Officials working on conservation matters in the New South Wales environment department have been barred from holding financial interests in the state’s biodiversity offset scheme.
This follows an investigation of the department’s management of potential conflicts of interest.
Senior officials told a parliamentary inquiry on Friday that staff who work on the offset scheme or in the department’s biodiversity, conservation and science sections had been told they could not work in those roles and hold personal interests in properties and companies that were involved in the financial trade of offset credits.
It follows two external investigations that were commissioned by the department after Guardian Australia uncovered a series of failures in offset programs.
Offsets exist to allow developers to compensate for environmental damage in one area by delivering an equivalent environmental benefit in another.
But there have been problems with the system, including in one case a 20-year delay in delivering environmental protection and so-called “double-dipping” by developers in areas of urban sprawl.
Guardian Australia also revealed the state and federal governments bought tens of millions of dollars in offset credits from properties linked to consultants whose company advised the government on development in western Sydney.
The reporting triggered a string of reviews, including one by the legal firm Maddocks and one by the consultancy Centium examining how the environment department had managed potential conflicts of interest associated with staff holding financial interests in offset sites.
Guardian Australia has reported on one case involving a former staff member who bought land during their time in the department that went on to become an offset site from which the state government bought credits. There is no suggestion there was any impropriety involved.
Dean Knudsen, the deputy secretary for biodiversity, conservation and science, told Friday’s hearing of the offset inquiry there had been fewer than five officials with such financial interests.
After the reviews, the department has introduced a new conflict of interest protocol that deems some investments “high risk” and presenting an “unacceptable risk to the integrity” of the scheme.
Knudsen said as a result, staff in certain sections could no longer participate in the scheme and those with historic interests had 12 months to divest.
“For departmental staff we’ve effectively said you’re not supposed to be participating in the scheme,” he said.
“If you have historically, we’ve told them what you have to do to effectively distance them from that.”
The Greens MLC Cate Faehrmann, who is chairing the inquiry, said the changes were welcome.
“This should have happened at the start of the scheme to help prevent the types of windfall gains by a few individuals with detailed knowledge of the offset industry,” she said.
“However, we also need to see a tightening of conflicts of interest [rules] within the industry itself, including within ecological consultancies.”
Officials were also asked about delays in securing permanent protection of offset sites to compensate for habitat destruction caused by coalmines in NSW.
Responses to questions on notice in the parliament from the independent MLC Justin Field state that of the 41 coalmines approved in New South Wales in the past decade, one did not require offsets, 14 had not yet triggered the requirement to deliver their offsets, nine had land set aside but permanent protections were not yet in place, and 17 had “substantially finalised” their offsets.
Field asked officials to explain what substantially finalised meant and was told for “all intents and purposes the offsets have been secured” but certain aspects – such as finalisation of some of the legal arrangements protecting the site – were outstanding.
Officials agreed the process for securing offsets for mines had not been “as timely as [they] should be”.
Field said it was not good enough that “not one single coalmine approved in the last decade has secured their required offsets through finalised in-perpetuity arrangements”.
“The government needs to improve the transparency around what the hold-up is, put a deadline on finalising these arrangements and hold these mine operators to that deadline,” he said.
