalty for carrying out a declared prohibited activity in a biodiversity maintenance area (see section 121 of Part 13). The Chair of the Regulator will be able to apply to a relevant court for an injunction to restrain a person from engaging in conduct or requiring that person to do a thing. Further, the Chair may apply to a relevant court for an interim injunction. As an injunction can only be granted by a relevant court under section 121 of the Regulatory Powers Act, the right to a fair hearing provided for by Article 14(1) of the ICCPR is not limited. Summary The Bill is compatible with the right to a fair hearing provided for by Article 14 of the ICCPR because, to the extent that it engages those rights, it does not limit those rights. Criminal process rights (Article 14 of the ICCPR) Article 14 of the ICCPR contains criminal process rights, including the right to the presumption of innocence (Article 14(2)) and minimum guarantees in criminal proceedings (Articles 14(3) and (5) to (7)). Relevantly, this includes the right to communicate with legal counsel (Article 14(3)(b)), the right to be free from self-incrimination (Article 14(3)(g)), and the right not to be tried or punished again for an offence for which a person has already been finally acquitted or convicted (prohibition on double jeopardy) (Article 14(7)). Civil penalty provisions The Bill provides for the following new civil penalty provisions, and the following maximum civil penalty amounts: • subsection 46(1) - 2,000 penalty units; • subsection 46(2) - 2,000 penalty units; • subsection 90(3) - 200 penalty units; • subsection 92(2) - 200 penalty units; • subsection 93(2) - 200 penalty units; • subsection 94(2) - 60 penalty units; • subsection 95(2) - 60 penalty units; • subsection 96(2) - 200 penalty units; • subsection 97(2) - 200 penalty units; 130

• subsection 99(2) - 200 penalty units; • subsection 100(3) - 60 penalty units; • subsection 102(4) - 60 penalty units; • subsection 107(4) - 60 penalty units; • subsection 107(5) - 200 penalty units; • subsection 108(3) - 60 penalty units; • subsection 116(7) - the greater of 2,000 penalty units or twice the market value of the biodiversity certificate as determined by the court; • section 121 - 2,000 penalty units; • subsection 143(2) - 200 penalty units; • subsection 144(3) - 200 penalty units; • subsection 145(2) - 200 penalty units; and • subsection 146(2) - 200 penalty units. As discussed in the Guidance Note 2: Offence provisions, civil penalties and human rights published by the Parliamentary Joint Committee on Human Rights, civil penalty provisions may engage criminal process rights under Articles 14 of the ICCPR, regardless of the distinction between criminal and civil penalties in domestic law. When a provision imposes a civil penalty, an assessment is required as to whether it amounts to a criminal penalty for the purposes of Article 14 of the ICCPR. Determining whether penalties could be considered as criminal penalties under international human rights law requires consideration of the classification of the penalty provisions under Australian domestic law, the nature and purpose of the penalties, and the severity of the penalties. The civil penalty provisions in the Bill expressly classify the penalties as civil penalties. Those provisions create solely pecuniary penalties in the form of a debt payable to the Commonwealth. The purpose of these penalties is to encourage compliance with the requirements under the Bill to provide for the effective operation of the scheme. The civil penalty provisions would not impose criminal liability and a finding by a court that they have been contravened would not lead to the creation of a criminal record. The civil penalties would only apply to project proponents and other persons participating in the scheme, rather than the public in general. Such persons will be reasonably expected to be aware of their obligations under the Bill and will have voluntarily sought the approval of the Commonwealth to engage in an activity that is regulated under very clear conditions. The maximum penalties that may be imposed under the Bill as a civil penalty are generally between 60 and 2,000 penalty units. Where the penalties are higher, this reflects the more serious implications or results of the contravention. Under paragraph 82(5)(a) of the Regulatory Powers Act, as applied to this Bill by section 151 in Part 17, the maximum penalties that apply to individuals would be those specified in the civil penalty provisions of the Bill. The application of paragraph 82(5)(b) to the civil penalties under the Bill means that the corporate multiplier will apply to bodies corporate. A court may therefore set the penalties payable by such entities at no more than five times the penalty specified in the civil penalty provision, which would generally result in a maximum penalty of between 300 and 10,000 penalty units. 131

The pecuniary penalties for the civil penalty provisions in the Bill have been set by reference to the Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers. They seek to reflect the seriousness of the contravening conduct to the operation and integrity of the scheme, as well as the threat that is posed to biodiversity outcomes. Higher penalties are proposed for contraventions involving aggravated circumstances. For instance, the civil penalty provision in subsection 116(7) provides for a maximum penalty of the greater of 2,000 penalty units or twice the market value of the biodiversity certificate as determined by the court, for non-compliance with a relinquishment notice. This is necessary as substantial penalties are required to provide an adequate deterrent against non-compliance with relinquishment requirements. There are significant [financial gains/benefits] that could be made from contravening requirements under the scheme and without such strong deterrence the scheme could be undermined. There would also be continuing civil penalty provisions for the purposes of section 93 of the Regulatory Powers Act. Section 93 of the Regulatory Powers Act provides that if an act or thing is required under a civil penalty provision to be done within a particular period or before a particular time, then the obligation to do that act or thing continues until the act or thing is done (even if the period has expired or the time has passed). A person who contravenes a continuing civil penalty provision commits a separate contravention of that provision in respect of each day during which the contravention occurs (including the day the relevant civil penalty order is made or any later day). Subsections 90(3), 92(2), 93(2), 94(2), 95(2), 96(2), 97(2), 99(2), 100(3), 102(4) and 107(2) set out various requirements for a person to provide relevant information to the Regulator within a certain period or by a certain date. Under subsections 90(5), 92(3), 93(3), 94(3), 95(3), 96(3), 97(3), 99(3), 100(4), 102(5) and 107(6), the maximum civil penalty that a court may order a person who is an individual to pay for each day that the contravention of the relevant requirement continues would be 5% of the maximum civil penalty that could be imposed. Given the importance of ensuring that the information is provided to the Regulator in a timely manner, it is appropriate for a continuing civil penalty provision to apply, calculated by reference to each day that the relevant requirement is contravened. The proposed application of the standard provisions in Part 4 of the Regulatory Powers Act by section 151 of the Bill means section 85 of the Regulatory Powers Act will apply to the proposed civil penalty provisions in the Bill. Section 85 of the Regulatory Powers Act provides that a relevant court may make a single civil penalty order against a person for multiple contraventions of a civil penalty provision if proceedings for the contraventions are founded on the same facts, or if the contraventions form, or are part of, a series of contraventions of the same or a similar character. However, the penalty must not exceed the sum of the maximum penalties that could be ordered if a separate penalty were ordered for each of the contraventions. There are no criminal consequences associated with civil penalty orders for multiple contraventions; for example, they do not carry the possibility of imprisonment. As such, these civil penalties are not sufficiently severe that they could be considered as criminal penalties. The above factors indicate that the civil penalties imposed by the Bill are civil rather than criminal in nature. Accordingly, the criminal process rights provided for by Article 14 of the ICCPR are not engaged by the proposed civil penalty provisions in the Bill. 132

Right to the presumption of innocence (Article 14(2) of the ICCPR) Article 14(2) of the ICCPR provides for the right to the presumption of innocence, that everyone charged with a criminal offence shall have the right to be presumed innocent until proved guilty according to law. The right to presumption of innocence is also a fundamental common law principle. Laws which shift the burden of proof to a defendant, commonly known as 'reverse burden provisions', can be considered a limitation of the presumption of innocence. This is because a defendant's failure to discharge a burden of proof or prove an absence of fault may permit their conviction despite reasonable doubt as to their guilt. This includes where an evidential or legal burden of proof is placed on a defendant. When a defendant bears an evidential burden in relation to an exception it means the defendant bears the burden of adducing or pointing to evidence that suggests a reasonable possibility that the exception has been met. It is then up to the prosecution to establish this exception does not apply. This can be justified in circumstances where the facts in question are peculiarly within the knowledge of the defendant. Reverse burden offences will not necessarily be inconsistent with the presumption of innocence provided that the reverse burden pursues a legitimate objective and is reasonable, necessary and proportionate to achieving that objective. Whether a reverse burden provision impermissibly limits the right to the presumption of innocence will depend on the circumstances of the case and the justification for the reverse burden. The Guide to Framing Commonwealth Offences notes that placing the burden on the defendant should be limited to circumstances where the matter is peculiarly within the knowledge of the defendant and where it is significantly more difficult and costly for the prosecution to disprove than for the defendant to establish the matter. The Guide to Framing Commonwealth Offences also notes that a reverse burden provision is more readily justified if the matter in question is not central to the question of culpability for the offence, the penalties are at the lower end of the scale, and the conduct proscribed by the offence poses a grave danger to public health or safety. Under subsection 46(2), a project proponent of the registered biodiversity project would be liable to a civil penalty, where a biodiversity certificate has been issued in respect of the project and any person carries out an activity that is prohibited from being carried out by the applicable protocol determination. There is an exception to this civil penalty if the project proponent has taken all reasonable steps to ensure that the prohibited activity is not carried out by the person. The project proponent, as the respondent, bears the evidential burden in relation to proving this exception in civil penalty proceedings. The reversal is justified in this instance, as the matter to be proved (that is, whether the respondent has taken all reasonable steps) is a matter that would be peculiarly in the knowledge of the respondent. This is also consistent with the approach taken in section 96 of the Regulatory Powers Act, which provides that a person who wishes to rely on an exception to avoid liability for contravention of a civil penalty provision would bear the evidential burden for proof of that exception. In the event of an application for a civil penalty order, it would be significantly more difficult and costly for the appellant to disprove all possible circumstances than it would be for a respondent to establish the existence of one potential 133

circumstance. Further, the activities that are prohibited by the applicable protocol determination would be likely to pose a material adverse risk to the biodiversity outcomes of the project, and it would be expected that a project proponent, as a voluntary participant of the scheme, would be able to take reasonable steps to ensure that those prohibited activities are not carried out. Therefore, in these circumstances, it is reasonable, necessary, and proportionate to reverse the burden of proof and limit the right to the presumption of innocence under Article 14(2) of the ICCPR. Right to communicate with legal counsel (Article 14(3)(b) of the ICCPR) Article 14(3)(b) of the ICCPR provides for the right of a person, in the determination of a criminal charge, to have adequate time and facilities to communicate with counsel of his own choosing. This means that the person should have the opportunity to be represented by a lawyer and to communicate with the lawyer in an unrestricted way in conditions that allow for confidentiality. Section 186 in Part 20 expressly provides that the Bill does not affect the law regarding legal professional privilege. Legal professional privilege may be availed of by a person to resist the giving of information or the production of documents which would reveal communications between a client and their lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings. Section 186 makes clear that legal professional privilege would not be abrogated by operation of any provisions of the Bill. In addition, sections 149 and 150 in Part 17 of the Bill trigger the monitoring and investigation powers under Parts 2 and 3 of the Regulatory Powers Act. Subsections 17(2) and 47(2) of the Regulatory Powers Act make it clear that the privilege against legal professional privilege has not been abrogated by the monitoring and investigation powers provisions. For the above reasons, the Bill does not limit the right to communicate with legal counsel under Article 14(3)(b). Right to freedom from self-incrimination (Article 14(3)(g) of the ICCPR) Article 14(3)(g) of the ICCPR protects the right to freedom from self-incrimination in the determination of a criminal charge by providing that a person may not be compelled to testify against him or herself or confess guilt. The common law also recognises the privilege against self-incrimination which applies unless expressly or impliedly overridden by statute. Part 10 of the Bill provides for certain information-gathering powers that may be exercised by the Regulator. Section 102 in Part 10 allows the Regulator to require a person to give information or produce documents or copies of documents. A person who fails to comply with a requirement would be liable to a civil penalty. The provisions in Part 10 are not intended to abrogate the privilege against self-incrimination. By virtue of sections 149 and 150 in Part 17 of the Bill, the monitoring and investigation powers under Parts 2 and 3 of the Regulatory Powers Act are also triggered. Under 134

subsection 24(3) of the Regulatory Powers Act, where entry is authorised by a monitoring warrant, the authorised person may require any person on the premises to answer questions or produce documents relating to information or provisions subject to monitoring. If the person fails to do so, this is an offence under subsection 24(5) of the Regulatory Powers Act. Similarly, under subsection 54(3) of the Regulatory Powers Act an authorised person who enters premises under an investigation warrant may require persons on the premises to answer questions or produce documents relating to evidential material of the kind specified in the warrant. If the person fails to do so, this is an offence under subsection 54(5) of the Regulatory Powers Act. Subsections 17(1) and 47(1) of the Regulatory Powers Act make it clear that the privilege against self-incrimination has not been abrogated by the monitoring and investigation powers provisions, including the offence provisions. For the above reasons, the Bill does not limit the right to freedom from self-incrimination under Article 14(3)(g) of the ICCPR. Right not to be tried or punished again for an offence for which a person has already been finally acquitted or convicted (prohibition on double jeopardy) (Article 14(7) of the ICCPR) Article 14(7) of the ICCPR prohibits an individual from being liable to be tried or punished again for an offence for which they have already been finally convicted or acquitted in accordance with the law and penal procedure of each country. This prohibition on double jeopardy is also a fundamental safeguard in the common law of Australia. It means that a person who has been convicted or acquitted of a criminal charge is not to be re-tried for the same or substantially the same offence. The civil penalty provisions contained in the Bill are a distinct penalty regime from the criminal offences in the Bill and cannot be used to subject a person to imprisonment. Division 3 of Part 4 of the Regulatory Powers Act, as applied to this Bill by section 151 in Part 17, sets out the relationship between criminal and civil penalty proceedings. Section 90 of the Regulatory Powers Act provides that criminal proceedings may be commenced against a person for conduct that is the same, or substantially the same, as conduct that would constitute a contravention of a civil penalty provision, regardless of whether a civil penalty order has been made against the person in relation to the contravention. This section recognises the importance of criminal proceedings and criminal penalties in sanctioning contraventions of a triggering Act (i.e., an Act that seeks to apply the standard provisions of the Regulatory Powers Act), and ensures criminal remedies are not precluded by earlier civil action. As section 90 of the Regulatory Powers Act permits both civil and criminal proceedings, but not multiple criminal proceedings for the same conduct, Article 14(7) of the ICCPR is not infringed. Further, section 88 of the Regulatory Powers Act provides that a court cannot make a civil penalty order against a person for a contravention of a civil penalty provision if the person has been convicted of an offence constituted by conduct that is the same, or substantially the same, as the conduct constituting the contravention. 135

Section 91 of the Regulatory Powers Act provides that evidence of information given, or evidence of the production of documents, by an individual is not admissible in criminal proceedings against the individual if: • the individual previously gave the information or produced the documents in proceedings for a civil penalty order against the individual for an alleged contravention of a civil penalty provision (whether or not the order was made); and • the conduct alleged to constitute the offence is the same, or substantially the same, as the conduct alleged to constitute the contravention. Section 91 of the Regulatory Powers Act ensures that information or documents produced during civil proceedings are not relied upon to support subsequent criminal proceedings, unless those proceedings are criminal proceedings relating to falsifying evidence in civil proceedings. Accordingly, these provisions engage, but do not limit, the prohibition on double jeopardy in Article 14(7) of the ICCPR. Summary The Bill is compatible with the criminal process rights provided for by Article 14 of the ICCPR because, to the extent that it engages those rights, it does not limit those rights. Prohibition on arbitrary interference with privacy (Article 17 of the ICCPR) Article 17 of the ICCPR prohibits arbitrary or unlawful interference with an individual's privacy, family, home, or correspondence, and protects a person's honour and reputation from unlawful attacks. The prohibition on arbitrary interference with privacy can be limited to achieve a legitimate objective where the limitations are lawful and not arbitrary. For an interference with this prohibition to be permissible, the interference must be authorised by law, be for a reason consistent with the ICCPR and be reasonable in the circumstances - that is, any interference with privacy must be proportionate to a legitimate end and be necessary in the circumstances. Monitoring and investigation powers Section 149 and 150 of the Bill will apply the standard provisions for monitoring and investigation powers in Parts 2 and 3 of the Regulatory Powers Act to the offence and civil penalty provisions of the Bill, as well as offence provisions of the Crimes Act or the Criminal Code to the extent that it relates to the Bill. To the extent that these monitoring and investigation powers limit the rights protected under Article 17 of the ICCPR, these limitations are not arbitrary, and are reasonable, necessary, and proportionate to the achievement of a legitimate objective. The Bill pursues the legitimate objective of setting up a regulatory framework for a voluntary national agriculture biodiversity stewardship market to enhance or protect biodiversity in native species . Applying the standard provisions in Parts 2 and 3 of the Regulatory Powers Act to the Bill will ensure the Commonwealth, and authorised officers who perform functions or exercise powers on behalf of the Commonwealth, can monitor the integrity of the regulatory system set up by the Bill, assess compliance with that system, and investigate any potential non-compliance. 136

The entry, monitoring, search, seizure, and information gathering powers under the standard provisions in Parts 2 and 3 of the Regulatory Powers Act are provided for by law. The powers are necessary to enable authorised officers to obtain information and knowledge relating to the operation of the scheme and any contraventions. They are constrained in various ways as set out below, ensuring their use is not arbitrary. The regime under the Regulatory Powers Act protects against arbitrary interference with privacy, as, except in limited circumstances, the monitoring and investigation powers cannot be exercised without consent being given to the entry into the premises, or prior judicial authorisation in the form of a warrant. Where entry is based on the consent of the occupier, consent must be informed and voluntary. The occupier of the premises can restrict entry by authorised persons to a particular period. Additional safeguards are provided through provisions requiring authorised persons, and any persons assisting them, to leave the premises if the occupier withdraws their consent. The Regulatory Powers Act also provides restrictions on the issuing of a monitoring or investigation warrant. For example, an issuing officer may issue an investigation warrant only when satisfied, by information on oath or affirmation, that there are reasonable grounds for suspecting that there is, or may be within 72 hours, evidential material on the premises. An issuing officer must not issue a warrant unless the issuing officer has been provided, either orally or by affidavit, with such further information as they require concerning the grounds on which the issue of the warrant is being sought. Such constraints on this power ensure adequate safeguards against arbitrary limitations on the right to privacy in the issuing of warrants. In addition, an authorised person cannot enter premises under a warrant unless their identity card is shown to the occupier of the premises. If entry is authorised by warrant, the authorised person must also provide a copy of the warrant to the occupier of the premises. This provides for the transparent utilisation of the powers and mitigates arbitrariness and risk of abuse. The monitoring and investigation powers may only be exercised in certain circumstances set out in the Regulatory Powers Act. For example, under section 52 of the Regulatory Powers Act, the power to seize evidence of a kind not specified in an investigation warrant may only be exercised where: • the authorised person finds the thing in the course of searching for material of the kind specified in an investigation warrant; and • the authorised person believes on reasonable grounds that: o the thing is evidential material of another kind; or o a related provision has been contravened with respect to the thing; or o the thing is evidence of a contravention of a related provision; or o the thing is intended to be used to contravene a related provision; and • the authorised person believes on reasonable grounds that it is necessary to seize the thing in order to prevent its loss, concealment or destruction. These constraints on the exercise of the powers limit their susceptibility to arbitrary use or abuse and ensure that their use is reasonable and proportionate in the circumstances. Accordingly, the monitoring and investigation powers are necessary, proportionate, and reasonable in the pursuance of the legitimate objectives of the Bill. 137

Fit and proper person test Under Part 8 of the Bill, an individual will pass the fit and proper person test if they are not insolvent. A body corporate will pass the fit and proper person test if they are not a Chapter 5 body corporate (for example, being wound up, under administration or under restructuring, for the purposes of the Corporations Act). A trust will not pass the fit and proper person test if the trustee or trustees of the trust do not pass the fit and proper test for an individual or a body corporate. Where the Regulator is satisfied that the project proponent does not meet the fit and proper person test, then the Regulator must not approve the registration of the biodiversity project or issue a biodiversity certificate. The Regulator may also cancel the registration of a biodiversity project where the fit and proper person test is not met, where permitted by the rules. To the extent that personal information is collected for the purposes of the fit and proper person test, as opposed to information about an entity, these provisions may engage the prohibition on arbitrary interference with privacy. Participation in the national agriculture biodiversity stewardship market is not a right; it is a privilege, granted by the Commonwealth to suitable persons. A project proponent seeking the benefit of participation in those markets will do so in the knowledge that they must provide information that allows the Regulator to assess whether they meet the fit and proper person test set out under the Bill. The success of the national agriculture biodiversity stewardship market depends on the financial viability and reputation of the project proponents under the scheme. The fit and proper person test is necessary, reasonable, and proportionate for the legitimate objective of ensuring that biodiversity certificates are only issued for registered biodiversity projects where the project proponent is solvent and capable of meeting the prescribed requirements under the Bill. Given the potential adverse consequences to the integrity of the market, the Commonwealth needs to be certain that the persons participating in the scheme will not, through financial or other risks, compromise the confidence that is placed in biodiversity certificates by the market. Additional criteria for the fit and proper person test may also be prescribed by the rules. This is necessary as it will allow the Commonwealth to respond in an appropriate and timely manner to risks and to implement any necessary regulatory reforms in the future. The rules are a legislative instrument and subject to Parliamentary scrutiny through the disallowance process, and sunsetting in accordance with the Legislation Act 2003 (the Legislation Act). Another important safeguard is that the rules relating to the fit and proper person test will not affect the operation of Part VIIIC of the Crimes Act regarding the disclosure and consideration of spent convictions. This means that, in certain circumstances, the person does not need to disclose spent convictions and persons who are aware of the spent convictions must disregard the convictions. On this basis, to the extent that the fit and proper person test limits the prohibition on arbitrary interference with privacy under Article 17 of the ICCPR, this limitation is necessary, proportionate, and reasonable to achieve the legitimate objectives of the Bill. 138

Collection, use and disclosure of information Parts 2, 3, 5, 9, 10 of the Bill contain provisions that will: • require a person to provide information in an application or nomination biodiversity project report (sections 13, 37, 38, 60); • require a person to provide further information in relation to their application (sections 14, 61); • require a person to comply with certain reporting and notification requirements (sections 89, 90, 92-97, 99, 100); • give the Regulator the power to require information or documents (section 102); • require a person to provide all reasonable assistance to an audit team leader, or any persons assisting the audit team leader, for the effective exercise of the audit team's duties (sections 107 and 108). By requiring persons to provide information or documents, the Bill may incidentally require the provision of personal information. The collection, use and disclosure of personal information may therefore engage the prohibition on arbitrary interference with privacy. These provisions of the Bill are necessary for the legitimate objective of assessing the suitability of a person to participate in the national agriculture biodiversity stewardship market and to ensure those persons are continuing to comply with requirements under the Bill. The Regulator will require access to this information to properly assess whether to register a biodiversity project or issue a biodiversity certificate. They will also need ongoing and up-to-date information once a biodiversity certificate is issued, to ensure that the project proponent is complying with their statutory obligations. A person who provides information in an application will voluntarily participate in the regulatory system. Guidance from the Parliamentary Joint Committee on Human Rights indicates that whether a person has a reasonable expectation of privacy in the circumstances is relevant to the issue of determining whether a provision is permissible. A person who has voluntarily entered the voluntary national agriculture biodiversity stewardship market should expect that a certain amount of personal information will need to be provided to the Regulator, and to any audit teams that assess compliance with the Bill, to obtain the benefits of that system. The interference with privacy is not arbitrary in these circumstances because the information the person needs to provide will be set out in the Bill and any rules made under the Bill. The information a person will need to provide may include information about their biodiversity project. For example, a person may need to provide maps of the proposed project area before a biodiversity project in respect of that area of land can be approved. A person who has voluntarily entered the regulatory system should be aware that they will have to provide this kind of information when they voluntarily decide to participate in the scheme. It is also intended that the powers and functions in the Bill will be required to be exercised in compliance with the Privacy Act 1988 (the Privacy Act). That Act regulates the collection, storage, use, disclosure, and publication of personal information. 139

On this basis, to the extent that the provisions in the Bill engage the prohibition on arbitrary interference with privacy under Article 17 of the ICCPR, this limitation is necessary, proportionate, and reasonable to achieve the legitimate objectives of the Bill. Registers Part 14 of the Bill provides for the establishment and maintenance of a Register, which would be made available on the Regulator's website. As the names of the project proponents for registered biodiversity projects and the holders of biodiversity certificates will be made available on the Register under sections 128 and 130, it may engage the prohibition on arbitrary interference with privacy. The publication of information on the Register is necessary for the legitimate objective of ensuring that relevant information is accessible and available to participants in the new national agriculture biodiversity stewardship market. This ensures that participants can obtain accurate and up-to-date information about the status of registered biodiversity projects and biodiversity certificates, and can have confidence in conducting their business affairs. The publication of information is also not arbitrary, as the details of the information that must be recorded in entries on the Register are set out in sections 128 and 130 of the Bill or in rules made under those provisions. A person who has opted into the voluntary national agriculture biodiversity stewardship market should expect that a certain amount of personal information about their involvement in a particular biodiversity project will need to be made available on the Register to other participants in the market. Together with the safeguards on the use, disclosure and publication of information set out in the Privacy Act as discussed above, the publication of information on the Register is also reasonable and proportionate to the objectives of the Bill. Under section 129 of the Bill, the Regulator may withhold details of the project area for a registered biodiversity project from being included in the Register, if requested by a project proponent and if certain criteria are met. This would be where the Regulator is satisfied that: setting out the details of the project area could substantially prejudice the commercial interests of the project proponent, the biodiversity of the area or the safety of any person; and that such prejudice would outweigh the public interest in setting it out. In addition, section 132 allows the rules to make provision for or in relation to matters to be recorded in the Register, among other matters. This is necessary to allow the Commonwealth to implement any necessary policy or regulatory reforms to maintain the relevance of information recorded in the Register. The rules are a legislative instrument and subject to Parliamentary scrutiny through the disallowance process, and sunsetting in accordance with the Legislation Act. The above considerations indicate that, to the extent that it engages the prohibition on arbitrary interference with privacy under Article 17 of the ICCPR, the establishment and maintenance of the Register is necessary, proportionate, and reasonable in the pursuance of the legitimate objectives of the Bill. Publication of information Part 15 of the Bill provides for the publication of information about the operation of the scheme. Section 135 of the Bill requires the Regulator to publish certain information on its 140

website after a biodiversity certificate is issued, varied, or transferred to another account. This includes the name of the person to which the certificate, or varied certificate, was issued, as well as the names of the account holders that were involved in the transfer of the certificate. Section 140 requires the Regulator to publish certain information regarding any decisions made to require a person to relinquish a biodiversity certificate, including the status and outcome of any internal reconsideration and external review relating to such decisions. Section 141 requires the Regulator to publish certain information about relinquished biodiversity certificates. As these provisions would provide for the publication of certain personal information regarding biodiversity certificates and relinquishment requirements, these provisions may engage the prohibition on arbitrary interference with privacy. Sections 135, 140 and 141 are necessary to support the legitimate objective of the Bill, which is to ensure that regular and accurate information is made available to the market about the issuing, varying and transfer of biodiversity certificates. The publication of information about the relinquishment of biodiversity certificates would also present a fair and accurate picture of efforts by project proponents to comply with obligations under the scheme. In addition, the information regarding internal reconsideration and external review also enables the Regulator to be held accountable for the quality of its decision making. The publication of information is not arbitrary, as the details of the information that must be published on the Regulator's website are set out in sections 135, 140 and 141 of the Bill or in rules made under those provisions, and a person who is participating in the scheme will be able to have a clear expectation of the personal information that will be published. Together with the safeguards on the use, disclosure and publication of information set out in the Privacy Act as discussed above, the publication of such information on the website is reasonable and proportionate to the objectives of the Bill. It is also appropriate for the rules to make provision for information to be published on the website. This allows the Commonwealth to implement any necessary policy or regulatory reforms to maintain the relevance of information that is published. The rules are a legislative instrument and subject to Parliamentary scrutiny through the disallowance process, and sunsetting in accordance with the Legislation Act. On this basis, to the extent that these provisions engage the prohibition on arbitrary interference with privacy under Article 17 of the ICCPR, this limitation is necessary, proportionate, and reasonable to achieve the legitimate objectives of the Bill. Summary The Bill is compatible with the prohibition on arbitrary interference with privacy provided for by Article 17 of the ICCPR because, to the extent that it interferes with privacy, it is not arbitrary, and the measures are necessary, proportionate, and reasonable in the pursuance of legitimate objectives under the Bill. Rights of equality and to non-discrimination (Articles 2, 16 and 26 of the ICCPR) Articles 2, 16 and 26 of the ICCPR provide for the right to equality and non-discrimination. This means that laws, policies, and programs should not be discriminatory, and should not be applied or enforced in a discriminatory or arbitrary manner. It also ensures that no one is denied their rights because of factors such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, or birth. 141

Section 193 provides that the Bill will not affect the operation of the Racial Discrimination Act 1975. That Act sets out several prohibited grounds for discrimination. It provides that it is unlawful to do any act involving a distinction, exclusion, restriction, or preference based on race, colour, descent or national or ethnic origin which has the purpose or effect of nullifying or impairing the recognition, enjoyment, or exercise, on an equal footing, of any human right or fundamental freedom in the political, economic, social, cultural, or any other field of public life. For this reason, the Bill is consistent with and promotes the right to equality and non- discrimination under Articles 2, 16 and 26 of the ICCPR. Right to enjoy and benefit from culture (Article 15 of the ICESCR) Article 15 of ICESCR protects the right of all persons to take part in cultural life. The United Nations Committee on Economic, Social and Cultural Rights (General Comment 21, 2009) has stated that culture encompasses: 'ways of life, language, oral and written literature, music and song, non-verbal communication, religion or belief systems, rites and ceremonies, sport and games, methods of production or technology, natural and man-made environments, food, clothing and shelter and the arts, customs and traditions'. The Committee has stated that cultural rights may be exercised by a person as an individual, in association with others, or within a community or group. The Committee has also stated that countries should guarantee that the exercise of the right to take part in cultural life takes due account of the values of cultural life, which may be strongly communal, or which can only be expressed and enjoyed as a community by Indigenous peoples. Indigenous peoples' cultural values and rights associated with their ancestral lands and their relationship with nature should be regarded with respect and protected. Countries must take measures to recognise and protect the rights of Indigenous peoples to own, develop, control, and use their communal lands, territories, and resources. Indigenous peoples have the right to act collectively to ensure respect for their right to maintain, control, protect and develop their cultural heritage, traditional knowledge, and traditional cultural expressions. Part 7 sets out the eligible interests in land under the Bill. Whether or not consent has been provided by a person who holds an eligible interest in the project land is a factor to be considered by the Regulator in deciding whether to impose a condition on the registration of a biodiversity certificate (see section 19). Section 82 provides that a registered native title body corporate for an area of native title land holds an eligible interest in the land. A registered native title body corporate has the same meaning as under the Native Title Act 1993 and holds the native title rights and interests on trust for the native title holders, who are Indigenous Australians. These provisions will allow Indigenous Australians to be involved in decisions relating to the conduct of biodiversity projects on their traditional lands, and to either give consent to, or withhold consent from, such projects as they so choose. If written consent by the registered native title body corporate is not given to the biodiversity project, then section 19 requires the Regulator to impose a condition on the registration of the project, which prevents a biodiversity certificate from being issued until such consent is provided. The Bill therefore does not limit the right of all persons to take part in cultural life under Article 15 of the ICESCR. 142

Right to work (Article 6(1) of the ICESCR) Article 6(1) of the ICESCR protects the right of every person to the opportunity to gain their living by work which they freely choose or accept. This right may be subject only to such limitations 'as are determined by law only in so far as this may be compatible with the nature of these rights and solely for the purpose of promoting the general welfare in a democratic society'. The Bill creates a framework which engages the right to work in two separate ways. Firstly, the Bill promotes the right to work, because it enables people to participate in a national agriculture biodiversity stewardship market and to receive financial recognition for engaging in biodiversity projects. The Bill also allows for biodiversity certificates, as a new form of tradeable personal property, to be exchanged on an online market-based platform, thereby incentivising private investment in projects that will support biodiversity protection and restoration. It further promotes economic growth for Australian farmers, by allowing them to earn an income from less productive areas of farmland by undertaking biodiversity projects. This will have a positive effect in increasing the number and variety of employment opportunities in the Australian labour market, and particularly in regional areas where opportunities may be more limited compared to non-regional areas. Secondly, the Bill may limit the right to work by regulating who can participate in the market and the obligations that they must comply with. A person who wishes to participate in the national agriculture biodiversity stewardship market will need to obtain certain approvals from the Regulator and satisfy certain requirements under the scheme. For example, the Regulator will need to provide approval for the registration of a biodiversity project proposed by the person or the issuing of a biodiversity certificate to the person. The Regulator will also have the discretion to vary or cancel the registration of a biodiversity project in certain circumstances. Accordingly, the Bill will implement a robust regulatory system to ensure the integrity of the scheme and ensure that biodiversity outcomes are delivered and maintained. It is appropriate for the Regulator to have the ability to curtail behaviours that are inconsistent with the objectives of the Bill, by ensuring that people who apply for and who hold approval to conduct biodiversity projects have the necessary knowledge, capabilities, resources, and professional integrity. These requirements are necessary and proportionate to ensure that persons who participate in the scheme will comply with the regulatory framework set out in the Bill. In addition, section 181 will allow the rules to provide for the voluntary accreditation of persons who provide advice and assistance in relation to the operation of the Bill, carrying out of biodiversity projects, or trading of biodiversity certificates. For example, the rules may make it a condition of accreditation that a person pass a knowledge test on the agriculture biodiversity stewardship market scheme, or that a person meet the requirements of the fit and proper person test. This is necessary for the legitimate objective of ensuring that persons who wish to become accredited advisers are persons who are trustworthy and have demonstrated the required attributes necessary to provide advice and assistance on the operation of the Bill. In addition, the accreditation process is voluntary, and the rules that would be made under section 181 will not be able to require that a person must be accredited to provide such advice and assistance. 143

The Bill is compatible with the right to work in Article 6(1) of the ICESCR because it promotes that right and, to the extent that it may limit that right, that limitation is reasonable, necessary, and proportionate to the achievement of a legitimate objective. Conclusion The Bill is compatible with human rights because, to the extent that it may limit human rights, those limitations are reasonable, necessary, and proportionate. Further, in some instances, the Bill positively engages human rights. The Hon. David Littleproud MP Minister for Agriculture and Northern Australia 144

CHOOSE CLASSIFICATION • • Pathway to a National Voluntary Biodiversity Stewardship Market Regulation Impact Statement Department of Agriculture, Water and the Environment CHOOSE CLASSIFICATION

Contents Contents Contents ......................................................................................................................................................................................... 1 1. The problem ............................................................................................................................................................................... 2 Biodiversity is in decline ............................................................................................................................................................. 2 Biodiversity is a public good ....................................................................................................................................................... 2 Imperfect market information and nationally consistent measurements ................................................................................. 3 What benefits could biodiversity restoration provide Australia? .............................................................................................. 4 2. Why is government action needed? .......................................................................................................................................... 4 Policy objective........................................................................................................................................................................... 5 3. Policy options identification and analysis .................................................................................................................................. 5 Option 1 - Status quo ................................................................................................................................................................. 5 Option 2 - Government legislates a National Framework ......................................................................................................... 6 Option 3 - Government funds restoration ................................................................................................................................. 8 4. Impact Analysis ........................................................................................................................................................................... 8 Option 1 - Status Quo ................................................................................................................................................................ 8 Total cost and benefits of option 1 ........................................................................................................................................ 9 Option 2 - Government legislates a National Framework ......................................................................................................... 9 Risks and unintended consequences ................................................................................................................................... 15 Total costs and benefits for option 2 ................................................................................................................................... 16 Option 3 - Government funds restoration ............................................................................................................................... 16 5. Consultation ............................................................................................................................................................................. 18 Key messages ........................................................................................................................................................................... 18 Stakeholders consulted ............................................................................................................................................................ 19 6. Analysis of the best option ....................................................................................................................................................... 20 7. Implementation and review ..................................................................................................................................................... 21 Implementation challenges ...................................................................................................................................................... 21 Review ...................................................................................................................................................................................... 23 DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 1

1. The problem Biodiversity is in decline Nature's annual contribution to the global economy through the provision of services related to biodiversity, as a source of food and shelter; and from clean water, air and healthy soils is estimated to be USD$125 trillion a year1. In Australia, land based (terrestrial) ecosystems provide more than AUD$325 billion in ecosystem services 2. Australia is globally renowned for the quality of its agricultural, forestry and fisheries products and biodiversity. Our agriculture, fisheries/aquaculture and forestry land managers depend directly on the health of their natural resources and actively manage their land for their success, productivity and growth. Agriculture, forestry and tourism industries alone contribute more than $120 billion to the economy and employ more than 1 million Australians 3. However, Australia's biodiversity is declining, with almost 200 million hectares of land degraded or degrading4. Successive "State of the Environment" reports, the review of the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act), and other independent reviews have highlighted the ongoing decline. • Approximately 44 per cent of Australia's forests and woodlands have been cleared since European settlement; 39% was cleared before 1972. The three most heavily cleared habitats in these areas together previously covered more than 170,000 square kilometres of Australia, and each has lost more than 80% of its original extent. In temperate ecosystems, less than 2% of original grasslands remain. • It is estimated that Australia gains around 20 new pests or diseases each year. These invasive species impact native species through a combination of habitat modification and predation. • There is a high rate of species extinction in Australia. Over 50 Australian animals and 30 plants are known to be extinct. A further 404 animal species and over 1300 plant species are either critically endangered, endangered or vulnerable. In the 2019-20 bushfires, an estimated 65 threatened species had over half of their habitat impacted. A further 49 species had more than 80% of their habitat damaged by the fires. Further impacts are expected with changes to our climate. More action is needed. Despite this need, active land and biodiversity management by private landholders, such as farmers, is not valued by markets. This situation limits the availability of private sector funds for investment in biodiversity improvement. Biodiversity is a public good While governments have been supporting landholders and farmers for biodiversity protection and restoration through grants, public funding is insufficient to support existing biodiversity or sustain the level of restoration required. 1 Costanza R, de Groot R, Sutton P, Van der Ploeg S, Anderson SJ, Kubiszewski I, Farber S, Turner RK, 2014, Changes in the global value of ecosystem services, Global environmental change, 1 26, 152-8. 2 ABS, 2010, Australia's Biodiversity (Year Book Australia, 2009-2010 Feature Article), Available at: https://www.abs.gov.au/ausstats/abs@.nsf/Previousproducts/1301.0Feature%20Article12009-10?opendocument&tabn 3 Calculated using Australian Bureau of Statistics National Account data. 4 Bai ZG et al, 2008, Proxy global assessment of land degradation, Soil, Use and Management, Figure 2 DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 2

Farmers manage approximately 60 per cent of Australian land. However, their stewardship of biodiversity on their land is not valued by markets whilst they maintain their agricultural productivity. This means there is no added incentive to protect or enhance biodiversity on farm for those that fall outside of current grant offerings. Separate to that, businesses and other entities are increasingly wanting to invest directly in landscape restoration and protect or create biodiversity. This may either be for a financial return, or more broadly to support their social licence to operate5. These voluntary markets however are not developing. The public good attribute means biodiversity is not easily appropriated or traded which can disincentivise private investment and farmer participation. There is currently no legal mechanism for landholders to sell the outcomes from farm biodiversity stewardship activities to private buyers. This means philanthropic and financial investors have few options but to buy and lock up land to achieve biodiversity outcomes rather than supporting activities in conjunction with productive farm environments. Furthermore, the opportunity cost of biodiversity conservation on agricultural land is high, meaning that there is limited financial incentive for farmers to deliver biodiversity outcomes on a given parcel of land. The consequences of this are under-investment from the private sector and under-delivery of biodiversity outcomes - for example lack of increased habitat and ecosystem support for threatened species. This is particularly the case in agricultural regions where land has high value alternative uses. In these areas, there is significant potential for farmers to establish new native habitat through environmental plantings along waterways, hillsides and areas prone to erosion and better manage existing vegetation to improve biodiversity outcomes. These however are not being realised at the scale needed. Imperfect market information and nationally consistent measurements Transparent biodiversity stewardship market information is not currently available to support further investment decisions, for both supply and demand. Private buyers are not engaging in the market despite their interest due to lack of market information and support of biodiversity projects. Imperfect information about the supply, comparability of biodiversity projects, and achievement of the outcomes across projects affects buyers' confidence, increases transaction costs and reduces their ability to efficiently substantiate the 'claims' that underpin their environmental commitments and meet their customers' expectations. There is limited information for farmers to understand the potential demand for biodiversity stewardship outcomes on their land, understand the value of their project outcomes in the marketplace or support their planning of projects. This is directly impacting on the supply of biodiversity outcomes to the market. There are currently no consistent or efficient ways of providing independent assurance around whether biodiversity stewardship outcomes are being achieved. This is in a context where biodiversity projects are, by their nature, medium to long term and have a large number of variables (e.g., species, scale, biodiversity outcomes). So, landholders and buyers have significant transaction costs related to ongoing assurance or trust that the project outcomes are being achieved. In addition, it is currently difficult to contract biodiversity stewardship outcomes that cannot be easily or consistently measured and described - there are no national standard methods or processes that allow a prospective buyer to compare projects based on a consistent set of attributes, likelihood of achieving outcomes or their value. There is also a lack of legal systems that apply nationally for the operation of a national biodiversity stewardship market. For both buyers and sellers, multiple biodiversity offsets and conservation schemes across the country mean complexity and different processes in each jurisdiction. Engaging in these systems then presents high search and transaction costs. 5 RM Consulting Group (RMCG), 2016. Evaluating business investment in biodiversity conservation. DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 3

What benefits could biodiversity restoration provide Australia? Recent research suggests that when ecosystems have less than 30% coverage of healthy native vegetation, ecosystem services and biodiversity sharply decline. 6 The same research has calculated that 13 million hectares must be restored in Australia to reach the 30% threshold, but that targeted restoration on degraded ecosystems on less profitable agricultural land has enormous potential to alleviate these issues. Some additional benefits of restoration at this scale would be: • Restoration of habitat and ecosystem services • Expansion of threatened species habitat • Re-establish ecosystem functions like pollination and erosion control • Store carbon dioxide from the atmosphere and tap into a new source of carbon credits • Create regional jobs • Building resilience of landscape and consequently livelihoods 2. Why is government action needed? Governments often set up frameworks to enable trade and impart confidence to parties that standards and other mechanisms are in place to protect their rights in the market, especially where the goods and services are merit or public goods; for example, to incentivise the private provision of education or environmental services such as carbon sequestration. National markets often require government intervention to deliver market confidence, e.g. the stock market operates through the support of legislation that specifically outlines the conditions for issuance (i.e., the Corporations Act) and oversight by a regulator (i.e., the Australian Securities and Investment Commission). The Commonwealth Government has previously intervened in similar situations, for example the Carbon Farming Initiative Act which creates assurance over the carbon abatement market, which is now seeing an increase in private demand from corporations choosing to demonstrate their carbon abatement commitments, and this framework would build on that success and model. Australian Government action in this space could provide further incentive to farmers to create biodiversity outcomes across Australia. Moreover, it would provide a mechanism to increase the level of private sector investment into biodiversity, adding the advantage that Government does not have to be the only one to fund these improvements, as they have been to date. Market research has shown that with the right framework in place, Australia could see an increased level of investment in biodiversity that is needed for the benefit of farmers and the environment. Commonwealth Government action has the potential to deliver a nationally consistent biodiversity stewardship framework that can increase the supply of biodiversity stewardship outcomes as well as addressing information issues that private sector cannot solve alone. There is currently no nationally accepted way to provide consistent and efficient assurance over claimed biodiversity outcomes in projects undertaken by landholders. The capacity for industry to achieve this outcome is currently limited on 6 Mappin, Bonnie & Ward, Adrian & Hughes, Lesley & Watson, James & Cosier, Peter & Possingham, Hugh. (2021). The costs and benefits of restoring a continent's terrestrial ecosystems. Journal of Applied Ecology. 10.1111/1365-2664.14008. DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 4

what is very much an emerging market. The measurement of biodiversity improvement, and the development of processes for undertaking biodiversity stewardship projects can be complex - they require a high level of scientific and ecological expertise and independent assessment. This can create a substantial information asymmetry in the market. Government intervention can ensure that the right knowledge and expertise are harnessed and available in a consistent way to potential private investors to build market confidence. Policy objective The broad policy objective for this proposal is to identify and implement the best policy approach for supporting farmers to protect and restore Australia's unique natural environment through revegetation and vegetation enhancement on less productive agricultural land. An effective intervention would deliver tangible improvements to Australian's natural environment and biodiversity, support corporate sustainability goals, and provide recognition and incentives for farmers for delivering biodiversity outcomes, particularly on parts of a property that are not ideal for agriculture production. Taking action to deliver on this objective will be complex, and potentially costly, potentially involving the introduction of a new piece of legislation and a new role for the Clean Energy Regulator to administer a new program. There are challenges to setting the right standards and rules for the market such that it will create an attractive product for potential buyers. There are further complexities with balancing any newly introduced system with existing systems at the State or Territory level that would have to be worked through to ensure that any action taken adds to the overall achievement of improvements to the environment and does not subtract from it. However, the cost of inaction and allowing Australia's biodiversity to further erode is much higher and more costly in the long run, as outlined in Section 1 of this RIS. 3. Policy options identification and analysis Option 1 - Status quo The first option that was considered for this policy problem is for the Australian Government to take no direct action and allow the market to resolve matters on its own. Given that there is both demand and supply side interest in the private biodiversity outcomes, it is possible that over time the market may provide partial solutions to the current problems in the market. Under this option, the Australian Government would look for ad hoc opportunities to support the emerging market - this could include: • the development of educational materials and seminars for buyers and sellers, • engagement with industry bodies such as the National Farmers' Federation and the Business Council of Australia. However, it would rely on current approaches to preventing or encouraging protection and/or enhancement of biodiversity through existing legislation and programs at both federal and state level. DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 5

Option 2 - Government legislates a National Framework A second option is to legislate a voluntary National Biodiversity Stewardship Market such that the Commonwealth Government sets the policy for the biodiversity market as well as administers and regulates it. The legislation would implement the Australian's Government's 2030 commitment to ensure that Australian farmers are rewarded for their stewardship of land and water. Development of a legislative framework for a voluntary national biodiversity stewardship market could build off the success of the regulation of other ecosystem services markets such as carbon. Biodiversity Stewardship markets in Australia 7 There is limited publicly available information on the size of Australia's biodiversity markets 8. However, it is recognised that it is growing. Demand in the voluntary carbon market is on track to reach 1,000,000 Australian Carbon Credit Units (ACCUs) in 2021, up from 25,000 in 2014-15. There is also an increasing demand for carbon + biodiversity units which deliver both carbon and biodiversity outcomes. There is a large potential for farmers/landholders to supply into the market. Participants who supply and demand biodiversity stewardship services currently interact through direct transactions, intermediaries (including market platforms), or even within individual business entities. For example, a firm facing obligations to replace biodiversity may purchase land to provide the biodiversity directly rather than contracting with an existing farmer to supply the service. Supply Farmers can supply biodiversity stewardship services by managing their land in a way that protects, restores or promotes biodiversity. There is a large potential for farmers to supply biodiversity stewardship services, as indicated by the participation of the agricultural sector in the Emissions Reduction Fund. Agricultural related projects make up 65% of the issued ACCUs on the Emissions Reduction Fund, worth around $450 million since 2012. Most of the uptake has involved the regeneration or protection of native forests on grazing lands, in particular in semi-arid regions of Queensland and New South Wales9. There has been less uptake in areas where the opportunity cost of agricultural production forgone is higher per unit of land. Demand The demand for biodiversity stewardship services comes from compliance activities (offsets), philanthropic investments, and commercial decisions to meet biodiversity/environmental commitments or as a public good investment by government. Increasingly, many large corporations in Australia are interested, or already investing, in projects with biodiversity benefits including BHP, Woodside, Qantas and Woolworths. This is outside their compliance with environmental regulations. In addition, philanthropic demand from environmental NGOs is at least $100 million a year, which demonstrates the private sector appetite to pay for biodiversity stewardship and that this demand could grow with the appropriate frameworks in place. Beyond voluntary markets there are several compliance schemes that could also result in a long-term source of demand if permitted by relevant regulators. Some of these schemes involve substantial demand. For example, there were approximately 450 approval decisions under the EPBC Act between 2012 and 2017. Of these, about 80% involved offset conditions, with some projects including multiple offset conditions. The dollar costs associated with these offset conditions is not known. Offset activity in the jurisdictions varies considerably. A robust legal framework to support biodiversity outcomes would support the emergence of a fully-fledged national voluntary biodiversity market. 7 Frontier Economics 2020 8 There are no national or state databases of regulatory offset obligations, or details of third party off-set transactions, other than those involving trade in biodiversity credits. The information on government-led purchasing is also dispersed across different governments and government agencies, and difficult to track through time. Similarly, no data are routinely collected or published on the size of the voluntary biodiversity market and nature of relevant trades. 9 Macintosh, A; Roberts, G; Buchan, S, 2019, Improving Carbon Markets to Increase Farmer Participation, A report prepared for AgriFutures. DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 6

There would be three key objectives of Commonwealth legislation: • Nationally consistent framework to describe and measure biodiversity outcomes. • Enable biodiversity certificates describing biodiversity projects to be purchased, transferred, claimed, used and publicly tracked; and • Establish project assurance and compliance systems to provide certainty to the market. This would include provision to: • Establish and issue tradeable certificates corresponding to individual biodiversity stewardship projects o Establish property rights for farmers over the project that are separate from the land. o The certificates would include a list of project attributes to allow buyers to compare and understand the outcomes being delivered. • Establish nationally consistent biodiversity stewardship protocols that set out discrete ways in which biodiversity outcomes can be achieved that are informed by science to ensure environmental integrity. • Establish an integrity and oversight system that provides confidence to investors about the outcomes that a project would deliver, including confirmation that projects are being maintained for relevant permanence periods. • Develop a public registry of projects and of biodiversity stewardship certificates that provides information to the market on the supply of projects together with a trading platform that allows sellers to find information about the demand. The legislation would provide for projects to be on agricultural land within Australia and would be designed to facilitate projects on less productive areas of those agricultural lands. To make it easier for participants to undertake landscape restoration and management projects delivering both carbon and biodiversity benefits, the legislation would be modelled after the Carbon Credits (Carbon Farming Initiative) Act 2011 (CFI Act) which established a voluntary market for carbon sequestration projects. Other existing environmental market schemes like carbon operate based on 'credits' generated for a certain quantum of outcome (i.e., an Australian Carbon Credit Unit which represents one tonne of carbon dioxide equivalent net abatement). However, with biodiversity being a highly heterogenous product and with metrics for creating a single unit still in development or debated, this option is proposing the creation of a 'Biodiversity Certificate'. The Biodiversity Certificate and the project register would capture the outcome being achieved using standardised attributes of the project such as area and location, but also information on benefit delivered by the project. This Option would also create a mechanism for the biodiversity outcomes to be 'owned' so they can then be exchanged. Regulation and enforcement of property rights is a role for governments and done to underpin many other markets. When you combine this property right with legislated rules around transparency, trade, and enforcement it creates confidence in the market. Governance structure Under this option, there would be a basic governance structure with the Department of Agriculture and Water Resources (DAWE) taking on ongoing responsibility for policy development, including the development of technical protocols that outline the various mechanisms through which biodiversity outcomes are to be achieved (similar to the methods in the carbon farming and reef credits schemes). Protocol determinations would be developed to accommodate the assessment and measure of the various types of biodiversity projects. The protocol determinations would establish specific requirements for how distinct types of projects would be managed and would also be the legal mechanism through which certain rights and obligations are assigned to the project proponent. Prototype protocols are currently being tested through the Agriculture Biodiversity Stewardship Package pilots and the market would likely open with those same two protocols available and build from there over time. An independent Expert Advisory Committee would be convened to consider these protocols and make recommendations to the responsible minister informed by public consultation. The day-to-day regulation of the scheme and its integrity could be undertaken by the Clean Energy Regulator - this independent statutory agency already regulates comparable land-based DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 7

projects under the CFI Act. It is anticipated that a portion of participants in the biodiversity market would also have carbon projects established under that legislation, allowing for some potential efficiencies in the regulation of the two schemes by the same entity. Option 3 - Government funds restoration The third option is that the Australian Government could commit additional funds towards biodiversity, up to an estimated $2 billion a year for the next 30 years to restore the estimated 13 million hectares of degraded land needed to reach 30% threshold target. This option could contemplate extending out the Agriculture Stewardship pilots across Carbon + Biodiversity (C+B) and Enhancing Remnant Vegetation (ERV) and offering this option Australia-wide. From there, additional methods or methodologies could also be piloted and added to the program. Under this option, the Australian Government would seek to identify the areas of most need of restoration and tailor the program to incentivise those landholders in that area to undertake the necessary actions to assist with this restoration target. This would be undertaken through voluntary agreements with the relevant landholders. The bulk of the cost of this option would be to compensate farmers for the cost of retiring those portions of land from farming, although noting that the option would focus on places where the land requires the least revegetation work and is already least profitable to minimise the amount of compensation required. Additional funding would be required to ensure DAWE has sufficient ongoing resources to take the pilot program into an ongoing operation. There is a possibility under this Option that the Government could establish an entity to fund these restoration projects in exchange for a certain portion of the environmental credits secured by the projects (for example in the form of carbon credits), which the Government could then either on-sell to recover costs or retire to meet other obligations where it would have otherwise needed to purchase credits itself. 4. Impact Analysis In considering the options, DAWE has considered arrangements overseas, but identified no relevant or easily adaptable model for supporting a private biodiversity stewardship market in Australia. While other countries are looking to facilitate market-based approaches, such arrangements have yet to be implemented widely. As such, there is no international model from which data or process lessons could be directly drawn. The environmental market sector is at an early stage of development in Australia and so there are a range of uncertainties in developing this Regulatory Impact Statement. • Limited experience in regulating environmental markets - Australia does not have specific experience in managing a biodiversity market. There is a regulatory regime in place for another type of environmental market, the carbon market, governed primarily by the Carbon Credits (Carbon Farming Initiative) Act 2011, which provides a valuable model to draw on for the development of a second and likely complementary regime. • Future growth - As the actual uptake of these options is difficult to determine and would be based on many externalities including the willingness of landholders to participate either in a market or via direct funding by government, the scale of associated environmental, economic, and social benefits is difficult to consider. The remainder of this section addresses best estimates of the expected impact of each option on stakeholders noting the above uncertainties. Noting all of the above limitations, DAWE has attempted to describe costs and benefits across government, the environment, landholders and the broader community and economy. Option 1 - Status Quo Option 1 does not require any changes by government or landholders. Under this option, the voluntary restoration of biodiversity would continue to be limited as it currently is. It is challenging to estimate the potential cost of biodiversity DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 8

decline beyond what is set out in the introductory sections above, however a broad estimate of the impact of the status quo is provided below. Government The Australian Government has a range of measures already in place to enhance Australia's unique biodiversity - most particularly the Environmental Protection and Biodiversity Conservation Act, the National Landcare Program 10 and the Environment Restoration Fund.11 More recently the 2021-22 Budget also delivers $32.1 million in additional funding for the Agriculture Stewardship Package to develop market approaches to biodiversity stewardship. Building on the initial $34 million, it will kick start private investment in farm biodiversity and other sustainability opportunities, but there is no further budget set aside to expand this work beyond the pilots. Various States and Territories governments also spend money to protect biodiversity through a variety of local schemes. All these costs are already being incurred with the aim of enhancing biodiversity, but Australia is still experiencing rapid biodiversity decline. The estimates of how underfunded biodiversity is reach into the billions. Therefore, it could be expected that pressure would mount for the Government to take more action in this space to reverse the trend as people continue to feel the effects of the decline in biodiversity. Environment, landholders, broader community and environment While Option 1 would result in no direct changes to our domestic regulatory frameworks, the status quo would not be static for all Australian stakeholders because of the ongoing, and in fact escalating, rate of decline of biodiversity under the current system. Over time as our natural resource base continues to decline, so too will our future productivity. So, while the base case (by definition) assumes no additional costs, ongoing degradation of our natural environment would result in increased costs for many stakeholders compared with the current situation. Australian landholders and farmers are grappling with the consequences of declining biodiversity and the accompanying loss of production, natural disasters and reduced ecosystem services. But the biggest loser would be the environment itself, which would continue to suffer from species extinction and increasing occurrences of pests and weeds. Under current conditions, the outlook for the environment would be as follows: species will continue to be under pressure, new pests and diseases will challenge Australia's biosecurity system and all of this would contribute to erosion, soil degradation and salinity which would affect production. Reduced production can also lead to reduced food supply and higher prices, which would have an impact on a wider segment of the population. Total cost and benefits of option 1 The direct costs for option 1 are minimal to non-existent, as option 1 represents no further funding committed beyond existing programs. The benefits of this option are related to savings from the Government not investing in any new programs to support biodiversity. However, while the costs to the environment are not easily quantifiable in dollar figures, allowing it to decline would cost landholders in terms of quality of the lands they live on and would have flow on costs to consumers as it impacts on production. The cost of inaction will result in less biodiversity for Australia paired with the increasing costs of environmental degradation over time. On this basis, the costs of this option are likely to significantly outweigh the benefits. Option 2 - Government legislates a National Framework Under this option, the proposed national framework would allow landholders to voluntarily protect or enhance biodiversity on the less productive areas of their property and be financially rewarded for these outcomes by private sector agents 10 The Australian Government is currently investing $1.1 billion over six years (from 2017-18 to 2022-23) in the second phase of the National Landcare Program. 11 Including $100 million over four years, 209-20 to 2022-23. DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 9

looking to enhance their environmental, social and corporate governance (ESG) credentials in Australia. The only government investment under this option is in the framework to support these transactions to take place, compliance and enforcement and support for potential future participants considering undertaking a biodiversity project. This is an opportunity to take the models tested in the Agriculture Stewardship pilots run by DAWE this year and expand this out to a wider audience but changing the payment model. Under this option, the funding for the projects would initially be fronted by the landholder, who is then compensated by a private sector purchaser who wishes to secure those outcomes. This would mean the ultimate funding for the biodiversity projects is coming from the private sector instead of the Government. The design attributes of this option would enable the issuance of a biodiversity certificate as quickly as possible so that the landholder can receive compensation for the upfront costs of the project, and then to ensure that the outcomes are ultimately delivered and appropriately maintained. Based on the experience of the Agriculture Stewardship Pilots, it is expected that a market such as this would initially have around 20-30 landholders per region who would be willing to participate, which across the 52 regions in Australia, would mean somewhere in the neighbourhood of 1000-1500 participants, at least in the initial stages. A market such as this would expect to see growth if demand continues to pick up the way that it has for other environmental markets such as carbon and if the price is perceived as adequate by suppliers. Stakeholder feedback and the experience of the Agriculture Stewardship pilots, have indicated there is both a willingness to supply these types of credits to the market and willingness by certain companies to purchase the resulting outcomes of the project. The pool of available capital interested in ESG investment has grown rapidly over the past decade, with the responsible investment market in Australia in 2018 reaching $980 billion and sustainability-themed investments accounted for $70 billion.12 Option 2 provides an opportunity to further capitalise on the demand for biodiversity enhancements and supply capability of landholders to arrest biodiversity decline outlined in the problem section. It is anticipated that the first movers in a market such as this would likely be participants offering a mix of carbon and biodiversity outcomes, as there has been considerable interest from buyers in this through the voluntary carbon market to date, especially in the category of indigenous carbon credits and more recently Carbon + Biodiversity pilot. The price of carbon on the voluntary market has increased 13. However, the price of biodiversity certificates is entirely unknown at this stage. Therefore, a carbon plus biodiversity would give participants some confidence about entering a new market and the price that they might be able to secure for the outcomes that a biodiversity project alone could not provide. Over time the market would set the price for the biodiversity outcomes that it values the most. It is expected that the introduction of a biodiversity market that could deliver at least 1000 new projects per year would have impacts as described and categorised below. Government Under this option, private sector funds can be leveraged to offset the cost of achieving additional biodiversity outcomes rather than the Government providing the funding. The work required and areas incurring costs for the Commonwealth Government would include: • The initial development of the legislative framework - managed by a team of policy, legal and technical advisors in DAWE. Key tasks would include project management, policy work and consultation. The initial few months would be spent developing primary legislation followed by subsequent development of subordinate regulations and rules over the following 12 months. • Technical drafting and legal advice for the delivery of enabling rules and regulations. DAWE would lead this process through engagement with appropriate experts to design the market in a way that can achieve the desired biodiversity benefits. Many of the rules can and would be based on the carbon market, where appropriate, but recognising that the two are different in important ways and that because of this, some additional rules and 12 RIAA (Responsible Investment Association Australasia) (2019) Responsible Investment Benchmark Report, Responsible Investment Association Australasia. 13 https://reneweconomy.com.au/australias-de-facto-carbon-price-surges-to-47-on-way-to-60/ DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 10

processes would need to be designed from scratch for biodiversity projects. This would be a substantial, foundational piece of work requiring technical expertise to set the protocols appropriately to ensure the market can deliver the expected biodiversity outcomes. • Advice to buyers and sellers in the market. Potential suppliers would not be sure how to assess their own potential to participate, what is required to develop a project, what it might cost and how to negotiate with a potential buyer. DAWE would develop these materials to support the launch of the market and encourage participation. Likewise, potential purchasers of biodiversity credits would develop Guidelines to support standardisation of certificate claims. • Ongoing management of the market, including establishment of the regulator and register, and compliance. This type of information is aimed at providing confidence to a market where the item being traded is not easily inspected by the buyer themselves. Suppliers would need clarity on the rules around their project development, application and ongoing reporting requirements and buyers would need confidence around enforcement and confirming that projects are delivering as intended, particularly where land ownership changed. There is no contract between the Government and a supplier of a biodiversity project under this scheme, so these elements are essential to ensuring a project is on track and the biodiversity certificate has meaning. A public register would provide for transparency around who is supplying what types of outcomes and who is buying them. The Clean Energy Regulator would regulate this market and maintain the register. They would also be granted a series of regulatory powers to monitor and track the progress of projects on the register, and a range of compliance mechanisms including civil penalties, to secure the outcomes promised by the projects. Monitoring and assuring compliance with the protocols would be a significant task for the CER and they would need to dedicate adequate resources to this new piece of work to fulfill this role and provide the needed confidence to the market. The challenge will be getting all these elements right, and to a standard that allows suppliers to deliver a project without too much cost or complexity and yet still provides confidence to buyers to want to purchase the outcomes. Biodiversity is not a heterogenous product and this only adds to the challenge of defining what types of projects should be brought into the market as well as how to appropriately manage their delivery over long time periods. This would also make the enforcement and compliance aspects of the scheme complex so the Government would need to ensure it adds sufficient technical experience and expertise to the CER roster who could be charged with this task. Option 2 would cost taxpayers approximately $13.2m over two years from 2021-22 to 2022-23. Further costs of administration of the market over the longer term are estimated at $10m a year based on the experience of the CER in regulating the carbon market14. States and Territories Various States and Territory governments have existing schemes relating to biodiversity. Some are already market-based and offer credits to the private market, such as in New South Wales, while others operate compliance schemes designed to identify or deliver offsets for development where there are unavoidable environmental impacts. The introduction of a biodiversity market might represent potential competition for supply into the various schemes, given there are only so many land managers in Australia. For instance, a particular landholder might choose to deliver a biodiversity certificate under the national framework, rather than participate in the state-based scheme. This could affect participation in local schemes, including the compliance schemes that seek to identify very specific outcomes to be protected to offset damage done by development projects. However, under Option 2, to the extent that outcomes can be tailored to State-Local based biodiversity priorities and site-specific needs, state or territory budgets would be relieved of obligations, freeing funds for other priorities Option 2 would represent a new product in the market and potential investment for those who might have otherwise invested in a state-based scheme. There may be some level of uncertainty for investors while the market is being established, 14 Based on the current assumption that CER costs are around $7 - $8 million a year. DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 11

and some may choose to wait and see what the market can offer them before investing. Option 2 would require support to NRM bodies to upskill them as a source of information across regional Australia. There may also be a new regulatory obligation placed on states and territories, who would be responsible for noting the existence of a biodiversity project on land title. However, as with the carbon scheme, the intention would be for the CER to notify the states of the existence of a project, but not require any action be taken on that notice. If the state or territory chooses to act on it, then it may take on additional responsibility for managing the notification of encumbrances on land title for the purposes of property transactions. During consultation with the various states and territories it was not felt that this burden would have much of an impact beyond what is already created by the carbon market. State and territory governments may seek to leverage opportunities to facilitate private investment through the scheme. This market would also create a nationally consistent approach to describe and measure biodiversity outcomes and allow coordination between state and national approaches. Environment As projects by individual landholders come online at the rate of approximately 1000 per year, spread across the Australian landscape, and offer biodiversity protection or enhancement, there would be an initial slowing of the rate of decline in biodiversity and then potentially an increase in biodiversity. Environmental gains such as these are challenging to monetise, but with an assumption of 1000 new biodiversity protection or enhancement projects established each year, the option has the potential to enhance significant regions of the Australian landscape. A network of new biodiversity projects that grows year-on-year across Australia would mean significant potential for the following: • more trees being planted in areas that were formally bare and likely eroded • water quality improvements from reduced runoff • added habitat for species that will allow space for them to recover and reproduce • commitments to protecting unique or endangered existing habitat • Landholders with additional, diversified income streams may also find it easier to stay on their land and continue their primary agricultural business, allowing more small farmers to stay in business. Projects are likely to contribute to the reestablishment of ecosystem functions such as pollination and erosion control. The revegetation would also contribute to drawing down and storing carbon dioxide from the atmosphere, generated to provide an additional income stream to landholders. Increased biodiversity is expected from the creation and existence of this market. The extent to which landscape restoration could be achieved is uncertain and highly dependent on uptake, however there is potential for achieving 30% restored landscapes as a result of Option 2. Landholders The existence of a market that supports biodiversity projects in exchange for money from private buyers has the potential to benefit landholders who choose to participate through an additional income stream to their usual activities. This additional income stream, and potential to couple a biodiversity project with a carbon project would provide farmers with the ability to diversify their income, increasing their resilience in challenging times. In the carbon market there are often concerns about the market creating an opportunity for local landholders to sell their property to a company or larger entity to purchase land for the purpose of creating biodiversity outcomes exclusively. The argument is that this encourages those buyers to just "lock up and leave" the project, which has consequences for the neighbours and the community if their populations continue to decline. But in this market, the intention is for the rules to focus on active management and limit the conversion of entire properties to biodiversity projects. An ability to trade farm biodiversity goods and services and negotiate the price with private investors would provide farmers the financial incentives to be able to dedicate select portions of their land to biodiversity outcomes. Depending on the circumstances, this could include: DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 12

• Portions of land within a larger property that might be less suitable for the primary agricultural activity occurring on the property • Land that is already dedicated to carbon farming projects where there may be a second source of income available, and • Land where reforestation or other activities that might enhance biodiversity outcomes could have flow on benefits for the property, such as creating wind breaks or protecting waterways. Farmers would have limited obligations in the event of a natural disturbance to their project. Generally, farmers would be required to ensure vegetation and species are able to recover. Different requirements may apply to projects involving particular species or eco-systems. The scheme would have different rules in the event of a significant reversal of biodiversity outcome due to intentional acts or omissions of the proponent that would ensure that any purchaser of the related biodiversity certificate was made whole, through the provision of equivalent biodiversity certificate or otherwise. Costs to participate Choosing to participate in the market would come with two types of costs to a landholder. The first are the upfront or on- ground costs to deliver a biodiversity project, which are not being considered a regulatory burden measurement because they would be costed into the project itself during the development phase. As the scheme is voluntary, farmers would only proceed with the project if the price offered covers the costs of the project and provides a reasonable return. Information from the Agriculture Stewardship pilots indicate that projects meeting the criteria set out for those pilots could range from $65,000 to $175,000 on average over 10 years but would vary considerably by region and type of project being implemented. DAWE would put other programs in place to support farmers wishing to participate in the market, such as tools, advice and materials to assist them in assessing their potential costs and benefit of running a project on their property. The farmer could then go into the market and find someone willing to pay that price or more to support the project. The main cost impost on the farmer would be the time involved in assessing the opportunity and determining whether to proceed to develop and price the project. The second type of costs are the administrative or in-kind costs that each landholder would need to pay to participate in the scheme and which here represent the regulatory burden measurement of the scheme. These costs include application costs, securing consents to establish the project and ongoing monitoring and reporting costs. All scheme participants would have to cover some in-kind costs associated with delivering a project. These Regulatory burden measurement costs include the following: • Application process: prospective participants will be required to submit an online application form that includes personal and company details, information about how the project is going to be undertaken including which protocol and accompanying documents. • Eligible interest holder consent: to support the application process prospective proponents may be required to obtain consent from interest holders on land such as banks and non-exclusive native title holders. • Reports: project proponents could be required to report on their project. Reporting periods are being considered and would likely vary by protocol but could be every two to five years, meaning there will be up to 5 reports over a 10-year period. • Crediting application: project proponents could be required to submit one crediting application based on project reports once during the project period. • Notices: project proponents will be required to notify the Commonwealth where certain events occur. This could include a change in project proponent, a natural disturbance such as bushfire or where the proponent ceases to be a fit and proper person (e.g., bankruptcy). These notice obligations are unlikely to occur for all proponents - and it is assumed that there will be an average of one notification requirement over the life of each project across the scheme. • Support for Commonwealth audit activity: as part of Commonwealth's assurance process, the responsible agency would likely conduct an "annual audit program" through which each year a small proportion of projects would be subject to an external audit. While this type of audit would be paid for by the Commonwealth, there may be in kind DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 13

costs for proponents relating to answering auditors' questions, providing documents and potentially escorting auditors during site visits. It is estimated that the average number of hours required for each audit would be eight. It should be emphasised that not all projects would be audited, and that many Commonwealth audits would be undertaken on projects where there are known or suspected compliance issues. For the purposes of this exercise this will be further considered during the design phase; it is assumed that around a quarter of all projects will be subject to audits over their project period. The indicative cost of these in-kind costs is estimated at $340/year for 10 years of the project, as follows: Regulatory Burden Measurement Costs Item Hours Cost per hour Number of times Total cost Application process 4 $100.00 1 $400.00 Eligible interest holder consent issues 4 $100.00 1 $400.00 Reports 4 $100.00 5 $2,000.00 Crediting applications 3 $100.00 1 $300.00 Notice costs 1 $100.00 1 $100.00 Support for CER audit 8 $100.00 0.25 $200.00 Cost over 10- year life of a single project $3,400.00 Cost per project per year $340 Annual regulatory burden $1,700,000 Consistent with recent regulatory reforms under the CFI scheme, where reasonable, assurance will be supported through mechanisms like information sharing between the CER and other government agencies, and the use of geospatial data. This is the approach that was practicable for farmers participating in the Agricultural Biodiversity Stewardship Package where they are now not required to undertake audits at their own expense, and there is no financial cost for undertaking audits for these participants. The Commonwealth would also develop online tools that allow participants to upload assurance information as projects are undertaken at marginal cost. For example, allowing time and location stamped photographs of planting to be uploaded at the time it occurs. Despite this, it is possible that external audits paid for by participants would occur for a small proportion of premium projects that lead to very specific outcomes such as population by specific fauna. Implications for land title The creation of a tradable personal property that is contemplated under Option 2 would influence the willingness to participate in the market both from the supply and demand side. With farmers being more likely to participate since they would be generating personal property which can then be traded, providing a level of confidence that if they participate in DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 14

the scheme, they will have something of value at the other end. It would also positively influence buyers of the certificates, by providing assurance in what they are purchasing and transparency. The intention of the scheme is that biodiversity stewardship projects would get noted on the title of the land where they occur, but that the person who is registered as the proponent of the project on the Register would be the one with the legal obligation to maintain the project, regardless of ownership of the land. In fact, the scheme would allow people who are not the current owners of the land to register a project on behalf of the landholder with consent as the carbon market does. Any regulatory enforcement actions would be taken against the person registered as the proponent of the project. In the event of a land sale, there would be provisions for the new owner to voluntarily take over as the proponent of the project, but they would not be obligated to do so; this would have to be a matter of negotiation between a buyer and seller of a property and potentially the proponent of the project as well if they are not the same as the seller. The seller of the property would be motivated to ensure this transfer of responsibility, otherwise would remain liable for a project even after selling the land. This could complicate an otherwise more straightforward land transaction and is something that both buyers and sellers of property would need to understand. Broader community and economy Option 2 would focus on public good outcomes to meet existing state and federal biodiversity targets. This would help ensure that the addition of the 1000-1500 new projects a year would provide opportunities to a wide set of stakeholders and add to the achievement of existing biodiversity targets set by individual states. However, the Government can only suggest areas of interest but would not be able to control the type or location of projects in a market. Australians would enjoy social and environmental benefits from the operation of a scheme that encouraged the voluntary protection or restoration of biodiversity. The establishment of a market for biodiversity outcomes would support corporate sustainability goals and provide an opportunity for companies looking to improve their social license to operate. Risks and unintended consequences The primary risk of this option is the potential impact of natural disasters on the market and the temporary disturbance this can cause before the systems are able to regenerate. As noted, the scheme would be intended to operate such that, so long as a landholder made reasonable efforts to follow the obligations set out in the biodiversity protocols towards recovery, then there would be no non-compliance. This does not address the loss of biodiversity inflicted by the natural disturbance at that moment and could delay the outcomes that had been achieved by the market or impact the purchaser of the certificate affected by the incident, however the biodiversity risks would be considered as part of the biodiversity protocol development and by the expert advisory group. Another risk is that participants in the market do not behave in line with the protocols or rules and default on their obligations to maintain their projects. Or that the protocols and rules are not right and end up leading to no outcomes or even perverse environmental outcomes. These risks however would also be considered as part of the biodiversity protocol development and by the expert advisory group. It is possible the market may result in unanticipated outcomes. For example, buyer preferences could favour certain types of landholders or certain regions of Australia over others, even if they are not the areas where the greatest biodiversity gains can be achieved or if it leads to too many of one type of project and not enough of others to get true biodiversity gains for Australia. The legislation makes provision for the rules to specify excluded biodiversity projects. In deciding whether to make rules the Agriculture Minister would have to consider if there is a material risk that the kind of project would have a material adverse impact on one or more of the following: • the availability of water • biodiversity (other than the kinds of biodiversity to be addressed by the project) DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 15

• employment • the local community • land access for agricultural production. The purpose of this provision would be to enable the Agriculture Minister to ensure that biodiversity projects do not have unintended, adverse impacts. Other potential risks of a scheme include participants becoming disenchanted with the market or never taking it up in the first instance, some reasons for this might be: • Perceived as too complex or burdensome • The price buyers are willing to pay is not high enough to compensate farmers for the costs to deliver their projects • Uncertainty over price that can be obtained • No buyers • Oversupply or undersupply distorts the market Total costs and benefits for option 2 A comprehensive cost benefit analysis of this option is challenging because the quantum of potential benefits that can be achieved under any market-based option is dependent on factors that cannot be determined in advance, and which would vary based on market design: • Ease of implementation to encourage supply • Uptake by private and public investors to deliver biodiversity outcomes at scale And these two factors feed on each other in terms of the supply needing to meet the demand to maximise the outcomes for the environment and market participants and in turn the overall benefit to Australians. However, the benefits for option 2 indicate the potential, significant environmental social and economic returns that could be achieved with a biodiversity market in place. The option would require a relatively minor investment from the Commonwealth for its establishment, enforcement and ongoing administration. The remaining costs of this option would be borne by the individual participants in the scheme, who would then be compensated by the private buyers in the market when they sell their certificate. The private buyers of these outcomes would bear the costs but earn their reputational boost and social license to operate in exchange. On balance, this indicates that the potential benefits are likely to outweigh the cost of establishing a national biodiversity market for Australia. Option 3 - Government funds restoration Option 3 includes a coordinated Government effort to support biodiversity outcomes on the ground. The option would continue the Agriculture Stewardship pilot model, rolling it out on a broader scale to achieve biodiversity outcomes with ongoing funding from the Government to achieve this. Government Option 3 would involve the Australian Government funding the restoration of biodiversity itself. For comparative purposes, Option 3 assumes that 1000 new projects will be funded per year. Based on the experience of the Agriculture Stewardship pilots, it costs up to an average of $175,000 over ten years to deliver one biodiversity project. Broken down evenly over the 10 years, this is $17,500 per project per year, or $17.5 million a year to deliver 1000 projects, plus an additional $2.5 million in administrative costs per year for DAWE for a total of $20 million a year. The administrative costs would be to support the design of the program, assessment and selection of projects, and then monitoring and managing the contracts. This would DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 16

also include external technical expertise that may be required to support the program on an ongoing basis. This cost estimate does not take into account growth in demand. Government would be responsible for defining the sets of activities that landholders would be expected to undertake in order to achieve the desired biodiversity outcomes. This would entail maintaining a team in DAWE to continue to refine the requirements for participation, design and take applications, assess them for potential outcomes and contract with the landholders offering the best value for money outcomes in terms of biodiversity for Australia. Ongoing departmental resources would be required to administer the contracts with the landholders and to undertake monitoring, evaluation and reporting of the outcomes. States and Territories States and territories' concerns over the potential impact on their own schemes could be raised, similar to those for Option 2 where this could divert some participants away from state-based schemes. However, like Option 2 this impact could be managed through consultation between governments and alignment between state priorities and the projects selected. This option would not impact on or deter investors into state-based schemes since there is no market component of Option 3. Moreover, federal funding of biodiversity would relieve the states of obligations to fund these projects. Environment Similar benefits for the environment are expected as for Option 2 with Government directly funding the 1000 protection and restoration projects. Option 3 would result in a slowing of the decline in biodiversity followed by an increase in habitats and restoration of ecosystem services. However, would not deliver long term growth in projects as is limited by government funding. The benefit to the environment could be maximised under Option 3, as the Government could tap into local and national expertise to set a comprehensive nationwide strategy for where the most important biodiversity gains can be found and could implement this strategically across the landscape to obtain better outcomes and connectivity of outcomes. Moreover, the bulk of the funding would go directly to landholders to undertake the necessary activities and there is thereby a level of assurance that the projects would occur once the funding was provided and an agreement in place. Landholders Option 3 would see landholders get funding and support to protect or revegetate the more marginal areas of their productive land. There would be costs to implementing the actions necessary to achieve the biodiversity outcome, but under this option they would be funded by the Government. This would mean a financial benefit to landholders, with project activities paid for and an incentive payment on top to encourage uptake. Not all landholders would be approached under this scheme, as the Government would be identifying the areas where they can get the most outcomes with the least impact on production and focus on the most degraded landscapes. This may leave some willing landholders without an option to receive any financial incentive for protection or enhancement of biodiversity on their properties. The scheme would operate via contracts with individual landholders, meaning it would operate and provide benefits pursuant to the individual contract. It would not create a new form of personal property. However, some level of assurance that the biodiversity benefits would be maintained on that property in exchange for the funding to execute it would need to be established via a contractual arrangement and would likely include a notation on title to ensure that it runs with the property. This may lead to either real or perceived impacts on the value of a property with this type of project registered against it as there would be obligations to maintain the outcomes for a certain time. Again, this is likely a matter of timing of the sale. If all payments have been made and only a permanence obligation remains, a potential buyer may consider this to be an impediment to use of the property, as they would have an obligation to maintain a portion of their property in a certain way without any compensation. However, if there are still some ongoing payments being made, then the potential purchaser would likely gain additional income through the contract/project. Broader community and economy It is expected that many of the same community, economic, and social impacts described in Option 2 under a market-based scheme could also be realised if the Government were to fund the 1000 restoration projects itself. However, no increase in DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 17

projects beyond 1000 would be achieved. 1000 new projects per year would impact the broader community and economy in terms of creating regional jobs to assist with plantings and fencing projects, injecting money into the local supply chain for supplies to undertake the project, putting money into the pockets of local landholders and creating demand for native trees to be planted. There is no impact on the private sector with this option, and the impacts on them would be the same as under the status quo. This option does not provide any opportunity to support corporate sustainability goals. Risks and Unintended Consequences As with Option 2, the primary risk with this option is the potential impact of natural disasters on the biodiversity secured through these projects. With this option, a natural disaster could potentially wipe out any of the biodiversity gains achieved through the projects and a temporary loss would be suffered as the systems regenerate post disaster. A further risk is that the activities set by Government do not lead to the expected outcomes in biodiversity gain. This could arise due to incorrect selection of the set of activities for the landholders to undertake, which do not lead to the anticipated outcomes. This could also arise due to poor specification of contract terms such that landholders sought to minimise their obligations and maximise access to funds. There is also a risk that landholders will not want to engage through this type of grant or contracting program directly with the Government, such that projects in certain strategic areas would not actually be delivered. There is also a risk of non-delivery by the contracted landholders, or that they will not maintain the gains once the contract payments have concluded. The Government would be put in a position if that were the case to enforce against the landholders, which can be challenging to manage. Total costs and benefits for option 3 The benefits for Option 3 indicate potential significant environmental social and economic returns, albeit at a much higher cost to Government. The ability to control the projects that are selected and funded is a distinct advantage in terms of the biodiversity outcomes that could be achieved due to the ability to strategically select projects. 5. Consultation DAWE has been exploring the potential approaches with stakeholders specifically with the farming, environmental and business sectors. It has also consulted other government departments and discussed with the Clean Energy Regulator to learn about the regulatory functions it performs for the carbon market. Targeted consultation on a legislative framework to underpin a national voluntary biodiversity stewardship market was undertaken during November and December 2021. Consulted parties had consistent views that there are willing cohorts of both buyers and sellers, but that the high costs of transaction and lack of certainty about the definition and delivery of biodiversity outcomes was the most significant impediment to increased private investment in biodiversity restoration. There were strong views provided by stakeholders that an overarching legislative framework was needed and until that was in place the market and the resulting biodiversity outcomes on farmland will not be realised. Key messages Below is a list of key messages received in the consultation process and the issues that will need to be investigated further in 2022 ahead of implementation. • There is broad support for Option 2, enabling the Australian Government to intervene and introduce legislation that facilitates the trade of farm biodiversity stewardship projects and establishes an assurance system for outcomes on a voluntary basis. All stakeholder groups interviewed were of the view that government legislation is needed that will give participants confidence and foster investment in farm biodiversity stewardship projects. Specifically: o Address legal rights through a tradable certificate DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 18

o Deliver transparency specially through a national registry and o National consistency to measuring the biodiversity outcomes • Most stakeholders highlighted the potential and importance of streamlining arrangements under various markets and schemes including carbon, and state and territory biodiversity approaches. Bringing on simplicity, transparency and consistency will maximise participation and therefore investment in environmental outcomes. • State and territory governments broadly supported the concept of an umbrella/national voluntary scheme but indicated their strong interest in working closely with the Australian Government to ensure compatibility and avoid duplication/competition. o There is some concern from some state governments that this initiative could impact on their own schemes - either by providing a competing option for landholders or creating uncertainty in the market for buyers. DAWE will be working with these states to ensure as little impact on their schemes as possible. o The legislation is intended to provide a pathway for landholders to participate not only at the national level but also in state schemes where the programs are rewarding different activities or outcomes and there has been commitment to work together to maximise the benefit that these schemes provide to landholders. • Stakeholders indicated the need to keep the scope as broad as possible in terms of the types of projects (protection covenants, restoration and maintenance), the eligible suppliers (farmers and other landholders) and the potential buyers (corporates, philanthropic and compliance buyers). • Multiple stakeholders were interested in the process for developing protocols that outline the requirements, methods and measurements for different types of projects under the scheme. Some of them were interested in participating in such process in 2022 and offered their expertise in biodiversity, markets and investment and the farming sector. • A recurring issue was the need for information to assist market participants including guidelines, prices, standard contracts, training of advisers, trading architecture etc. This will be an important aspect in the implementation of the scheme. • Stakeholders supported the concept of registers that provide information to market participants about key attributes of projects and assist with regulation of claims. Comments were also made in favour of doing so while protecting privacy of project proponents. • Stakeholders were conscious that information about the market will take some time to build, especially what relates to demand and supply. That is, what buyers are interested in and value the most and what kinds of biodiversity outcomes farmers are willing to offer and at what price. However, there was wide recognition that there is need to make as much information available as soon as possible when implementation kicks off. • Some stakeholders inquired about periodic assessment and reporting on the scheme outcomes/effectiveness. DAWE will continue to engage with selected stakeholders in 2022 to work through issues relating to protocol development, land tittle issues, market development requirements and any others that may arise. Stakeholders consulted Consulted stakeholders include around 60 organisations representing the agriculture, business, finance, research and DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 19

conservation sectors as well as other Commonwealth departments15 and most state and territory governments16. DAWE also held individual meetings with various stakeholders who requested a more detailed discussion on the proposal 17. Agricultural sector workshop Sheep Producers Australia (SPA) Australian Grape and Wine Inc. Birchip Cropping Group Red Meat Advisory (RDA) AgriFutures Australia Farmer -Victorian beef producer Cattle Council Australia (CCA) Meat and Livestock Australia (MLA) Grain Growers Australia (GGA) Council for Rural RDCs Dairy Australia (DA) Cotton Australia Farmers for Climate Action AusVeg National Farmers Federation (NFF) Environmental bodies/NGOs/Research workshop Accounting for Nature National Landcare Network Australian Land Conservation Alliance NRM Regions Queensland NRM Regions Charles Darwin University (CDU) Greening Australia Places You Love CSIRO Australian Conservation The National Trust of Western Environmental Defenders Office Foundation (ACF) Australia (NTWA) Green Collar Humane Society International Birdlife The Nature Conservancy University of New England (UNE) Wilderness Society WWF Industry workshop Australian Farm Institute Coles Minerals Council of Australia Ecomarkets Australia Woodside Business Council of Australia Woolworths Carbon Market Institute Financial sector/market specialists' workshop NAB Marketplace for Nature Commonwealth Bank Macquarie EY Pollination Climate Change Authority 6. Analysis of the best option Both a legislative framework (Option 2) and direct funding of biodiversity outcomes (Option 3) would be more expensive than the status quo, but both also offer the hope of reducing biodiversity decline. Option 1, maintaining the status quo, would result in further significant declines in biodiversity in the future. Options 2 appears to be a more effective means for achieving biodiversity outcomes. This is primarily due to the costs of Option 2 being considerably lower than Option 3. Option 2 provides opportunities for the private sector to contribute to 15 Includes Department of Industry, Science, Energy and Resources, Department of the Treasury, Department of Finance, Department of Prime Minister and Cabinet, Department of Foreign Affairs and Trade and the Clean Energy Regulator. 16 Includes New South Wales, Victoria, Queensland, Tasmania, and Western Australia. 17 Including National Farmers Federation, The Nature Conservancy, Greening Australia, Places you Love Alliance, Green Collar, Indigenous Desert Alliance, Pollination and Birdlife. DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 20

better biodiversity outcomes in Australia by entering the market as purchasers consistent with promoting corporate sustainability goals. The Australian Government regulatory framework has the capacity to harness scientific knowledge to develop nationally consistent, clearly articulated approaches to undertaking biodiversity stewardship projects for a market, and to conduct assurance and verification activities over the outcomes to lend certainty. The Commonwealth can access academic and specialist advice and provide for increased scrutiny of those protocols by making them disallowable instruments. The Government taking on this role provides buyer confidence that biodiversity outcomes will be achieved. Stakeholder consultation indicated that unless government takes on the regulatory role the private sector is unwilling to participate in the market. As noted, the cost benefit assessment was challenging to quantify due to the inherent challenges in assigning a monetary value to environmental outcomes, challenges in forecasting the likely participation level and the likely growth of the market. On this basis, a highly qualitative cost benefit assessment was undertaken. Despite this context, the very significant opportunities presented by the proposed national biodiversity market provide a strong case that option 2 is likely to provide the highest net benefit. 7. Implementation and review A staged implementation is planned, whereby the legislation that is introduced creates a framework for the market to be established and administered and the further detail about its commencement and operation is captured in other legislative instruments that will be drafted and introduced after further consultation. This will allow the Clean Energy Regulator to prepare to take on the administration of the scheme and the Expert Committee to convene. Ongoing consultation will focus on the key elements of the supporting legislative instruments that will allow this market to have the greatest net benefit as identified above: the ease of implementation and aspects which will encourage the widest uptake by the private and public sectors. DAWE will continue to draw on expertise and support provided by stakeholders, consultants, and experts in biodiversity and the lessons learned from the Agriculture Stewardship pilot programs. The Australian Government will continue to work with the states and territories to ensure compatibility of the scheme with any overlapping programs in their jurisdictions to optimise and streamline the options for landholders. To mitigate any impacts of the introduction of the market, the Commonwealth has already committed to work with the other governments to ensure as much consistency between the new market and existing schemes as possible and to streamline the information and communication with potential participants. Through a collaborative approach to this, a national legislative framework approach has the potential to provide a pathway for linkages with state-based approaches. The national framework will be designed in a way that would allow for a national approach to emerge over time. This would include engagement on consistent approaches to measuring biodiversity outcomes, approach to land titles and preventing any duplication of on ground assessment and compliance and incorporating this into the scheme design. It will take time to reach to achieve alignment and involve some uncertainty in the interim. States and territories may need to investment time in to understand how a national scheme might intersect with their existing programs and land title registers. States and territories may face questions from constituents about the scheme and how to participate, so education of other governments will also be necessary to alleviate this potential burden. The Commonwealth will support Natural Resource Management bodies as a source of information across regional Australia. Implementation challenges The implementation of the proposed legislation has several implementation challenges and risks. These are discussed below. Ensuring the best regulatory settings The first is that as an emerging market, it will be important to establish the correct framework settings for best managing the biodiversity market. In developing draft legislation, DAWE will use the CFI Act as a general model with its core themes of: DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 21

• Codified processes for achieving environmental outcomes • The establishment of projects from willing proponents • The issuance of certificates for environmental outcomes, and • The Australian Government taking responsibility for ensuring compliance through the project including over any permanence period. However, within these broad settings, there are many decisions to be made, and the real risk that some of the initial settings inhibit the healthy development of the biodiversity market. To address this issue, DAWE will undertake three actions: • engage with experts and state government officials who have expertise and experience in design and operation of environmental markets to develop the scheme • draft a Bill that has sufficient flexibility to adjust settings through legislative rules - this is an approach that has worked effectively in the CFI, and allows regulatory settings to be adjusted to best meet the needs of a developing market • the legislation will be subject to internal administrative review 24 months after the scheme opens to applications, and a legislative review will be carried out five years after the scheme opens to applications. Measurement of biodiversity The cost-effectiveness of the preferred option will be strongly influenced by the transaction costs for participation in the program, and the approach to the measurement of biodiversity will likely represent a large proportion of these costs 18. This measurement, as far as possible, will be based on a nationally consistent, spatially explicit classification scheme and approach to condition assessment. While there is currently no nationally agreed approach to biodiversity measurement that is 'fit for purpose' for the preferred option, the development of the measurement framework will assess, adapt and/or combine a range of existing approaches and datasets to support the implementation of the program, including: - National Vegetation Information System (NVIS) - Australia's Terrestrial Ecosystem Research Network (TERN) - Ecosystem accounting, under the Australian Government's Strategy and Action Plan for Environmental-Economic Accounting. - Other environmental datasets held by DAWE. Key criteria for the establishment of a measurement approach will be a dataset with spatial and temporal resolution sufficient to discriminate change within the ecosystem targeted by the project. As with other biodiversity programs, remote sensing datasets will need to be complemented by expert-driven field assessment. Ensuring effective administration of the legislation The second challenge relates to ensuring that the legislation establishing the scheme is well administered. Again, as a new area of regulation for the Australian Government, there is a risk of legislation being administered in a way that does not provide ideal market outcomes. This risk is being addressed through the day-to-day regulatory powers and responsibilities being provided to the Clean Energy Regulator. The Clean Energy Regulator is a well-established environmental regulator that has significant experience in regulating land based environmental projects (in a context where most biodiversity projects are likely to also be registered as eligible offsets projects under the CFI Act), strong compliance and enforcement arrangements, a register of environmental auditors and an annual audit program. Perhaps most significantly, it acts as a "market" regulator (as opposed to simply an environmental regulator) and is very experienced at creating the environment for solid transparent markets supported by mechanisms to encourage competition, and the frequent publication of market data that informs both buyers and sellers of potential business opportunities. 18 OECD - Paying for Biodiversity (2010) DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 22

Review DAWE will monitor and review the new legislation on an ongoing basis through the ongoing consultation it has committed to. Careful consideration will be given to the feedback from potential future participants and buyers in the biodiversity market and the states and territories that might be impacted by it. DAWE will make any necessary changes to the supporting legislative instruments to incorporate this advice and will have ample opportunity to respond and amend accordingly. Given the uncertainties associated with creating a new property right and market, a Post Implementation Review will be undertaken within 2 years from commencement of the Legislation. DEPARTMENT OF AGRICULTURE, WATER AND THE ENVRIONMENT | Pathway to a National Voluntary Biodiversity Stewardship Market 23

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