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‘We need to change the scheme’: calls for multiple investigations into $40m gain from NSW environmental offsets

Lisa Cox
·6-min read

There are calls for multiple investigations into the New South Wales government’s purchase of millions of dollars in conservation offset credits from a company linked to a firm that was advising the government on major road developments in western Sydney.

Labor has called on the Berejiklian government to launch an independent investigation into the transactions, while the independent MLC Justin Field said the purchases and the state’s entire biodiversity offsetting regime should be reviewed by the NSW auditor general.

The matter is also expected to be considered by an upper house committee examining land acquisitions in relation to major transport projects and the Greens have signalled they will seek a parliamentary inquiry into offsetting and write to the state’s auditor general.

Related: ‘Enormous sum of money’: $40m windfall from NSW environmental offsets sparks calls for inquiry

Guardian Australia revealed on Friday that a company – Meridolum No 1 – made more than $40m by buying land and then selling offsets on that land to the state and federal governments.

In 2018, NSW Roads and Maritime Services (RMS) purchased $38m in offset credits from Meridolum No 1 to offset the destruction of Cumberland Plain woodland that would be caused by the upgrades to the Northern Road and the construction of the M12, which will connect to the new Sydney airport. In 2019, the federal infrastructure department purchased $5.2m in credits as part of its offsets for the airport.

The consulting firm Eco Logical Australia, which employed two of Meridolum’s directors, provided the RMS offset advice on the road projects.

The two directors have told Guardian Australia they were not personally involved in preparing the offset advice for the government, and do not recall ever seeing the relevant report. They have denied any suggestion of wrongdoing or conflict of interest and said they had made the appropriate declarations to government.

Transport for NSW has launched an internal review into the transactions but has refused to provide detail on what the review will examine or answer questions while it is under way.

Labor, Greens and independents call for investigation

John Graham, NSW Labor’s roads spokesman, said an independent investigation was warranted.

“Given what’s been disclosed, this needs to be done at arm’s length. We would certainly call on the minister [for roads and transport, Andrew Constance] to initiate an independent, arm’s length investigation into this matter,” he said.

“The central concern is: are these arrangements in the public interest, is the public interest being protected here? Given the sums of money and potential conflicts that have been disclosed it’s difficult to be assured that’s the case.”

Field said the transactions “should be independently investigated by the auditor general as part of a thorough review of the entire biodiversity offsetting scheme in NSW”.

The Greens MLC Cate Faehrmann said she would be referring the transactions to the auditor general and that the wider offsetting scheme needed review.

“Now that this has come out we need to change the scheme,” she said.

“I will be speaking to people in this area and seeking their expertise. We need legislative change.”

Environment group calls for Icac referral

Environment group the Nature Conservation Council of NSW called on the Berejiklian government to refer the transactions to the Independent Commission Against Corruption (Icac) and to conduct a comprehensive review of the state’s offset scheme.

The Wilderness Society, meanwhile, said the state and federal governments should appoint an independent panel to examine the purchases.

“This episode raises very serious questions about the integrity of the whole system and should trigger a thorough review,” said the Nature Conservation Council’s chief executive, Chris Gambian.

“If the government refuses to refer the matter to the corruption watchdog, we will.”

Directors say they did nothing wrong

The directors of Meridolum have denied any suggestion of wrongdoing or conflict of interest and told Guardian Australia they made the appropriate declarations to government.

Through a PR company, they have said they purchased two parcels of land in response to a widely anticipated demand for offset credits in western Sydney, including calculations that were public at the time through the 2015 draft environmental impact statement for the western Sydney airport, the final EIS published in 2016, and changes to NSW legislation that expanded the use of biodiversity offsets.

The RMS ran a public expression of interest process that sought offset credits during 2016 and 2017. That process included newspaper advertisements and placing a “credits wanted” request on the state’s biobanking register.

In December 2017, the RMS also sent a letter to landholders in the region, such as the Local Land Services agency, asking them who owned land that might have been suitable as a biobank. Those landholders were asked to contact a staff member of Eco Logical Australia who was managing the process for sourcing the credits. That staff member is not involved in the Meridolum company.

The directors said they followed government processes for credit purchases, including by advertising their available credits on the NSW biobanking register in 2017 and formally registering their interest through the RMS tender process in that same year.

They added they had no knowledge of the credit procurement process undertaken by their Eco Logical Australia colleague for the RMS, nor were they involved in “the preparation or review” of the offset advice Eco Logical Australia prepared for the RMS on the Western Sydney Infrastructure Plan.

The two directors linked to Eco Logical Australia said they declared those roles to the RMS and the federal infrastructure department and that after the Meridolum company was registered in 2017 processes were put in place at Eco Logical Australia “to manage information flow and conflicts of interest”.

Guardian Australia put further questions to Meridolum on Friday but did not receive a response by publication deadline.

The directors have previously said they “categorically deny any suggestion of wrongdoing, breach of law, conflict of interest or that Meridolum, or any of its officers or principals, used information not available to the public to gain an advantage in the acquisition of land and sale of biodiversity credits”.

Constance is on annual leave. Paul Toole is the acting transport and roads minister.

A spokesperson said on Friday the transactions pre-date Constance’s time as minister.

“Ensuring that the community has faith in the integrity of the public service is of the highest importance,” she said.

“On 7 April 2021, minister Constance wrote to the transport secretary requesting that he take steps to satisfy himself of the matters raised.

“As the matter is currently being investigated by Transport for NSW, it would not be appropriate to provide any further comment.”

A spokesperson for the federal infrastructure department said the department “conducts all tenders … in accordance with commonwealth procurement rules”.

As part of the offset procurement process in 2019, “vendors were required to declare conflicts of interest and that they had not otherwise engaged in any collusion, anti-competitive conduct or any other similar conduct in relation to the preparation of the tender”.

Meridolum “made these declarations, and advised the department of the detail of any conflicts of interest”, the spokesperson said.