Protecting Critically Endangered Grasslands

Tabled: 17 June 2020

2 Establishing the grassland reserves

The main purpose for establishing the WGR and GEWR is to offset the losses of Natural Temperate Grasslands and Grassy Eucalypt Woodlands. The reserves will also protect other grassland-inhabiting species.

2.1 Conclusion

DELWP has not met the state’s commitment to the Australian Government to establish the WGR and GEWR by 2020.

The MSA program schedule and associated protection of environmental values in the reserves was based on early acquisition of the land. The MSA program based the 10-year land acquisition timeframe on the understanding that the state would commit significant funding for the program. This did not occur and DELWP has not acquired land as intended, which increases the risk that its ecological condition has degraded and may continue to do so.

To address this, DELWP recently updated the regulatory framework that supports the MSA program and is changing its approach to acquisition and management of targeted land. However, it has yet to show whether it can offset losses of native vegetation due to urban development, or how it will preserve ecological values to meet its commitments under the MSA program.

DELWP has found that most of the land purchased for the WGR is of low quality, as much of it is nutrient-enriched, but still has significant ecological value. Improving its ecological condition will require long-term effort from DELWP and Parks Victoria and incur significant management costs.

2.2 How the reserves offset losses from urban development

Under the MSA program, clearing within Melbourne’s UGB is subject to compliance with vegetation offset requirements in Victoria’s Native Vegetation Management: A Framework for Action 2002.

The MSA program identifies several protection mechanisms to offset the loss of almost 46 287 hectares of land, containing 6 249.50 hectares of native vegetation and 2 856 scattered trees, as a result of urban development. These include establishing two large grassland reserves.

Western Grasslands Reserve

DELWP identified the 15 000-hectare WGR as the primary offset for expected losses of almost 3 278 hectares of Natural Temperate Grasslands in the UGB.

In 2009, the state government told developers:

… the retention of native vegetation within the [UGB] is now the exception rather than the rule. Therefore, with few exceptions, all native grassland will be cleared within urban development areas. This is because the protection of native vegetation has been considered in a more strategic manner and because the focus has been on protection of the largest and most significant areas, mostly outside the UGB …

In August 2010, the government implemented planning scheme Amendment VC68, which restricts development in areas that contain Natural Temperate Grasslands by:

  • expanding the UGB around Melbourne
  • reserving land for the Regional Rail Link and Outer Metropolitan Ring Road
  • placing a PAO on land in the WGR and applying an environmental significance overlay on other areas of conservation significance.

Once complete, the WGR will be the largest consolidated area of Natural Temperate Grasslands in Australia.

Figure 2A shows WGR locations.

Figure 2A
Location of the WGR

Figure 2A  Location of the WGR

Source: VAGO.

Grassy Eucalypt Woodlands Reserve

As shown in Figure 2B, under the MSA program, DELWP listed how it would offset Grassy Eucalypt Woodlands lost through urban development. This included establishing a 1 200-hectare GEWR outside the UGB by 2020. This is yet to begin.

Figure 2B
Protection of Grassy Eucalypt Woodlands through the MSA

Figure 2B  Protection of Grassy Eucalypt Woodlands through the MSA

Source: VAGO.

Unlike the approach to the WGR, DELWP decided not to place a PAO on land identified as containing Grassy Eucalypt Woodlands. Instead, it would primarily protect these grasslands from destruction in the UGB and offset only a small amount outside the UGB.

DELWP did not identify specific parcels of land to be protected for the reserve. Instead, it proposed an ‘investigation area’ for the GEWR in Melbourne’s north, but has not finalised the location of the reserve.

2.3 Importance of early acquisition

The MSA program was established and conservation commitments developed on the basis of early acquisition of land in both the WGR and GEWR, to best preserve ecological value.

Potential for ecological degradation

A 2005 study of native grasslands to the west of Melbourne reports on the significant loss of this habitat due to development and land degradation between 1985 and 2000, including due to weed infestation:

The remaining grasslands will continue to be threatened by weed invasion and other degradation processes. Many highly invasive alien species, particularly introduced stipoid grasses such as Nassella neesiana, currently threaten Victorian native grasslands (Carr et al., 1992; McLaren et al., 1998; Morgan, 1998). Although weed control techniques are being developed (Lunt and Morgan, 2000; Campbell et al., 2002), due to the lack of active management at many grassland remnants, particularly railway reserves, it seems many sites will continue to degrade in the future.

This study supports DELWP’s own findings regarding grassland degradation.

DELWP’s 2009 modelling of future extent and condition of native grasslands to the west of Melbourne under four possible scenarios shows the significant ecological benefits from purchasing properties early. The longer the period between the state applying the PAO and acquiring land, the greater the risk to achieving these benefits.

DELWP’s modelling shows that the:

  • greatest benefit to grassland quality occurs if land is purchased upfront
  • ecological benefits of a strategic approach significantly reduce if properties are progressively purchased over an extended period
  • the likelihood of significant ecological degradation occurs within the first 10 years, which is the present case.

In addition, purchasing all land upfront as a contiguous reserve helps land management and provides economies of scale.

The planning scheme amendments that DELWP introduced to ensure landowners within the WGR do not develop or use their land in a way that affects its environmental value provide some controls to protect these grasslands. However, the threat of ecological degradation from weed invasion remains.

Attempt to change acquisition timelines

In 2012, the Victorian Government wrote to the Australian Government requesting an extension to the 2020 acquisition deadline for both reserves. To justify the extension, DELWP cited limited funds and slower than expected development rates.

In July 2012, the Australian Government agreed in principle to the extension, noting that both governments would need to work together to formally extend the acquisition timeframe.

This has not occurred. At the time of this audit, the original 2020 timeframe for establishment of both reserves remains in the MSA program.

2.4 Progress on establishment of reserves

DELWP acknowledges that it will not achieve the MSA program’s 2020 deadline for WGR acquisitions. It advised us that a range of factors have affected its ability to acquire land, including failed landowner negotiations and funding constraints.

WGR acquisition progress

The government is significantly behind its land acquisition target.

As shown in Figure 2C, by December 2019 the state had acquired around 10 per cent of the flagged WGR land. Of this, almost 64 per cent came from a single purchase of 1 000 hectares in 2012.

Figure 2C
WGR land acquisition as at October 2019

Figure 2C  WGR land acquisition as at October 2019

Source: VAGO, from DELWP data.

DELWP acquisition prioritisation criteria

To guide acquisition, DELWP assesses and scores each parcel of land against six prioritisation criteria:

Criteria

Prioritises acquiring land where …

Vegetation state

high-quality grasslands exist (to reduce risk of loss/degradation)

Values of ecological significance

significant ecological values other than Natural Temperate Grasslands and wetlands, such as native plant species like the Spiny Rice-flower or animal species like the Striped Legless Lizard, are identified

Risks to the quality of the values

weeds threaten the condition of the land 

Strategic fire management requirements

there are major fire zones (for ease of fire management)

Parcel features

landowners are highly impacted by the PAO 

Neighbourhood

it will add to a consolidated area (to facilitate more effective land management).

DELWP revises scores if an adjacent parcel has been acquired. In these instances, when the neighbourhood score increases, the parcel is given a higher priority.

DELWP has also prioritised offers to purchase land from landowners who are experiencing personal or financial distress.

Factors leading to low acquisition rates

DELWP has not yet purchased some properties assessed as the highest priority. In part, this is because DELWP is allowing landowners to decide when to sell rather than compulsorily acquiring the land.

Acquisition is also limited by the amount of money DELWP has to make purchase offers, and by landowners’ willingness to accept the offers made.

GEWR acquisition progress

In June 2014, DELWP developed a proposal to establish the GEWR. The proposal outlined the location of the proposed reserve area, protection measures and management considerations. However, the proposal did not include the commitment to establish the reserve by 2020, as identified in the MSA program, or say how this would be achieved.

Figure 2D details the different protection mechanisms for Grassy Eucalypt Woodlands.

Figure 2D
Protection mechanisms for Grassy Eucalypt Woodlands

Protection criteria

Protection mechanism

Grassy Eucalypt Woodlands dominated by kangaroo grass

Voluntary purchase by the Crown for areas larger than one hectare.

Grassy Eucalypt Woodlands dominated by native grasses

Voluntary purchase by the Crown for areas larger than five hectares.

Derived grasslands and thickets

Voluntary on-title agreements under the Conservation, Forests and Lands Act 1987.

Scattered trees or ‘fertilised woodlands’

Voluntary on-title agreements under the Conservation, Forests and Lands Act 1987. These areas will consolidate and connect the areas of higher-quality habitat.

Source: VAGO, from information in the Land Protection under the Biodiversity Conservation Strategy 2014, pp. 11–12.

DELWP has not decided on the protection mechanisms the reserve requires and has not acquired any land for this reserve.

2.5 Ecological condition of the grassland reserves

From its beginning, a lack of reliable, accurate and comprehensive ecological information has hampered the MSA program. This continues to impact DELWP’s ability to deliver on outcomes, including:

  • identifying high-value areas
  • strategically implementing interim management activities
  • prioritising land acquisition
  • providing assurance to the Australian Government that the two reserves will offset losses of Matters of National Environmental Significance in the UGB.

Condition of the WGR

DELWP does not have a complete and comprehensive understanding of the ecological values and condition in the WGR.

Without up-to-date, comprehensive ecological data, DELWP cannot effectively prioritise management actions or which private land in the WGR to acquire.

There is a significant risk that native grasslands on identified WGR land have since been lost to degradation and weed infestation.

Condition of private (unacquired) land

As DELWP does not have the power to enter private property, it cannot undertake onsite assessments to determine the state of the land.

DELWP has not conducted a condition assessment and mapping of native vegetation values on private land since 2011. In 2011 DELWP gathered data on the quality of the land within the WGR from sources outlined in Figure 2E.

Figure 2E
Condition assessments commissioned by DELWP

Conducted by

Year

Purpose 

Method

DELWP

2011

To undertake vegetation mapping and condition assessments of ecological values of private land.

Field-based surveys were conducted on private land where landowners had requested it because they challenged DELWP’s modelled extent of native vegetation within their properties.

Two botanists surveyed native vegetation based on habitat hectares and collected mapping data using a portable computer.  

Serrated Tussock Working Party

2011

To map weed infestations of serrated tussock, Chilean needle grass and cane needle grass 

Field-based surveys conducted in southern section of the WGR along transect lines 200 metres apart.

Surveys from roadside in northern section due to restricted access.

Arthur Rylah Institute for Environmental Research

2011

To map state of the WGR to inform an adaptive management approach.

In-field observations.

Observations from property boundaries.

Analysis of patterns visible on aerial photographs where access was restricted or no data available.

Source: VAGO, from information provided by DELWP.

Since 2012, the Arthur Rylah Institute has conducted ‘over the fence’ assessments for DELWP of what is visible without accessing the land. DELWP advise that these assessments are useful but do not provide a full understanding of the land’s condition. However, DELWP does not document these assessments to demonstrate how frequently or extensively they occur.

Without access to complete onsite inspections, DELWP cannot be fully aware of the condition of private land subject to the PAO.

Land impacted by rock removal and nutrient enrichment

Previous land use, such as for agriculture and urban development, has changed grassland quality. Researchers have developed models to categorise the different states that occur in Natural Temperate Grasslands and these can be used to guide management.

The Australian Journal of Botany’s State and Transition Model, shown in Figure 2F, categorises the condition of Natural Temperate Grasslands from more to less desirable. This is often determined by previous land use, such as agriculture, and includes a nutrient rich classification.

Figure 2F
State and transition model for natural temperate grasslands

Figure 2F  State and transition model for natural temperate grasslands

Source: VAGO, from Sinclair et al, ‘A state-and-transition model to guide grassland management’, Australian Journal of Botany, vol. 67, pp. 437–453.

Grasslands that have fertiliser applied (nutrient-enriched) and/or have had naturally occurring basalt rock removed (de-rocked) are categorised as less desirable. This is likely to occur where landowners have intensively cropped the land.

Higher nutrient levels can lead to non-native species—usually noxious weeds—dominating these landscapes.

DELWP’s technical advisory group classifies nutrient-enriched grassland as the second lowest conservation value of all grassland states. While land acquired to date still qualifies for EPBC Act listing, much of it is nutrient rich and therefore not high quality.

DELWP’s progress reports state that approximately 1 000 hectares of acquired WGR land is classified as ‘EPBC-listed Natural Temperate Grasslands’. However, as recorded in DELWP’s vegetation inventory reports, over 900 hectares of this land is classified as nutrient-enriched grassland, as shown in Figure 2G.

Nutrient-enriched grasslands need intensive management to return to a more desirable state.

Figure 2G
State of EPBC-listed Natural Temperate Grasslands acquired by DELWP

Grassland state

Ranking

Area (hectares)

% of total EPBC land

Herb-rich

More desirable

22.9

2.3

Themeda

More desirable

12.2

1.2

C3 Grassland

Less desirable

164.6

16.5

Nutrient enriched

Less desirable

937.7

93.8

De-rocked and nutrient enriched

Less desirable

84.2

8.4

Note: Data as at 2015.
Source: VAGO, from information provided by DELWP.

Condition of the GEWR

DELWP has a poor understanding of the ecological condition of land containing Grassy Eucalypt Woodlands and earmarked for protection. DELWP has not provided any ecological condition surveys or reports for the GEWR. The area identified for the GEWR is still listed as an ‘investigation area’.

DELWP has not prioritised protection of the GEWR. This is because there is:

  • no PAO for the GEWR land
  • no legal mechanism to enter purchasing arrangements with landowners
  • only a small pool of money to purchase and protect land across both reserves.

DELWP’s ecological modelling that informed the 2009 assessment identified areas where Grassy Eucalypt Woodlands were highly likely. Based on this, DELWP identified that 294 hectares of Grassy Eucalypt Woodlands must be protected within the UGB to meet the 80 per cent target. DELWP later identified that the area of Grassy Eucalypt Woodland is much less and the initial modelling overstated losses within the UGB and resultant offset obligations.

Grassy Eucalypt Woodlands are commonly represented by River Red Gums, with a degraded understorey. These dominate the investigation area for the GEWR.

In August 2016, DELWP wrote to the Australian Government requesting changes to the MSA program outputs to reflect identified modelling inaccuracies.

DELWP requested:

That …

and

be combined …

a 1 200-hectare conservation reserve outside the UGB

80 per cent (294 hectares) of Grassy Eucalypt Woodlands in secure conservation areas in the UGB

as a single target to deliver 1 494 hectares within and outside the UGB rather than two separate targets. 

DELWP also requested that the River Red Gums with a degraded understorey, contribute toward achieving its Grassy Eucalypt Woodland commitments. The Australian Government agreed to this.

Detailed condition modelling would help DELWP prioritise parcels for protection and ensure that the loss of Grassy Eucalypt Woodlands is appropriately offset through the implementation of the MSA program.

2.6 Funding models and constraints

Since its outset, the government has used two funding models to generate funds to implement the MSA program:

  • the native vegetation credits funding model
  • the habitat compensation fee model.

Both models are based on the polluter pays principle—in this instance, the developers. Figure 2H compares the two.

Figure 2H
Comparison of the MSA funding models

Figure 2H  Comparison of the MSA funding models

Source: VAGO, from DELWP documentation.

Native vegetation credits funding model

Between 2010 and 2013, DELWP used the native vegetation credits funding model to implement the MSA program. This mirrored the general offsetting provisions in place at the time.

This approach required upfront funding for initial land purchases. This is reflected in the MSA program report which indicates that the resources required to publicly acquire land—within a 10-year acquisition program—had been committed. The government recognised it would require upfront funding in its 2010–11 budget, where it committed to a total estimated investment of $190 million over the life of the MSA program. DELWP received $10 million in 2009–10 and expected to receive $20 million a year through to 2013–14.

In 2010, the state government reduced funding to the MSA program. As a result, the only funding DELWP has received from the government for the MSA program has been the $10 million provided in 2009–10.

Habitat compensation fee model

Since 2013, DELWP has used a habitat compensation fee model, based on full cost recovery, to fund implementation of the MSA program. Cost recovery involves setting and collecting charges imposed on developers.

DELWP aims to achieve full cost recovery over the life of the MSA program—to 2062—through the collection of habitat compensation fees from developers.

Estimated MSA program costs

DELWP modelled MSA program costs in 2013, 2017 and 2019 to determine likely costs to 31 December 2060. Figure 2I shows the estimated MSA program costs in real terms.

Figure 2I
Estimated MSA program costs in real terms

Figure 2I Estimated MSA program costs in real terms

Source: VAGO, from information provided by DELWP.

Between 2013 to 2019, in real terms, the estimated costs have increased by around 80 per cent. This is due primarily to land values in the WGR increasing at a faster rate than inflation.

MSA program expenditure and fees collected

Figure 2J shows total MSA program expenditure and revenue from 2010–11 to 2018–19.

Figure 2J
MSA Program expenditure and revenue to 30 June 2019

Figure 2J   MSA Program expenditure and revenue to 30 June 2019

Source: VAGO, from information provided by DELWP.

Over 90 per cent of revenue collected has been from habitat compensation fees, with the remainder in state appropriation funding.

Around half of MSA program expenditure has been for land acquisitions, as seen in Figure 2K.

Figure 2K
MSA program expenditure 2010–11 to 2018–19

Figure 2K  MSA program expenditure 2010–11 to 2018–19

Source: VAGO, from information provided by DELWP.

Administration expenditure is 15.6 per cent of total program expenditure. DELWP acknowledge that administration costs are high. However, DELWP has had to commit resources to develop various frameworks and policies for the MSA program, and to develop the MSA Act. DELWP has reduced these to 7 per cent for 2018–19.

At 30 June 2019, the MSA trust account balance was around $44 million. In addition to using money for acquiring land, DELWP needs to ensure there are sufficient funds available for potential ‘loss on sale’ compensation claims.

Loss on sale compensation

Loss on sale compensation is a consequence of the PAO and is legislated under the Planning and Environment Act 1987.

Loss on sale compensation claims occur in the following circumstances:

If …

And …

Then …

a landowner sells their land at a lower price than they expected to get if the land had not been under a PAO

the landowner gave the state 60 days written notice of their intention to sell 

the landowner may claim compensation after the sale.

a landowner sells their land to a third party

the sale price is below unaffected market value (market value without the PAO)

the landowner may be entitled to compensation after the sale.

a loss on sale claim is successful 

 

DELWP has 30 days to pay the claim.

Payment of a loss on sale claim does not result in the land transferring to ownership by the Crown.

Limitations of existing fee arrangements

DELWP has not indexed or raised habitat compensation fees since 2013. DELWP did not increase these fees because of limits on its capacity to impose or control them. This has limited the funds generated and put full cost recovery for the MSA program at risk.

This issue also slowed the pace of land acquisition and DELWP’s ability to secure and protect priority WGR sites.

As of 30 June 2019, DELWP has collected $117 million from developers to administer and deliver the MSA program. The revenue generated has not kept pace with increasing land and maintenance costs. DELWP estimates the current fees cover approximately 43 per cent of the estimated MSA program delivery costs.

To address these issues, in 2014, DELWP began to create a new regulatory framework for the MSA program.

The Melbourne Strategic Assessment (Environment Mitigation Levy) Act 2020

The MSA Act sets measures to ensure that the MSA program remains fully cost recoverable over its life.

It replaces habitat compensation fees with an environment mitigation levy. There will be two indices that operate in parallel in the first five years. One is a composite index of the Consumer Price Index and wages used to adjust fees annually for the life of the MSA program.

The second index increases levies by around 20 per cent per year over the first five years of the MSA Act to ensure that the MSA program achieves full cost recovery.

DELWP will review the cost base for the MSA Act every five years to determine if it is appropriate to achieve conservation outcomes.

2.7 A changing approach

DELWP acknowledges that planning for the MSA program was rushed and not carefully thought through. It believes that 2020 was never realistic as an establishment date for the two grassland reserves. However, the Australian Government endorsed and approved the MSA program based on this commitment.

DELWP’s revised implementation

In August 2019, DELWP briefed the state government that the habitat compensation fee scheme ‘…was not designed to acquire the WGR by 2020, instead it was designed to implement the Program in accordance with Victoria’s offsetting principles…’ as outlined in Victoria’s native vegetation regulations, the Guidelines for the removal, destruction or lopping of native vegetation 2017.

Acquiring land in pace with development

DELWP advised the state government that it has been acquiring WGR land to keep pace with development, and for every one hectare of land cleared, two have been protected in the WGR. Figure 2L shows the amount of land cleared in the UGB and offset in the WGR as of June 2019.

Figure 2L
Native vegetation cleared for urban development and offset in the WGR

 

Hectares

Percentage of total

Native vegetation cleared in the UGB

654 (of 6 412)

10.2%

Native vegetation protected inside and outside the UGB

1 308 (of 12 802)

10.2%

Note: Note: Data correct as of June 2019.
Note: Note: 6 412 is the total estimated to be cleared until 2060. 12 802 is the total amount of native vegetation within the reserves.
Source: VAGO, from DELWP data.

To date, land acquisition and management is keeping pace with vegetation cleared due to urban developments. The MSA Act will ensure that DELWP’s previous costs shortfall, due to land value increase and inflation, are fully recovered over the first five years of its operation.

The use of a multiplying factor—on a hectare basis—of two is not a good measure of an offset. The Guidelines for the removal, destruction or lopping of native vegetation 2017 does not use this measure to calculate offset requirements.

The habitat hectare method is a vegetation assessment method that measures the condition of native vegetation against a benchmark for the same vegetation type. It is a measure of vegetation quality.

The landscape factor is derived from landscape scale information. It represents the importance of one location relative to all other locations in Victoria.

According to these guidelines, offsets compensate for biodiversity losses as a result of native vegetation removal. The guidelines do not operate on a hectare basis. Rather, a habitat score (habitat hectare multiplied by a general landscape factor) determines the offset size.

Further, under the EPBC Act, the Australian Government’s guidance states that offsets should be tailored specifically to the attribute of the protected matter that is impacted to provide a conservation gain. The guideline suggests that any direct offset must meet, as a minimum, the quality of the habitat at the impact site (that is, like-for-like).

DELWP stated that it has purchased land in line with development that has occurred, and therefore aligns with offsetting best practice. However, DELWP cannot demonstrate how the land acquired in the WGR would satisfy requirements using a scoring system commensurate with the guidelines.

DELWP has also not provided evidence to demonstrate that the quality of land purchased in the WGR matches the quality of land cleared in the UGB.

Alignment with the MSA program

DELWP’s approach of purchasing land in line with development is not the original intent of the MSA. The MSA program made it clear that early acquisition of land was important to preserve the environmental values of critically endangered Natural Temperate Grasslands.

While the aim was to offset losses from urban development, the commitment to the Australian Government was to acquire and establish the WGR by 2020.

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