Di Martin: Hello, I'm Di Martin, welcome to Background Briefing, which begins today in northern New South Wales.

So we're driving up the Kamilaroi Highway, we've just gone through Gunnedah and then Boggabri, and it's just on dusk, and a landscape that would be familiar to many listeners, of open farmland, a little bit of irrigation here and there, hills and mountain ranges in the distance, and then suddenly we come across this extraordinary coal infrastructure on both sides of the road.

Phil Spark: So those big trucks there, they are tippers, sideways tippers.

Di Martin: With me in the car is local ecologist Phil Spark.

Phil Spark: So they just go up around the loop to where the coal pile is and they just stop there and just tip sideways and all their coal drops out and they turn around and go back to the coalmine again. What we can see here now is the new rail line that's going to go through here. So they've cleared across to the river. And they are putting that power line in as well.

Di Martin: As we turn onto a gravel road, Phil Spark says local people are worried about the big increase in the number of coal and coal seam gas projects in this area. They fear the Liverpool Plains is turning into another Hunter Valley, a region not far to the south, where expanding coal mines are swallowing small towns, bushland and farms.

Phil Spark: Yes, that's everyone's worst nightmare, and we're seeing it happening. We've got huge developments in the pipeline with Chinese company Shenhua and BHP, they will be massive mines if they get the go-ahead. It is a huge concern because we don't want this catchment to turn into the next Hunter Valley.

Di Martin: We're driving towards the hamlet of Maules Creek. It sits next door to one of Australia's largest open-cut coal mines under construction. Phil Spark heads a local environment group and says the Maules Creek mine is now bulldozing one of the last large remnants of a critically endangered woodland, and it should never have been approved.

Mine owner, Whitehaven Coal, is required to compensate for the loss of this forest. The company has to buy other properties with the same sort of vegetation and habitat as what's being cleared, and manage those properties as conservation estates. It's a scheme called offsetting.

But Phil Spark takes Background Briefing to the mine's largest offset sites, and says the forest there is nowhere near the same as what's being bulldozed.

Phil Spark: So this area that we've just walked into, mapped as critically endangered ecological community, is not that community at all.

Di Martin: We'll return to Maules Creek later in the program.

Environmental offsets is a relatively new policy that's quickly been adopted by governments across Australia. It promises that development can happen, and biodiversity will be no worse off. But offsets have always been controversial, and recent examples have attracted so much criticism that a Senate Inquiry has been set up to investigate.

An increasing number of scientists, ecologists and conservationists say that offset policy is not working, that it's full of loopholes, and is being manipulated by governments who simply won't say no to developers.

A man described as Australia's top restoration ecologist says with less and less good quality bush to be found, developers are putting up degraded land as offsets, land which they say they'll restore to its original state. But Richard Hobbs says that restoration science is new and uncertain, and scoffs at the idea that Australia's biodiversity will be no worse off.

Richard Hobbs: I'll say it's a furphy. To me it's akin to some guy going into the art gallery and pointing at the Mona Lisa on the wall and saying, 'Sorry mate, we need that bit of wall for something else, so the Mona Lisa has to go. But we'll paint you another one.'

Di Martin: To begin today, we need to understand offsets a bit better, from a man who's worked on several offset policies, including for the Commonwealth and New South Wales governments. ANU Professor Phil Gibbons says offsets are all about compensating for the biodiversity we bulldoze in the name of progress.

Phil Gibbons: If you bowl over some bush somewhere, you've got to get an equivalent gain somewhere else. It's that simple.

Di Martin: The theory is that gain can come from restoring old cattle paddocks, or a mine site, or setting aside another bit of good quality bush that would have otherwise perished.

Phil Gibbons: One of the ways that biodiversity offsets work is that people say, well look, if we clear this patch of bush, let's take another patch of bush that might have been lost anyway in the future. It might have been zoned for urban development, it might have weeds coming up to it and impacting on it. Let's protect that area in perpetuity and manage it so it actually improves, and that's where you get the gain.

Di Martin: Phil Gibbons says it's critical that the bit of bush being used as an offset must be the same as what is being bulldozed.

Phil Gibbons: Anything that you lose in terms of biodiversity must be offset by like-for-like, or equivalent biodiversity. So it has got to be the same kind of ecological community, the same habitat. If you have impacted on one particular species, threatened species for instance, then the gain must be for that particular species as well. So it's got to be equivalent or like-for-like. So biodiversity offsets is a mechanism that governments have really embraced in the last decade or so. And Australia is one of the leaders in this area.

Di Martin: Phil Gibbons explains how he's become increasingly outspoken about offsets, as he sees how they're being rolled out across the world.

Phil Gibbons: The theory is fine in terms of biodiversity offsets and you can see why so many governments have embraced it. The problem is in the execution. Biodiversity is incredibly complex. A lot of it…you can't just knock over a patch of bush that is pristine and hope to recreate it elsewhere. They are just too complicated. That's the first problem. The second problem is you've got a tree that's 500 years old, a nice old eucalypt full of hollows that is necessary for a whole host of wildlife. You bowl that over, how do you replace a tree that's 500 years old by planting another tree?

Di Martin: Phil Gibbons says he's seeing various problems emerge; offsets approved that are not like-for-like, offset areas that are not being properly managed or restored, and he's especially worried about offset sites getting approved that weren't in danger of being lost.

Phil Gibbons: You know, you're saying, 'I'm going to protect that area because it would have been lost in the future if I didn't protect it.' How do you prove that it would have been lost in the future? That is a very tricky thing to do. And that's where the offset policy can be gained or manipulated.

Di Martin: Are we being hoodwinked with biodiversity offsets?

Phil Gibbons: In theory biodiversity offsets seem very attractive and I've been involved in the development of several biodiversity offset policies. But the devil is in the detail. And I think the way governments are applying biodiversity offsets in Australia generally are not in the spirit of the policy or the theory. And I just do not think we are getting the improvement in biodiversity conservation that offsets promise.

Di Martin: That's Phil Gibbons from the ANU.

Time to return to the Liverpool Plains in northern New South Wales, and we rejoin local ecologist Phil Spark, a fierce critic of offsets for a new open-cut coal mine not far from the hamlet of Maules Creek.

The $767 million Maules Creek mine is digging into one of Australia's largest coal deposits. Owners Whitehaven Coal say the royalties and corporate tax alone are worth $6.5 billion in the first two decades of the mine's life.

But this coal lies under a critically endangered box gum grassy woodland. Phil Spark says this mine should never have been approved, because the offsets are not equivalent to what's being knocked over, nowhere near like-for-like. Yet the bulldozers are already at work on the Maules Creek mine site.

Phil Spark: See all the dust over here? That's where they're conducting their works right now.

Di Martin: So that's the dust from the bulldozers?

Phil Spark: Yes, they are constructing roads in through the forest.

Di Martin: Phil Spark takes Background Briefing for a look.

Phil Spark: So I'll just pull up here.

Di Martin: So on the other side of this fence is…?

Phil Spark: Is the Leard State Forest.

Di Martin: Phil Spark says the survival of a host of woodland plants and animals depends on large forest remnants, which are much more resilient to impacts like climate change. Leard State Forest contains one of Australia's last large patches of old growth white box grassy woodland.

Phil Spark: We are in an area that's immediately adjoining where they are starting construction for the new Whitehaven mine, an area of white box woodland which is the critically endangered ecological community. It has been reduced down to 0.1% of its original extent.

Di Martin: This white box grassy woodland?

Phil Spark: Yes, it has been over-cleared very much and areas in good condition such as this are very rare.

Di Martin: White box grassy woodland was heavily cleared for farming, its existence a sign of good soil. It's now down to the last of the last. There's virtually none in National Parks, and much of what is left is in fragments, in stock routes and on roadsides, and is being invaded by weeds.

Background Briefing understands staff from the New South Wales Office of Environment and Heritage identified Leard State Forest as 'irreplaceable', but were overruled when the state gave the mine its blessing.

Here's Phil Spark:

Phil Spark: Even though this forest was logged for many years, it was only logged in the areas where there is narrow-leaved ironbark and white cypress. So the box woodland areas are actually mature old-growth. So the number of tree hollows is incredibly high, there are over 100 per hectare. Yes, those big mature trees, we're just looking at some there now, there would be five or six hollows in each tree, small ones suitable for bats and reptiles and the large ones suitable for cockatoos and owls and the larger animals.

Di Martin: This forest supports 28 threatened species, especially bats and woodland birds, and is potential habitat for the Swift Parrot and Regent Honeyeater, now believed to be down to the last few hundred individuals. Phil Spark has also found an endangered plant in an area marked up for clearing, a plant missed in Whitehaven Coal's environmental assessment.

Phil Spark: They've marked it all up, it's obviously going to be cleared quite soon, and this little Tylophora linearis, which is a little twiner that twines itself around other shrubs, it hasn't even been considered.

Di Martin: A Whitehaven Coal report says it will conduct pre-clearing surveys and translocate any plants found.

Critical in approving the mine are the offsets, properties which Whitehaven has bought and has to manage as conservation estates. There's nearly 10,000 hectares in those offsets, a far greater size than what's being cleared.

The properties are supposed protect the same sort of vegetation and habitat that will be lost in Leard State Forest. Like-for-like. But Phil Spark says the size and good condition of white box grassy woodland in Leard makes it near impossible to offset.

Phil Spark: They just think that they can simplistically purchase other properties that will supposedly compensate for this loss, which is not the case, and which is what we are going to actually explain a bit more today.

Di Martin: The Maules Creek mine offsets are in several locations. At the heart of this controversy is the amount of critically endangered box gum grassy woodland on those offset sites. Whitehaven Coal's own offset plan says the vast bulk of this community is on just two properties; Mt Lindesay and Wirradale. So Phil Spark drove Background Briefing there for a look.

Phil Spark: We have just come into the offset property of Mt Lindesay.

Di Martin: On Mt Lindesay, Phil Spark has walked more than half the area the mining company's consultant mapped as critically endangered box gum woodland, and he says there are huge discrepancies, not only in areas mapped as white box, but other vegetation types as well.

Phil Spark: Righto, so we have just come across the road and into an area that has been mapped as critically endangered ecological community of manna gum, yellow box, Blakely's red gum open forest. This community we've found to be completely wrong. It's based on manna gum being present, and it is not present at all.

Di Martin: We then walked to another site marked on the mine's offset map as a critically endangered white box community.

Phil Spark: We are now into an area that is supposedly white box stringy bark grassy woodland, and we are looking around us and we see a dominance of stringy bark, probably 80% stringy bark. And it's not white box at all. Even if that was white box it still wouldn't be the community because if you look around, and look at the shrub layer that we have around us here, it is a continuous shrub layer. No white box woodland community that fits the description actually has a shrub layer.

Di Martin: Now, Phil Spark, how do we know that just over the ridge here there is not the beginnings of a large area of beautiful white box?

Phil Spark: Well, we've walked extensively around six areas mapped as critically endangered ecological community of box gum woodland, so we have covered a good cross-section of it. We haven't covered all of the areas on Wirradale and Mt Lindesay, so we're not saying that there isn't some critically endangered ecological community on those properties. But what we have proven is that those six large remnants, they do not fit the criteria and it is a sufficiently large enough area that raises very serious questions about all the vegetation mapping.

Di Martin: Phil Spark says 'we' because there's now four ecologists who've volunteered their time to review these offset sites and found them seriously lacking. You can see those reports on the Background Briefing website.

As Phil Spark is a fierce critic of the mine, Background Briefing sought the opinions of two independent ecologists about Whitehaven's offsets. Dr John Hunter and Wendy Hawes agreed to meet in a park in the nearby city of Armidale.

Am I right in saying that both you, Wendy and John, reviewed a report done initially by Phil into the problems with the offsets that have been purchased by Whitehaven coal?

Wendy Hawes: Yes, I have reviewed Phil's report.

Di Martin: And what is your assessment of Phil's report?

Wendy Hawes: That he is correct, that the offsets don't match what is in Leard State Forest.

Di Martin: And you John?

John Hunter: Yes, well, I reviewed Phil's and Wendy's and did my own, and yes, we are all of the same opinion.

Di Martin: Dr John Hunter is a botanist and vegetation mapper who specialises in local critically endangered communities. He's also helped developed offset plans for other mines. Wendy Hawes sat on the expert panel that wrote the condition criteria used to identify box gum grassy woodlands, and she also wrote the draft national recovery plan for this critically endangered community. Between them they have half a century of experience mapping and identifying vegetation in this region.

Wendy Hawes went to the mine's two largest offset properties and studied four areas mapped by Whitehaven Coal as white box grassy woodland.

Wendy Hawes: It doesn't contain grassy white box woodland, which is the endangered ecological community, the CEEC. There are within their offset areas from our observations small patches that could potentially meet the CEEC, but they are very small areas, so they are a couple of hectares. Nothing like the hectarage they are claiming. So the majority of the stuff that they are protecting is stringy bark communities, not white box.

Di Martin: And this is something that you can verify with the weight of your experience?

Wendy Hawes: Yes.

Di Martin: Dr John Hunter has now investigated 1,600 hectares of Mt Lindesay and Wirradale, all of which is mapped as critically endangered box gum woodland by Whitehaven Coal. He says his report is preliminary, and the whole area needs to be thoroughly re-mapped. But on the basis of work so far, Dr Hunter says 95% of the Whitehaven offset mapping is wrong.

John Hunter: I think there is, at maximum, 5% of what they are saying is box gum woodland there. The communities, they are not just stringy bark. All the dominants we found there are actually trees that they haven't listed as occurring there.

Di Martin: Like what kind of trees?

John Hunter: Stringy barks, New England black butt, orange gum, Bendemeer white gum, they are all trees that are dominating in this system but they are not represented in the mapping.

Di Martin: So are you saying the maps are wrong?

John Hunter: The maps are patently wrong. They are just completely wrong.

Di Martin: Whitehaven Coal's offset plan was developed by environmental consultants, Cumberland Ecology. The plan says there were field studies done to assess these offset areas. Background Briefing contacted Cumberland Ecology for an interview. Its director, Dr David Robertson, said his contract with Whitehaven Coal prevents him from speaking.

Local ecologist Wendy Hawes says those field studies are wrong.

Wendy Hawes: If they have been on site they seriously didn't know what they were looking at.

Di Martin: Now, to the uninitiated, tell us how you can come to that conclusion?

Wendy Hawes: Because the trees that we're talking about are quite distinctive, and if you are used to working in them then you know what the community looks like, you know what the trees look like, you know when you are not in box gum woodland.

Di Martin: Background Briefing contacted both the state and federal governments to find out if they did their own field surveys of the offset sites before approving the Maules Creek mine. The federal government admitted it did not. The state government provided no evidence it had surveyed the offset sites either.

So both levels of government approved one of Australia's biggest new open cut coal mines without any independent check of Whitehaven Coal's offset claims. Only when the federal government approved the mine did it order an independent review of the Maules Creek offset areas. But it said Whitehaven could begin clearing Leard State Forest before that review even got underway.

The New South Wales Environmental Defenders Office helped challenge the approval in court. Part of the EDO's argument was that the size and condition of white box grassy woodland in Leard State Forest is down to the last of the last, and probably can't be offset. But the case was lost in December. The Federal Court said it was quite legal to allow mining to begin before the offsets are sorted.

EDO principal solicitor, Sue Higginson:

Sue Higginson: The court could see this is not desirable, words to the effect that this was not desirable from a conservation perspective. But what it did say is that by requiring independent verification, the mine could commence and the clearing could commence. And so therefore you can go ahead, start the project and get rid of part of that critically endangered ecological community, get your house in order with the offsets, if you haven't got your house in order with your offsets, go out and find some more.

Di Martin: Sue Higginson says even if there was no more white box grassy woodland left in Australia, the court would still have found the federal approval was legal.

Sue Higginson: So the question before the court was, well, what if there are no more? And the answer to that was ultimately, well, then there is a punishment scheme within the Act to say that you have breached the law.

Di Martin: Federal Environment Minister Greg Hunt declined to be interviewed, but provided the following statement:

'I am aware that there are concerns around the suitability of the offsets put forward by the proponent and approved by the previous Labor government. An independent review of the proposed offset areas has been submitted, and the Department of the Environment is considering the findings of the review to determine whether the proposed offsets satisfy the requirements of the approval conditions.'

The Department has recently told a Senate Estimates hearing that it's investigating what it calls a criminal matter regarding the Maules Creek offsets. It's a crime to be reckless or negligent in providing false or misleading information about offsets.

Background Briefing approached Whitehaven Coal's CEO Paul Flynn for an interview, but he was not available. The company did provide a statement. It says it's committed to meeting its offset obligations, and defends David Robertson, the ecologist hired to map the vegetation on those offset sites. Whitehaven also says the reports critical of its offsets are incomplete and deliberately distorted. That statement, and a reply from Dr John Hunter, are on our website.

In the meantime, New England ecologist Phil Spark has lodged a complaint about Cumberland Ecology's David Robertson, who prepared the Maules Creek offset plan. The Ecological Consultant's Association of New South Wales is considering the issue and is due to report this month.

Dr Robertson declined to be interviewed, but told Background Briefing that Phil Spark's complaint is politically motivated. David Robertson also says he has more than 20 years experience as an ecological consultant, including 13 years working on biodiversity offsets.

However, it's the not the first time Cumberland Ecology's offset work has been criticised in the past few years. The company was the offset consultant for another major coal project near Lithgow, two hours drive west of Sydney. Called the Coalpac Consolidation Project, it was a controversial proposal that would have involved strip mining in the Ben Bullen State forest below ancient sandstone pagodas. Local environmental groups said there were serious problems with the offset sites.

It's one of the few major coal projects rejected by both New South Wales Planning Department and the independent reviewer, the Planning Assessment Commission. The Commission said the offset package:

'cannot be considered adequate. The Commission's conclusion on the offset package is that it is designed to exchange a number of fragmented areas that in some instances require extensive rehabilitation … for a single area of high quality habitat … which adjoins like areas of high quality habitat.'

Cumberland Ecology's reply to the Commission's report is posted on our website. Yet even with further changes to the Coalpac proposal, the Department of Planning still didn't approve it.

Only an hour and a half's drive up the road from Lithgow is another coal mine development that's used Cumberland Ecology to prepare its offset plan. That's stage two of the Moolarben Coal Mine, a state preferred project outside the town of Mudgee.

Again local environment groups complained about the adequacy of the offsets. The New South Wales Department of Planning has just approved that offset plan, but not without several changes. In its report published late last month, various concerns were raised about the size of the offsets, the quality of the habitat, and whether it was like-for-like. The Planning Department said significant additional areas or four extra properties had to be added to the offset plan before it was accepted. That report is also on our website.

You're listening to RN's Background Briefing. I'm Di Martin, with a program on environmental offsets and the growing controversy surrounding them.

Up on Sydney's north shore is the office of environmental law expert Gerry Bates. He's watched laws and lawmakers fail to protect Australia's biodiversity over many decades.

Gerry Bates: You've got a patch of ecosystem which scientists say is threatened, most people don't understand it, they don't appreciate it, and you are trying to match that against the big dollars involved in a mining project, particularly now the carmakers are leaving Australia, and you've got governments trying to find work and so on. Now, there's a question of values going on here. And biodiversity has always been expendable. That's why it's declining.

Di Martin: Gerry Bates says offsets are becoming a new environmental battleground. He says offset assessments need to be very clear about what's being bulldozed, and what's being put up to compensate for that loss.

Gerry Bates: This is the whole problem with offsets. You have to be very, very rigorous as the decision maker to allow this to happen, and the evidence has to stand up. And of course as we know they are very controversial. A lot of people would start from the point of view that offsetting is not a legitimate tool anyway. But if it's going to be used, it has to be as rigorously and scientifically evaluated as possible, and that's where a lot of the controversy comes about.

Di Martin: Gerry Bates says a key problem is there's no standard accreditation for ecologists.

Gerry Bates: The problem is any Tom, Dick or Harry can stick a plate up at their door and say, hey, I'm an ecological consultant. You know, environmental assessments have been going on since the 1970s, and there's still no formal standards of accreditation for the people who claim to be able to do them. That again is absolutely why the decision-maker has to give the most rigorous analysis to the information provided by the proponent of a development.

Di Martin: The Sydney Morning Herald highlighted this dilemma with an example near Lithgow, an extension of the Invincible mine. The environmental impact statement was written by a mine surveyor, not an ecologist. And that mine surveyor was a part owner of the mine.

The New South Wales Planning Department was quoted as saying there was no issue because:

'the relationship between a mine and the author of an environmental impact statement is irrelevant, because all the supporting material is rigorously checked.'

Even if there's no problem with the way offsets are assessed, there's increasing nervousness about how secure they are. Offsets are supposed to become conservation estates, protected in perpetuity. But that hasn't happened in a high profile New South Wales coal mining operation outside the little town of Bulga, in the Hunter Valley.

Background Briefing's Jess Hill reported on it last year.

Jess Hill: The first coal was dug out of Mount Thorley Warkworth more than 30 years ago. For most of that time, the mine and the residents of Bulga have co-existed in relative harmony. In 2003, Rio Tinto applied to expand the mine.

The New South Wales government approved it, but with a very important condition: Saddle Ridge, the hill separating the town from the mine, as well as the critically endangered Warkworth Sands Woodland, were never to be mined.

Di Martin: But just seven years later, after a steep rise in coal prices, Rio Tinto decided it wanted to mine the offset it was supposed to be protecting. It applied to the New South Wales government, and the Planning Minister said yes.

The Environmental Defenders Office helped the Bulga community take the case to court.

Here's Sue Higginson:

Sue Higginson: And the Chief Judge of the New South Wales Land and Environment Court heard the case about allowing mining in an offset area, looked at what that meant in terms of biodiversity impacts, and he found that they would be unacceptable. So he refused permission to the mining company and they couldn't go ahead with the new part of the mine.

Di Martin: Critical in the decision is the scarcity of the Warkworth Sands woodland. Rio Tinto put up another offset, but the judge found it wasn't like-for-like. The New South Wales government and Rio Tinto quickly appealed the judgement. That decision is still pending.

In the meantime, Rio Tinto proposed another smaller mine expansion which also cuts into the original offset area. That expansion has just been approved by the New South Wales government.

Environmental law expert Gerry Bates says the Bulga case shows that any piece of land, offset or otherwise, is not protected in perpetuity.

Gerry Bates: It doesn't matter whether you have a National Park or an offset or a conservation covenant or anything, they are all variable. They can always be revisited in the future.

Di Martin: Gerry Bates says the New South Wales government has also moved to prevent another Bulga style court case. The government has changed the rules so the economic benefits of mining is given top priority in planning decisions. And Gerry Bates says no more merit reviews can go to the Land and Environment Court if there's already been a public hearing before the state's independent reviewer.

Gerry Bates: They have gone further because if the minister sends a major mining project to the Planning Assessment Commission for a public hearing, that will knock out all the types of appeal that were going on in the Bulga case. In other words, Bulga wouldn't be able to happen again if the minister sends the development, the proposal to the Planning Assessment Commission for a public hearing.

Di Martin: That's Gerry Bates.

The New South Wales Greens recently denounced the Planning Assessment Commission as a rubber stamp after finding it agreed with 96% of approvals made by the state's Department of Planning.

With less and less good quality bushland left in Australia, finding an equivalent offset will only become more difficult, which is why developers are putting forward offsets that rely on restoring cleared farm paddocks, or rehabilitating mine sites.

Mining companies often claim that when a pit or a well is closed 'the land is returned to its original state'. But a man described as Australia's top restoration ecologist says that's just wrong. This is Richard Hobbs from the University of Western Australia.

Richard Hobbs: And I think the problem up until now has been that people have seen ecological restoration as being a kind of magic bullet that will come in and solve everything, and I think the response to that is, well, no it's not.

[Birdsong]

Di Martin: This is the sound of Carnaby's black cockatoo, a threatened bird at the heart of an offset controversy that's worrying Richard Hobbs. Only a small proportion of the cockatoos left are young enough to breed, and they rely on the banksia woodlands around Perth. Yet Richard Hobbs says two high-value remnants of banksia woodland have been bulldozed recently, one which was listed to be protected.

Richard Hobbs: Recently there has been several pieces of very nice banksia woodland, one in fact was registered on the state's Bush Forever list as being of particular significance, that were cleared for development. One for a hospital, one for development around Jandakot Airport which is the light plane airport in Perth. Both of these have restoration offsets associated with them. And it must be fair to be said that it is very hard to see how the offsets that are being created will replace the woodlands that are lost.

Di Martin: Talk in more detail about these offsets.

Richard Hobbs: Well, the areas were basically old agricultural land or old grazing land, and at the moment they are what could be best described as plantations, and the native species are probably six inches to a foot tall. There are lots of weeds around and it's going to be quite a long time before it turns into anything looking like what was destroyed. So it begs the question of whether the offsets will be successful or not.

Di Martin: And in the meantime, Carnaby's black cockatoo will just have to deal with less habitat.

Richard Hobbs says changes need to be made to offset policy. He says areas that are critically endangered should not be considered for development. Nature reserves should not be declared as offsets. And he says offsets should be a last resort, used only after all other options have been ruled out.

Richard Hobbs: When a development is proposed there is supposed to be a cascade of things that are considered. First of all, can you avoid the damage altogether by doing the development somewhere else entirely? Is there an old brown-field site or something like that nearby that would do just as well? Secondly, can you actually reduce the damage that you are going to do on that site? And there is a lot of evidence accumulating from various parts of the world that that initial stages is more or less being bypassed. People are seeing the offset policy as an opportunity to sidestep the whole question of whether the development should go ahead on a particular place or not.

Di Martin: In other words, governments aren't wanting to say no?

Richard Hobbs: I think that is entirely true, yes.

Di Martin: But most of all, Richard Hobbs says Australia needs to get rid of the convenient fiction that offsetting means that biodiversity doesn't lose out. He refers to offsetting as a Faustian pact.

Richard Hobbs: The story about Faust is basically where this guy makes a deal with the devil where he trades his soul for knowledge and power. But over time that story is taken to start meaning trading something irreplaceable for success or short-term gain. And I think that's at the nub of what could be the problem with offsets is that we run the risk of trading something irreplaceable for the short-term development gains, with the mirage of having a good conservation outcome in the future through the activities of the offset.

Di Martin: Now it's back to Canberra and a last example that particularly aggrieves one of the architects of offsetting in Australia.

The ANU's Dr Phil Gibbons has brought Background Briefing to a box gum woodland park on the city's northern edge. It's right next door to another block scheduled to be cleared for a housing development.

Phil Gibbons: And now we are standing in Watson woodlands or Justice Robert Hope Park, which has now been approved as an offset for a development just ten metres away from us, which extends for four hectares.

Di Martin: Right, so that bit is going to be bulldozed over there, and I believe it has about 40 mature box gum trees on it?

Phil Gibbons: That's right. Mature trees there, looking at them they might be up to 200 years old.

Di Martin: As Phil Gibbons surveys these adjoining sites, he says using Justice Robert Hope Park as an offset is simply wrong. He says the Park only exists because of the hard work of local volunteers to restore the box gum woodland over the past 12 years. Dr Gibbons says those conservation gains are not the work of the developer.

Phil Gibbons: Let's remind ourselves about what offsets are about. A fair-minded person would agree that if a developer destroys some of Australia's natural capital in making a buck, then they should really offset that impact elsewhere, use some of their profits to offset that impact on our natural capital elsewhere.

Di Martin: When Background Briefing contacted both the ACT and Commonwealth governments, they both said the volunteers' work has not been taken into consideration in approving this offset. But Dr Phil Gibbons begs to differ. He helped develop the offset calculator used in this decision. He's gone back over the paperwork and crunched the numbers again, and found that the approval does claim conservation gains made by local volunteers.

Phil Gibbons: But if you look at their actual calculations, they have in fact used the community's goodwill since 2002 in calculating those gains. So in other words, every tree you see in this site that has been planted by the community is contributing to the loss of a tree next door. The community is not going to sign up for that if they know that that is what their work is contributing to.

Di Martin: Phil Gibbons then lists off several other reasons where this offset approval has gone awry, including a pivotal assumption that the Park is not properly protected. It's zoned urban open space, so the argument goes that the Park is in grave danger of being turned into a suburb, and the box gum woodland lost, if it wasn't declared an offset.

Phil Gibbons says that argument is rubbish.

Phil Gibbons: The offset calculator assumes that this site here has a 70% chance, if it wasn't set aside as an offset, it was likely to be destroyed anyway for urban development. And that is plainly wrong. I've calculated that the risk that this site would have been destroyed without it being an offset is actually below 1%.

Di Martin: This is a tiny little site here. It is only 16 hectares over there and four hectares over here. Why should we really be bothered?

Richard Hobbs: Di, you have got to remember, this is a critically endangered ecological community, only 5% of the original distribution. When Europeans came to Australia there was 95% more of this stuff, 5% left. I did some research to show that half of this ecological community is now in patches less than two hectares. We are standing here with a 20-hectare patch of box gum grassy woodland, it's one of the biggest left in the country. It's a big patch of box gum grassy woodland, okay. So you say that this is only a small patch, it's death by 1,000 cuts, all right? You knock off this, you do it over the whole country, and before you know it this stuff is gone. And every single species that rely on it is gone too.

Di Martin: Background Briefing's co-ordinating producer is Linda McGinness, research by Anna Whitfeld, technical production by Phil McKellar, and Chris Bullock is executive producer. I'm Di Martin.