Future directions for native vegetation in
Victoria
Review of Victoria’s native vegetation permitted
clearing regulations
Consultation paper, 14 September 2012
Future directions for native vegetation in Victoria – Review of Victoria’s native
vegetation permitted clearing regulations Consultation paper
Published by the Victorian Government
Department of Sustainability and Environment
Melbourne, September 2012.
© The State of Victoria Department of Sustainability and Environment 2012
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accordance with the provisions of the Copyright Act 1968.
Authorised by the Victorian Government, 8 Nicholson Street, East Melbourne.
ISBN 978-1-74287-616-0 (online)
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Cover image: DSE, Black Swamp, northeast Victoria
1
Table of contents
1.
Minister’s foreward ............................................................................................... 3
2.
Purpose of this consultation paper........................................................................ 4
3.
Native vegetation and the role for government.................................................... 6
3.1.Benefits of native vegetation ........................................................................... 6
3.2.The role for government .................................................................................. 7
4.
Victoria’s native vegetation ................................................................................... 8
4.1.Status of Victoria’s native vegetation .............................................................. 8
4.2.Challenges facing Victoria’s native vegetation ................................................ 9
5.
Victoria’s native vegetation policy framework .................................................... 11
5.1.Objectives for native vegetation management ............................................. 11
5.2.Government activities to manage native vegetation .................................... 12
5.3.Performance of the Victoria’s Native Vegetation Management - A
Framework for Action .......................................................................................... 14
5.4.Native vegetation permitted clearing regulations ........................................ 16
6.
Review of the permitted clearing regulations ..................................................... 19
6.1.Background to the review of the permitted clearing regulations ................. 19
6.2.Principles guiding the review of the permitted clearing regulations ............ 19
6.3.Issues identified with the permitted clearing regulations............................. 19
7. Reform directions for permitted clearing regulations ...........Error! Bookmark not
defined.
7.1.Reforms aim to build on the current system .... Error! Bookmark not defined.
7.2.Summary of proposed reforms......................... Error! Bookmark not defined.
7.3.Priority reforms ................................................. Error! Bookmark not defined.
7.4.Supporting reforms ........................................... Error! Bookmark not defined.
Appendix 1 – Previous reviews of Victoria’s native vegetation policy Error! Bookmark
not defined.
Glossary ........................................................................... Error! Bookmark not defined.
2
1. Minister’s foreword
Native vegetation is important for Victoria’s biodiversity. It provides habitat for
plants and animals and a range of ecosystem services essential for human wellbeing.
Managing native vegetation effectively and sustainably is important. Regulations
dating back to 1989 have worked to prevent broad scale clearing of native
vegetation in Victoria, and have limited the impact of land use change on
biodiversity.
There has been a succession of reviews and reports into the native vegetation
arrangements during the past decade, which have highlighted a range of concerns
and areas for improvement.
It is timely that the government undertakes a comprehensive examination on how
we can improve the system in order to identify opportunities for better and more
targeted environmental outcomes, with reduced regulatory burden and lower costs
for landholders and the community.
The review examines the outcomes of earlier investigations. For example, a 2009
Victorian Competition and Efficiency Commission report, A Sustainable Future for
Victoria: Getting Environmental Regulation Right, sought greater clarity on the use of
the 'no net loss' principle in the assessment process. We want to measure whether
such recommendations were effectively implemented and seek community input to
drive further improvements.
We are determined to improve the government’s performance as an environmental
regulator, while enhancing the integrity of the permitted clearing system. This will
mean less red tape, more transparent decision making and increased certainty for
landholders. Most importantly, it will mean stronger environmental outcomes.
We are now seeking your feedback on ways to streamline and improve native
vegetation arrangements to provide greater certainty and clarity.
To assist in providing feedback, this consultation paper sets out proposed future
directions for native vegetation policy in Victoria.
I encourage you to read this consultation paper and share your thoughts and views.
The Hon Ryan Smith
Minister for Environment and Climate Change
3
2. Purpose of this consultation paper
Background
Victoria’s Native Vegetation Management – A Framework for Action (NVMF) was
introduced in 2002. It stands as the principal policy for managing Victoria’s native
vegetation, including the removal of native vegetation.
The rules governing the removal of native vegetation in Victoria sit within
Victoria’s planning system. These rules are known as the ‘permitted clearing
regulations’. The NVMF is incorporated into Victoria’s planning schemes to inform
the application of the permitted clearing regulations.
Focus of the review of Victoria’s native vegetation policy
Since the introduction of the NVMF in 2002, Victoria’s environment, economy and
demography have changed, and science and technology have advanced. In response
to these changes, and to the findings of previous reviews, the Victorian Government
considered it timely to undertake a review of Victoria’s native vegetation policy.
The overarching objective of native vegetation policy, and the activities undertaken
to achieve it, were considered as context for this review. However, they were not
the main focus of attention. The two matters at the centre of the review were:

the objective of the permitted clearing regulations

the efficiency and effectiveness of the permitted clearing regulations in
achieving this objective.
This consultation paper outlines:

the benefits of native vegetation and why government intervention is
required to ensure these benefits are delivered (Section 0)

the status of native vegetation in Victoria, and current native vegetation
policy objectives and settings (Section 0 and 0)

issues identified with the design and implementation of the permitted
clearing regulations (Section 0)

proposed future directions for Victoria’s permitted clearing regulations, both
in relation to their objective and the policy settings required to achieve it
(Section Error! Reference source not found.).
Stakeholder feedback is welcomed
The purpose of this consultation paper is to give stakeholders and the community an
opportunity to provide feedback about:

issues identified with the current permitted clearing regulations
4

the four priority reforms, and five supporting reforms, proposed to address
these issues

issues related to implementing the proposed reforms.
Written submissions can be provided by email or post by 19 October 2012 to:
Native Vegetation Review
Department of Sustainability and Environment
PO Box 500
East Melbourne VIC 3002
Email: nativevegetation.review@dse.vic.gov.au
This feedback will form an important input to the Victorian Government’s decision
making regarding the future permitted clearing regulations. The government will
consider feedback before deciding its preferred approach. Based on this preferred
approach, a series of draft documents detailing the technical and implementation
changes to the permitted clearing regulations will be released for public comment.
These documents will include:

proposed amendments to the Victoria Planning Provisions, including
information requirements and decision guidelines

proposed approach to measuring the biodiversity value of native vegetation

proposed amendments to the rules for the offset market.
5
3. Native vegetation and the role for government
3.1 Benefits of native vegetation
Biodiversity conservation is an essential component of responsible environmental
and natural resource management. It is fundamental to quality of life and supports
our economy and productivity, both now and in the future. A keystone of Victoria’s
biodiversity is its native vegetation. Native vegetation comprises plants that are
indigenous to Victoria, including trees, shrubs, herbs and grasses.
Native vegetation provides habitat for native animals. It delivers a range of
ecosystem services that make the land more productive and that contribute to
human wellbeing. The benefits provided by native vegetation can be separated into
the following categories.
Use values
Use values involve people physically using or experiencing native vegetation and the
attributes it provides, and deriving value from this use. These use values comprise
both direct use values and indirect use values.

Direct use values. These values include benefits to agricultural production,
such as enriching soils, shade for animals, pollination of plants, and native
vegetation as the provider of goods such as honey, timber and pasture for
grazing. Other direct uses of native vegetation include recreation and cultural
uses.

Indirect use values. These values include functional benefits derived from
relying on natural ecosystems for life support functions including providing
clean air, water and other resources, along with the conservation of
biodiversity. Other benefits include resilience to climate change, and reduced
susceptibility to disease and extreme weather events.
Non-use values
There are a range of benefits that flow from native vegetation that are enjoyed
without contact with the native vegetation. These are known as non-use values and
include existence values, option values and bequest values.

Existence values. This means the satisfaction that the community derives
simply from knowing that native vegetation and biodiversity exist.

Option values. These are benefits derived from retaining the option to use
native vegetation in the future without necessarily planning to do so. These
benefits include the value of waiting until a time in the future when better
information is available to inform decisions about the use of native
vegetation.

Bequest values. These values derive from the knowledge that maintaining
native vegetation and biodiversity will benefit future generations.
6
3.2 The role for government
Native vegetation is considered to be a public good. This is because:

many of the benefits of native vegetation set out in Section 3.1 – particularly
indirect use and non-use values – flow to the community as a whole, rather
than to particular individuals (for example, clean air).

some benefits provided by native vegetation can be used simultaneously by
many people without one person’s use impacting another’s (for example,
knowing species exist).
Open access to these common benefits, or public goods, means they are produced at
a lower level than the community desires. Government intervention is generally
required for public goods to be provided at a level that meets community needs and
expectations, that is, the socially optimal level.
Some landholders receive direct private benefit from the native vegetation on their
properties, such as improved soil quality or shade for livestock. However, they are
likely to weigh up the benefits of retaining and managing native vegetation against
other private benefits from alternative land uses, such as agriculture or urban
development. Yet, as native vegetation provides benefits to the community more
broadly, decisions landholders make regarding native vegetation also affect other
community members. Land use decisions made by individual landholders can result
in either costs or benefits to the wider community.
Removing native vegetation comes at a cost to the community. Without government
intervention, landholders who remove native vegetation will not bear the full cost of
the impact their decisions have on biodiversity. Instead, these costs are borne by the
community in the form of reduced environmental benefits. This is called a negative
externality.
The biodiversity benefits delivered by native vegetation are central to the continued
functioning of ecosystems. For this reason, maintaining biodiversity is the key
objective for government intervention in relation to native vegetation.
It is acknowledged that native vegetation provides other benefits, such as reduced
salinity and recreation. These benefits may be linked indirectly to biodiversity, but
ensuring their provision requires different government interventions than those
focussed solely on the biodiversity value of native vegetation.
In many cases, government agencies other than DSE are responsible for delivering
the non-biodiversity benefits of native vegetation. This distinction is addressed in
more detail in Section Error! Reference source not found..
7
4. Victoria’s native vegetation
4.1 Status of Victoria’s native vegetation
Victoria has a broad range of natural habitats including alpine, tall forests, fertile
plains and deserts. The state is home to a diverse array of flora and fauna. Victoria’s
native vegetation is considered in relation to both its ‘quality’ and ‘extent’:

‘extent’ is the area of land covered by native vegetation

‘quality’ relates to how close native vegetation is to its pre-European natural
condition.
Victoria is the most cleared state in Australia. It is estimated that today, Victoria
retains 46 per cent of the original extent of native vegetation. Most clearing has
occurred in accessible and relatively fertile areas. On private land, only 21 per cent of
the original extent of native vegetation remains.1 The native vegetation remaining on
private land supports 30 per cent of Victoria’s threatened species populations.2
Furthermore 60 per cent of remaining native vegetation on private land is of a
threatened vegetation type.3
Native vegetation removal has significantly affected Victoria’s native plants and
animals. Since European settlement in Victoria, 61 species of plants and animals
have become extinct. A further 1,904 species are listed as rare or threatened on
DSE’s Threatened Species Advisory Lists.4 Extinction and decline in species is due in
part to loss of habitat caused by native vegetation removal.
Native vegetation removal has also affected vegetation quality in Victoria. Much of
the vegetation that is protected within National Parks and reserves is in good
condition, with high species diversity. However, native vegetation on private land is
generally of lower quality – it is mostly in small fragmented areas and it faces
ongoing decline from land use activities, weeds and pest animals.
Table 1 summarises the extent of native vegetation in Victoria.
Table 1: Victoria’s land area and native vegetation extent
Total area (ha)
Area of native
vegetation (ha)
Percentage of original
extent of native vegetation
remaining
Public land
8,634,665
7,578,690
88 %
Private land
14,063,955
2,901,659
21 %
Total land
22,698,620
10,480,349
46 %
1
VEAC, Remnant Native Vegetation Investigation: Discussion Paper, May 2010, p. 33 and p.45.
Department of Sustainability and Environment, Native Vegetation: Sustaining a Living Landscape, 2006, p.4.
3 Department of Sustainability and Environment, Mapping of Ecological Vegetation Classes, 2005.
4 Department of Sustainability and Environment, Advisory List of Threatened Vertebrate Fauna in Victoria – 2007 ,
p.6; Department of Sustainability and Environment, Advisory List of Threatened Invertebrate Fauna in Victoria –
2009, p.6; Department of Sustainability and Environment, Advisory List of Rare or Threatened Plants in Victoria –
2005, p.5.
2
8
Source: VEAC, Remnant Native Vegetation Investigation: Discussion Paper, May
2010, p.33 and p.45.
Figure 1 shows the extent of native vegetation that remains on public and private
land.
Figure 1: Native vegetation on public and private land
Map of Victoria shows the extent of native vegetation on public and private land.
4.2 Challenges facing Victoria’s native vegetation
Competition for land use continues to put pressure on Victoria’s native vegetation.
Over the last ten years, both the extent and quality of native vegetation have been
reduced. Extent and quality will continue to be affected by:

population growth and expansion of cities and towns, including growth of
peri-urban and rural living. Victoria’s population increased significantly
between 2002 and 2011, at an average annual rate of 1.6 per cent.5 During
this period, Melbourne’s population grew on average by 68,165 people, or
1.8 per cent per year – 57 per cent of this growth occurred at the city’s edge.6
5
Australian Bureau of Statistics, Regional Population Growth, Australia, 2010-11, ‘Table 2: estimated resident
population, statistical local areas, Victoria’, data cube: Excel spreadsheet, cat no. 3218.0
6 Australian Bureau of Statistics, Regional Population Growth, Australia, 2010-11, ‘Table 2: estimated resident
population, statistical local areas, Victoria’, data cube: Excel spreadsheet, cat no. 3218.0
9

changes in agricultural practices and intensification of agriculture, including
using larger machinery and converting land use from grazing to cropping. For
example, between 2001 and 2010 land used for cropping in Victoria
increased by 945,000 hectares – this means that the proportion of farming
land used for cropping increased from 23 per cent to 31 per cent.7

uses of native vegetation for primary production, such as grazing native
grasses.

the need to manage bushfire risk to life and property. To reduce the risk of
bushfires, new rules have increased the area of native vegetation that can be
cleared around existing dwellings without a permit.8

other human and environmental factors including invasion by weeds and pest
animals, pollution, climate change and extreme natural events.
7
Australian Bureau of Statistics, Agricultural Commodities, Australia, 2009-10, ‘Table 1: agricultural commodities,
national and state – 2009-10’, data cube: Excel spreadsheet, cat no. 7121.0: 2012; Australian Bureau of Statistics,
Agricultural Commodities, Australia, 2000-01, cat. no. 7121.0.
8 Department of Sustainability and Environment, Fire Operation Plans – Approved, 2012,
<http://www.dse.vic.gov.au/fire-and-other-emergencies/planned-burning-an-introduction/fire-operations-plansapproved>, viewed July 2012.
10
5. Victoria’s native vegetation policy framework
5.1 Objectives for native vegetation management
The current policy settings for Victoria’s native vegetation are set out in Victoria’s
Native Vegetation Management – A Framework for Action (NVMF). The NVMF was
adopted in 2002 as Victoria’s principal policy document for managing native
vegetation.
The objectives set out in the Framework rely on the concepts of ‘gains’ and ‘losses’ in
the quality and extent of native vegetation. A loss occurs when extent is lost through
clearing or when the condition of an area of vegetation declines in quality. A gain
occurs when the quality of an area of existing native vegetation is improved, or when
a degraded site is revegetated.
The NVMF sets out the overarching objective (the ‘net gain’ objective) of Victoria’s
native vegetation policy:
‘a reversal, across the entire landscape, of the long term decline in the
extent and quality of native vegetation, leading to a net gain.’9
The NVMF states that the objective of ‘net gain’ can be achieved when:

overall gains in native vegetation are greater than overall losses

individual losses are avoided where possible.10
The objective for the permitted clearing regulations sits beneath the overarching
objective for native vegetation management. The objective for the permitted
clearing regulations is:

‘no net loss of native vegetation for permitted clearing.’11
The application of the permitted clearing regulations is intended to have a neutral
impact on native vegetation. This means that permitted clearing is not expected to
contribute either gains or losses towards the ‘net gain’ objective.
The ‘net gain’ objective recognises the importance of both the quality and extent of
native vegetation. Together, quality and extent are used as a measure of the benefits
that native vegetation can provide. Changes to the quality and extent of native
vegetation produce gains and losses. To meet the ‘net gain’ objective, government
and the community must create gains in native vegetation that exceed the losses.
This ensures that while individual landholders are required to compensate for their
impacts, the community as a whole bears the cost of achieving ‘net gains’.
‘Net gain’ takes account of the following:
9
Department of Natural Resources and Environment, Victoria’s Native Vegetation Management: A Framework
for Action, 2002, p. 5.
10 Department of Natural Resources and Environment, Victoria’s Native Vegetation Management: A Framework
for Action, 2002, p. 5
11
Native Vegetation Policy and Planning Fact Sheet 2010, DSE
11

gains from improvements in the quality, extent and/or security of native
vegetation achieved through government investment and voluntary
measures

no net loss of native vegetation from permitted clearing and other neutral
activities (such as activities that mimic natural processes)

losses in the quality and extent of native vegetation arising from entitled
uses, from unmanaged threats, from illegal clearing, or from native
vegetation removal that does not require a permit.
Figure 2 shows the components of gains and losses that need to add up to greater
than zero to achieve ‘net gain.’
Figure 2: Components that need to sum to greater than zero to achieve net gain in
native vegetation
Figure shows components of gains and losses in native vegetation that need to sum
to greater than zero to achieve net gain.
To measure amounts and changes in native vegetation DSE developed a metric
called Habitat Hectares. This metric multiplies the quality and extent of native
vegetation to give a measure of its value. Habitat Hectares enables the relative
importance of quality and extent to be assessed. The Habitat Hectares metric also
allows different combinations of native vegetation quality and extent to be
compared to each other.
5.2 Government activities to manage native vegetation
Government undertakes a range of interventions designed to improve or control the
loss of the quality and extent of native vegetation. These interventions contribute to
the ‘net gain’ objective for native vegetation. Government interventions
implemented over the last decade are summarised in
12
Table 2.
13
Table 2 Summary of policies and programs related to native vegetation
Types of policies and
programs
Description
Investing in biodiversity
outcomes on private land
Government promotes improvements in biodiversity through various
investment programs. This includes tender programs that use marketbased approaches to procure activities that improve native
vegetation.
Licensing and regulation of
uses of native vegetation
Government protects against the decline of Victoria’s biodiversity by
licensing and regulating the use of native vegetation and activities
that impact on biodiversity assets. Such activities include sustainable
timber harvesting and licensing grazing on public land.
Duty of care requirements
These regulations oblige landholders to avoid causing or contributing
to land degradation which may damage the land of another
landholder. This includes managing weeds and pests, and protecting
soil and water quality.
Native vegetation
permitted clearing
regulations
By applying the permitted clearing regulations, government regulates
native vegetation removal through the planning system.
Parks and reserves
Government adds to and manages the parks and reserves system as
part of the national approach to creating a Comprehensive Adequate
and Representative Reserve System (CARRS).
Coordinating and facilitating
community programs
Government plays a coordinating and facilitating role, assisting
community groups to undertake activities that protect, manage and
improve Victoria’s native vegetation.
Providing information
Education and information campaigns help to ensure that Victorians
are aware of their rights and obligations in relation to the natural
environment. Information is communicated about how to manage
native vegetation for biodiversity outcomes.
Research
Research and pilot programs allow government to find ways to
achieve its environmental objectives more efficiently and effectively.
Managing native vegetation
for public safety
Through planned burning, the government manages the risk to life
and property from bushfires. This burning aims to mimic where
possible the natural regeneration processes of fire.
The Victorian Government implements the policies summarised in Table 2
recognising the need to balance a range of environmental, social and economic
considerations. There are also a number of constraints and competing forces that
make it challenging to find this balance.
Native vegetation policies must be determined alongside the government’s
objectives for community development, economic and employment growth,
affordable housing, other environmental policies, and public safety.
14
There is often uncertainty about how the environment will be affected by particular
actions or threats. While in these instances a highly precautionary approach may
safeguard against the worst case scenario, the costs of this approach need to be
considered. For an intervention to be worthwhile its benefits cannot be outweighed
by the costs it imposes. Furthermore, in certain circumstances the scope of
regulation of activities on private land is limited by existing use rights.
These constraints will continue to have a bearing on Victoria’s native vegetation
policy. They are reflected in the reforms proposed in this consultation paper (see
Section Error! Reference source not found.).
5.3 Performance of the Victoria’s Native Vegetation
Management - A Framework for Action
The focus of this review is the permitted clearing regulations. This review has not
addressed the full scope of Victoria’s native vegetation policy as set out in the NVMF.
However, it is important to consider the ‘net gain’ objective as context for this
review. It is the overarching guide for native vegetation policy, and is linked to the
permitted clearing regulations and their objective. Work has previously been
undertaken by DSE to estimate whether the ‘net gain’ objective of native vegetation
policy had been met.
In 2008, DSE released the Native Vegetation Net Gain Accounting - First
Approximation Report. The report used a combination of mapped and modelled
data, imagery, and assumptions to estimate gains and losses in native vegetation
quality and extent from various causes across different land tenures. The report’s
findings are set out in Error! Reference source not found..
Box 1: Findings of the Native Vegetation Net Gain Accounting – First
Approximation Report
The report estimated that in one year a net loss of 4,090 Habitat Hectares of native
vegetation (a measure of the quality and extent of native vegetation) had occurred
across Victoria.12 The components that contributed to these gains and losses are set
out in Error! Reference source not found..
It should be noted that permitted clearing is not included in Error! Reference source
not found.. The report assumed that the permitted clearing regulations had a
neutral impact on native vegetation.
12
Department of Sustainability and Environment, Native Vegetation Net Gain Accounting: First Approximation
Report, 2008.
15
Figure 3 Estimated components of gains and losses in native vegetation quality and
extent (measured in Habitat Hectares per year)
Figure shows breakdowns of gains and losses in native vegetation quality and extent
for a representative year. Figure also shows net result, a net loss in native vegetation
in the representative year.
These findings indicate that significant net loss is still occurring across the landscape.
Net loss is occurring despite government intervention, including regulation and
investment. Net loss is particularly apparent on private land due to losses from
entitled uses and exemptions from the permitted clearing regulations.
The Native Vegetation Net Gain Accounting - First Approximation Report findings
were based on available data and some broad assumptions, aimed at providing an
estimation of gains and losses of native vegetation in a representative year. The
report identified some gaps in data which prevented a more comprehensive
understanding of the performance of the NVMF being assessed. Since the First
Approximation Report was compiled there have been changes in the drivers of gains
and losses in native vegetation in Victoria, and some new data on native vegetation
and management activities is available.
Work is currently underway to enable a Second Approximation Report to be
prepared. This report will provide an update on changes in the quality and extent of
native vegetation since 2008. This will enable an assessment of the extent to which
the ‘net gain’ goal is being achieved and will be used by the Victorian Government to
inform future biodiversity policy. The Second Approximation Report is due to be
released in 2013.
16
Native vegetation permitted clearing regulations
The requirement for a permit to remove native vegetation was first introduced to
Victoria’s planning schemes in 1989. The regulations that guided implementation of
this requirement became known as the ‘permitted clearing regulations.’ In 2002,
Victoria’s Native Vegetation Management– A Framework for Action (NVMF)
introduced the following policy features in relation to permitted clearing:

methods for measuring predicted losses and gains from native vegetation
removal and from offsetting

conservation significance categories that are used to classify native
vegetation according to its ecological importance

the mitigation hierarchy approach to regulating the removal of native
vegetation. This approach states that native vegetation removal:
o should first be avoided
o if it cannot be avoided, it should be minimised
o if a permit is granted for the removal of native vegetation, it should
be offset

formalised, rules-based offsetting requirements designed to ensure that
losses are offset with equivalent, or commensurate, gains.
In 2003, the NVMF was incorporated into Victoria’s planning system to enable the
application of the permitted clearing regulations. Following the introduction of the
NVMF, a market for offsets emerged. The offset market allowed for third party
native vegetation offset providers to trade with those requiring offsets. In 2006, the
Victorian Government introduced the BushBroker scheme – a marketplace that
facilitated trade between buyers and sellers of native vegetation offsets.
In some cases permits to remove native vegetation are not obtained through the
planning system. In these cases other avenues for assessment and approval of the
removal of native vegetation are used. These other assessment processes apply the
objectives of the NVMF through formal agreements and administrative
arrangements. These include the consideration of vegetation loss for projects
requiring approval under the Mineral Resources (Sustainable Development) Act 1990
and the Environment Effects Act 1978, and for certain impacts on public land.
Similarly, the Code of Practice for Timber Production and the Code of Practice for
Bushfire Management on Public Land have been designed with the aim that timber
harvesting and bushfire management on public land have a neutral impact on
biodiversity over time. In addition, the biodiversity impacts of development in
Melbourne’s newest growth areas have been addressed through a process separate
to, but consistent with, the permitted clearing regulations, known as the Melbourne
Strategic Assessment.
The current permitted clearing regulations in the planning system comprise a four
stage process. The permitted clearing process for landholders and government is set
out in
17
Figure 4.
Figure 4 The current process for permitted clearing
Stage 1
What
permit
applicants
do:
Clarify their
obligations
Estimate costs
Contact local
government or
DSE
Stage 2
Provide required
information on
proposed clearing
Stage 3
Stage 4
Submit further
information if
required
Comply with
permit conditions
Accept applications
Consider applications
Request further
information if
required
Make decision to
grant or not grant a
permit
Support an offset
market
Demonstrate
avoidance/
minimisation of
impacts
Secure offset
onsite or purchase
suitable offset if
required
Lodge application
and pay fee
What
government
does:
Provide
information on:
- obligations
- processes
- decision criteria
- native
vegetation
value
Determine permit
conditions
Monitor and
enforce obligations
and conditions
In recent years permits granted for native vegetation removal have ranged from
clearing of one tree to clearing multiple hectares of remnant native vegetation.
Generally, when clearing is permitted an offset is required. Offsets create gains in
native vegetation through:

prior management actions that have maintained or improved the quality of
native vegetation since the permitted clearing regulations were introduced in
1989

increasing the security of native vegetation so that it cannot be cleared in the
future, including registering an agreement on the land title, or transferring
the land to a park or reserve

maintaining the quality of native vegetation by foregoing entitled uses and
preventing the spread of environmental weeds

improving the quality and extent of native vegetation, including reducing
weeds and pest animals, or revegetating cleared areas.
Table 3 sets out for the period 2008-09 to 2010-11:

the total area of native vegetation approved for removal by DSE

the corresponding Habitat Hectares of that area

the gain required to offset this clearing in Habitat Hectares.
18
As offset requirements are measured in habitat hectares, the size of an offset will be
dependant on the expected quality gain over the duration of the offset. In order to
deliver the gain required to offset the loss from the clearing, generally three to six
times the area of land being cleared needs to be secured as offsets.13
Table 3 Permitted clearing of native vegetation approved by DSE (remnant
patches)14
Native vegetation
clearing
(hectares)
Native vegetation
clearing (Habitat
Hectares)
Required gain from
offsets (Habitat
Hectares)
2008-09
319
163
260
2009-10
296
128
203
2010-11
159
76
116
Source: Department of Sustainability and Environment, Native Vegetation Tracking:
Overview 2008-09 Fact Sheet, June 2010; Department of Sustainability and
Environment, Native Vegetation Tracking: Overview 2009-10 Fact Sheet, June 2011;
Department of Sustainability and Environment Native Vegetation Tracking System,
2010-11.
13 This is based on Department of Sustainability and Environment estimates and the range of Habitat
Hectares gain per hectare for offsets sold through BushBroker.
14 Table 3 includes only DSE referred permitted clearing data. It does not include information on permits to
remove native vegetation processed by local government only. Approximately one-third of applications to
remove native vegetation are referred to DSE, and local governments assess the remaining two-thirds. Permits
are referred to DSE on the basis of the size (area or number of trees) and the endangered status of the
vegetation class of the proposed clearing. Table 3 also does not include information on the removal of scattered
trees.
19
6. Review of the permitted clearing regulations
6.1 Background to the review of the permitted clearing
regulations
This review of the permitted clearing regulations is informed by policy documents
and guidance material, consultation across government, data analysis, expert input,
findings of previous relevant reviews, and stakeholder submissions to previous
reviews. In recent years, a number of studies and public inquiries have examined the
application and outcomes of the permitted clearing regulations. The key findings
from these reviews are listed in Appendix 1.
Some recommendations from these reviews have been adopted, leading to some
progress in improving the implementation of the permitted clearing regulations.
However, many recommendations could not be addressed without considering the
underlying policy that informs the permitted clearing regulations. This review seeks
to resolve outstanding issues identified in earlier reviews. The issues identified in this
review of the permitted clearing regulations are generally consistent with those of
the previous reviews.
6.2 Principles guiding the review of the permitted clearing
regulations
To guide the review of the efficiency and effectiveness of the native vegetation
permitted clearing regulations, five principles were identified as criteria against
which to assess the current system’s performance. These principles are set out in
Table 4. The principles are adapted from best practice approaches to regulation and
environmental management.
6.3 Issues identified with the permitted clearing regulations
The current permitted clearing regulations operate as an approvals-based system.
The system seeks to avoid irreparable harm. When clearing does occur the system
aims to deliver appropriate compensation for the environment through offsets. This
conceptual approach is consistent with the review principles set out in Table 4.
In particular, the following broad features of the permitted clearing regulatory
architecture are designed to enable an efficient and practical approach to regulating
permitted clearing:

the objective for permitted clearing (‘no net loss’) seeks to ensure that native
vegetation removal has a neutral impact on biodiversity

landholders are compelled to factor into their decision making the
environmental value of native vegetation

the offset rules aim to deliver gains in native vegetation that are
commensurate, or equivalent, to the losses caused by permitted clearing

the systems adopted for measuring and classifying native vegetation allow
for the relative value of native vegetation to be considered.
20
The broad approach of the permitted clearing regulations is considered effective in
addressing the negative externalities created by native vegetation removal.
However, aspects of both the design and implementation of the regulations are not
consistent with the review principles. These shortcomings reduce both the efficiency
and effectiveness of the regulations in achieving their objective. In particular:

the objective of the permitted clearing regulations is unclear and not well
understood

the permitted clearing regulations do not adequately focus on biodiversity
outcomes

the permitted clearing regulations have not been designed to adequately
incorporate risk and proportionality

the offset market is subject to high transaction costs, volatile prices and an
inability to meet demand for some offsets

there is opportunity for greater use of strategic planning mechanisms

compliance and enforcement processes need to be improved.
These findings are discussed in more detail below.
Table 4 Principles for regulating permitted clearing
Principle
Description
Principle 1:
Regulation should
deliver long term
biodiversity outcomes
Regulation should appropriately value native vegetation based on the
duration over which biodiversity benefits are likely to accrue. This means
biodiversity benefits can be optimised for present and future generations,
as well as ensuring their security. Irreversible harm should be avoided
where possible.
Principle 2:
Information should be
based on sound science,
which is regularly
updated, and readily
available to support
decision making
Information about obligations and impacts should be accurate and based
on up-to-date scientific understanding. Policy should be designed to
ensure that changes in scientific understanding can be incorporated as
they occur. This information needs to be readily available for
transparency and to support decision making.
Principle 3:
Obligations should be
proportionate to
biodiversity impacts and
rest with the party
responsible
Consistent with the concept of polluter pays, landholders who remove
native vegetation should be responsible for the impacts of the removal on
biodiversity. Biodiversity is a public good. Therefore, those that use
biodiversity assets should be required to compensate society for any
negative outcomes they cause. Regulations based on the polluter pays
principle ensure the full impact of a polluter’s activities is taken into
account in their decision making.
The obligations imposed should be proportionate to the impacts caused.
This approach ensures that obligations imposed are efficient and
equitable. The approach prevents administrative costs excessively eroding
the benefits of regulation.
Principle 4:
Roles, responsibilities
and obligations of
regulations should be
clearly defined
The objectives of government regulations should be clear and proponents
should have a clear understanding of their obligations under different
circumstances.
Where multiple parts of government play a role in administering a
regulatory regime, the responsibilities of different government agencies
21
Principle
Description
and different tiers of government should be clearly specified.
Principle 5:
Processes should be
efficient, transparent
and predictable
Regulatory processes should be timely and consistent, and decisions
should be made in a transparent manner. Permit applicants should be
able to understand the basis for decisions made and have opportunities
for recourse.
An efficient, transparent and predictable regulatory system promotes
compliance and provides proponents with a level of certainty that
supports their planning and investment decisions.
The objective of the permitted clearing regulations is unclear and not well
understood
There is a lack of clarity surrounding the objectives of permitted clearing regulations
among landholders, decision makers, and more broadly, the community. This lack of
clarity can be summarised in three parts:

the conflation of the overarching objective for native vegetation
management (‘net gain’) and the permitted clearing objective (‘no net loss’)

misalignment between how native vegetation is defined in the objective (by
its quality and extent) and what the policy settings address (which is broader
and includes diversity of types of vegetation and species)

a lack of clarity on how biodiversity and other objectives for native vegetation
management interact in the planning system.
Confusion about the purpose and scope of the permitted clearing objective was a
consistent theme of submissions to recent inquiries and reviews which have
considered the permitted clearing regulations.15 ‘Net gain’ is the overarching
objective for all Victorian policy related to native vegetation. ‘Net gain’ is often
conflated with the ‘no net loss’ objective for permitted clearing regulations. This
confusion in part relates to Victoria’s Native Vegetation Management – A
Framework for Action (NVMF) linking clearing and offsetting with contributing to ‘net
gain’, while stating ‘losses associated with clearing are mitigated by commensurate
gains through appropriate offsets’.16 Previously, the Victorian Government has
sought to clarify the objective for permitted clearing. Most recently, in 2010, the
government stated that ‘net gain’ takes account of three types of contributions, one
of which is ‘no net loss of native vegetation for permitted clearing’.17 The confusion
of the ‘no net loss’ objective with ‘net gain’ has led to concerns among landholders
that the regulations require them to compensate for more than the vegetation they
remove.
There is also misalignment between:
15
See submissions to Victorian Competition and Efficiency Commission inquiry: VCEC, Inquiry into
Environmental Regulation in Victoria, 2009.
16
Department of Natural Resources and Environment, Victoria’s Native Vegetation Management: A Framework
for Action, 2002, p. 22
17 Department of Sustainability and Environment, Native Vegetation: Policy and Planning Fact Sheet, 2010.
22

how native vegetation is defined in the objective for permitted clearing
regulations, and

the policy and practices that implement the regulations.
The ‘no net loss’ objective focuses on ensuring that there is ‘no net loss’ in the
quality and extent of native vegetation. Quality and extent of native vegetation are
key determinants of the value of vegetation. However, quality and extent do not
comprehensively represent the components that make native vegetation valuable
for biodiversity. The implementation of the permitted clearing regulations recognises
this by incorporating vegetation type and species diversity into decision making. The
focus on quality and extent has made it difficult for landholders to understand the
biodiversity value of certain vegetation. For example, scattered trees in degraded
landscapes are considered low quality compared to remnant native vegetation, but
can have high importance as habitat for threatened species.
Confusion in how biodiversity and other objectives in the planning system are
applied has also contributed to inconsistent decision making and reduced certainty
for landholders. The biodiversity objective for permitted clearing is often considered
alongside a number of other objectives in the planning system, including the
implications of vegetation removal on visual amenity, cultural heritage, land
protection and water quality. Furthermore some of these considerations are specific
to particular local planning scheme objectives, while others are outlined in state
government policy. This approach is intended to enable integrated decision making
about vegetation removal. However, in practice there can be confusion about how
these objectives should be considered in decision making, and when determining
permit conditions. The lack of clarity and demarcation of responsibilities for these
varied native vegetation objectives has created unnecessary complexity and costs for
landholders, and reduced accountability for decision makers.
These shortcomings have contributed to the objective for permitted clearing being
unclear and not well understood. Landholders, decision makers and the community
are often confused about what the objective is trying to achieve, why obligations are
imposed, and the basis on which decisions are made. In particular, uncertainty
regarding obligations makes it difficult for landholders to make efficient land use
decisions before they incur the costs associated with entering into the permit
process.
The permitted clearing regulations do not adequately focus on biodiversity
outcomes
The characteristics of native vegetation are highly variable, and there are limitations
to our scientific understanding of how different types of vegetation contribute to the
functioning of complex ecosystems. Consequently, current biodiversity regulation
typically takes a precautionary approach by placing a strong focus on retaining the
current balance of different vegetation types.
This balance is achieved in two ways by the current permitted clearing regulations:
23

a requirement to avoid and minimise native vegetation removal on every site
where clearing is proposed

a requirement that offsets are generally of the same vegetation or habitat
type, and in the same area as the clearing.
While this focus is designed to maintain the current stock and mix of vegetation
types, it can come at the cost of foregoing other opportunities to provide improved
biodiversity outcomes.
The requirement to avoid and minimise native vegetation removal on every site
without considering the long term biodiversity value of the vegetation can lead to
low value vegetation being retained at the expense of securing higher priority
vegetation offsets in perpetuity. The vegetation that is retained may have low
biodiversity value because it has a high risk of decline in the future. This risk of
decline could be due to how the site is managed (for example, agriculture uses
around trees), or due to processes outside of the landholder’s control (such as
fragmentation or natural events).
In addition, there is an inherent weakness in the requirement for landholders to
state how they have adjusted their plans to avoid and minimise the removal of
native vegetation on their sites. In many cases it is difficult for decision makers to
know what a landholder’s original plans would have been, and they must exercise
their own discretion as to whether a landholder has adequately avoided and/or
minimised native vegetation removal.
Both requirements and incentives to avoid and minimise native vegetation removal
should target the protection of high value native vegetation that is viable in the long
term.
Restricting offsets to vegetation with matching characteristics to the vegetation that
is cleared, including location and vegetation or habitat type, can come at the
expense of securing an offset of higher strategic priority. Close matching of clearing
and offset characteristics may be desirable in certain cases, such as when the
vegetation removed provides important habitat for a threatened species. However,
in other cases this restriction means opportunities are foregone to secure offsets
that are more strategically valuable or have better long term viability – such as
protecting vegetation in an important habitat corridor, or in a well connected rather
than fragmented location.
Resolving these trade-offs is often complex. It requires judgments about the relative
importance of different native vegetation attributes and how they should be
assessed in the permit process. Scientific understanding of how ecosystems function
has improved since the NVMF was introduced. Advances in modelling tools,
particularly in landscape scale prioritisation, support outcomes focused decision
making about the relative importance of different native vegetation attributes. It is
expected that science and technology will continue to progress, facilitating further
improvements in outcomes focused decision making.
24
The permitted clearing regulations have not been designed to adequately
incorporate risk and proportionality
The permitted clearing regulations can impose a range of costs on landholders.
These include:

the costs of obtaining information to support decision making, such as site
assessments or species surveys

costs incurred due to the permitted clearing and offset compliance process
delaying planned activities

opportunity costs of the foregone benefits from alternative land uses when it
is required that vegetation be retained

the costs of securing offsets which comply with the offsetting rules.
Concerns have been raised by stakeholder groups from a variety of industries
including agriculture, development, and mining and extractives, about the high level
of these costs.
Best practice states that administrative and compliance burden should be
proportionate to the objectives of the regulation.18 Compliance costs should reflect
the incentives they aim to create for landholders – that is, the value of native
vegetation that is being removed. Administrative costs should be minimised.
The administrative and compliance costs of the permitted clearing regulations have
been identified previously as an area for reform (see Appendix 1). More recently, the
importance of incorporating risk into decision making, and focusing on outcomes,
was endorsed by the Council of Australian Governments as a guiding principle for
reforming environmental regulation.19
There is significant variation in the environmental impact of applications to remove
native vegetation. Approximately two-thirds of permit applications are assessed by
local government, and these are generally for lower impact clearing. The remaining
third is referred to DSE. As Figure 5 shows, in 2010-11, 10 per cent of DSE referred
applications for a permit to remove native vegetation accounted for about 76 per
cent of the clearing impact, measured in Habitat Hectares.20
18
Government of Victoria, Victorian Guide to Regulation, Department of Treasury and Finance, Melbourne, 2011,
p.28.
19 Council of Australian Governments, Meeting Communiqué, Canberra, April 13 2012
20 Department of Sustainability and Environment Native Vegetation Tracking System 2010-11.
25
Figure 5 DSE referred and approved permitted clearing permit applications, 20101121
Figure shows that 10 per cent of clearing applications are responsible for
approximately 76 per cent of permitted clearing in Habitat Hectares.
Source: Native Vegetation Tracking System Data, 2010-11
The vast majority of landholders who remove native vegetation are undertaking
actions that have small impacts on native vegetation. For these landholders, the
administrative costs associated with the permitting process and securing an offset
can be disproportionate to the size of their impacts. This can lead to both inefficient
and inequitable outcomes for landholders, and can discourage them from complying
with the permit process.
Some issues arising from inadequate consideration of risk and proportionality in the
current permitted clearing regulations include:

unclear information requirements resulting in unnecessary information,
which may be costly to provide, being requested from landholders

application of the requirement to avoid and minimise removal of native
vegetation in a one-size-fits-all manner, irrespective of the scale and type of
clearing proposed

limited availability of offsets in the market to meet restrictive offset
requirements, and offset prices not reflecting biodiversity value (see below
for further discussion).
21
Figure 5 includes only DSE referred permitted clearing data. It does not include information on permits to
remove native vegetation processed by local government only. About one-third of applications to remove native
vegetation are referred to DSE, and local governments assess the remaining two-thirds. Permits are referred to
DSE on the basis of the size (area or number of trees) and the endangered status of the vegetation class of the
proposed clearing.
26
Some actions taken to address these issues include developing guidance material to
support consistent decision making, establishing over-the-counter offset schemes,
and more recently, DSE developing risk-based pathways for assessing permit
applications. These initiatives have gone some way to improving the operation of the
permitted clearing regulations. However, many of these shortcomings are likely to
persist without a greater focus on incorporating risk and proportionality in both the
design and implementation of the permitted clearing regulations.
The offset market is subject to high transaction costs, volatile prices and an
inability to meet demand for some offsets
Establishing a native vegetation offset market has been an important development
for the application of the permitted clearing regulations. The market has connected
landholders who clear native vegetation with landholders who are willing to be paid
to manage and protect native vegetation on their land, and allowed them to trade.
However, issues identified with the offset market include high and volatile prices,
and the inability to meet demand for certain offsets. Although not directly
comparable due to different motivations for participation among providers and the
specificity required when offsetting, offset prices are considerably higher than the
cost of similar permanent environmental outcomes purchased through tender
programs.22 Volatility in offset prices has also been observed in the market. For
example, since 2006, BushBroker offset average prices for bioregions ranged from
$34,000 to $370,000 per Habitat Hectare.23
Low levels of supply and high prices for certain kinds of offsets are reasonable if they
reflect:

the relative scarcity of the vegetation type required

the alternative land uses where potential offsets exist

the costs associated with required management activities.
However current offset price variation and volatility cannot be attributed to
environmental and alternative land use factors alone. Features of the offset market
identified as limiting competition in the market, and affecting its ability to function
efficiently, include:

costly information requirements, such as site assessments and consultant
reports, that create high barriers to entry for offset suppliers

low levels of information flow between buyers and sellers of offsets, resulting
in price uncertainty and difficulty in matching buyers to sellers

limited flexibility for offsetting lower impact clearings, reducing availability of
offsets and contributing to price volatility.
22
<http://www.dse.vic.gov.au/conservation-and-environment/biodiversity/rural-landscapes/bushtender>,
viewed July 2012.
23 Department of Sustainability and Environment, BushBroker Price History, <www.dse.vic.gov.au/conservationand-environment/biodiversity/rural-landscapes/bushbroker/price-history>, viewed July 2012.
27

limited mechanisms for sellers to segment their offsets to meet demand for
small offsets.
These limiting features of the offset market have created costs without delivering
environmental benefits. Examples include:

offset sellers being able to charge excessively high prices due to lack of
competition in the market

buyers having to buy larger offsets than required by their permit conditions

allowing offsets to be secured which may not provide adequate gains due to
lack of available compliant offsets

delay costs from the time taken to locate compliant offsets.
The ability to secure a reasonably priced offset should not be seen as an objective in
and of itself. However, it is important that the cost, and difficulty of finding an offset,
is in proportion to the environmental impact of the related clearing. There is an
opportunity to redesign aspects of the offset market to address these concerns.
Strategic planning mechanisms offer opportunities for improved environmental
and land use outcomes
In some circumstances, the site level permit system may not result in optimal land
use or environmental outcomes for Victoria. This would apply when there is
significant risk surrounding the ongoing viability of a particular species, or when
areas are undergoing high levels of land use change. In these situations, a site-based
approach may be inadequate for efficiently balancing environmental and competing
land use objectives. Instead, a strategic approach may be more appropriate.
Strategic planning mechanisms offer an opportunity to consider some specific issues
beyond the site scale. Strategic approaches include Native Vegetation Precinct Plans
and the Melbourne Strategic Assessment.
There are opportunities for more targeted use of existing strategic planning
mechanisms to enable local and state governments to work together to improve the
interaction of local planning schemes and permitted clearing regulations. Such
opportunities include the use of zoning and overlays that set the intention for what
activities and development can occur on land.
When publicly available information such as zoning and overlays does not reflect
obligations under permitted clearing regulations, landholders face reduced certainty.
Compliance and enforcement processes need to be improved
Ensuring compliance with the permitted clearing regulations is important to have
confidence that environmental outcomes are being delivered and that all
proponents are treated fairly. This means ensuring that:

landholders who remove vegetation have a permit, when required
28

any permit conditions, such as the requirement to secure an offset, are
complied with.
The permitted clearing regulations should be designed so that they are simple to
understand and straightforward to comply with. In addition, compliance and
enforcement activities should be undertaken to ensure regulatory requirements are
being met.
A number of administrative systems support the native vegetation regulatory system
and add to the permit system’s integrity. These include the Native Vegetation
Tracking System and the Native Vegetation Credit Register. These systems are
depositories for information regarding permit activity and Native Vegetation Credits,
respectively.
The Australian Institute of Criminology’s report, Environmental Crime in Australia,
indicated that illegal clearing is most likely occurring in Victoria. It identified a lack of
resources and information, along with challenges in distinguishing legal and illegal
clearing, as factors affecting enforcement of clearing regulations. The report noted
that:

over time, as the regulations become more understood and accepted by the
community, compliance should improve

governments should take an approach of persuasion, inducement and
education, along with enforcement. 24
As the permitted clearing regulations sit within the planning system, the mechanisms
to monitor compliance are primarily the responsibility of local governments. Local
governments have identified the complexity of the permitted clearing regulations
and resource constraints as limiting compliance and enforcement activities.25 This
has resulted in compliance activities often being undertaken reactively, in response
to complaints, rather than in a proactive or targeted manner.
Left unaddressed issues with compliance and enforcement will continue to
undermine the integrity and performance of the regulatory system. Simplified
permitted clearing regulations, and a more coordinated approach to monitoring and
enforcement, is needed to ensure that all landholders face adequate incentives to
comply with the regulations. There are opportunities for the state government to
play a more effective role coordinating and facilitating compliance and enforcement
activities.
24
S Bricknell, Environmental Crime in Australia, Australian Institute of Criminology, 2010.
Victorian Competition and Efficiency Commission, A Sustainable Future for Victoria: Getting Environmental
Regulation Right, final report, July 2009.
25
29