Australian Government and Greens Party Agree to Overhaul National Environmental Laws

Australian Government and Greens Party Agree to Overhaul National Environmental Laws

The Australian federal government, led by the Labor party, has secured a deal with the Greens to pass a significant overhaul of the nation's primary environmental legislation, the Environment Protection and Biodiversity Conservation (EPBC) Act. The agreement will enable the passage of legislation to establish a new independent national Environment Protection Agency (EPA) and a body called Environment Information Australia (EIA). This marks a critical step in a multi-year effort to reform a legal framework widely considered outdated and ineffective.

Context & What Changed

The Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) is Australia's central piece of national environmental legislation. It provides a legal framework to protect and manage nationally and internationally important flora, fauna, ecological communities, and heritage places. For over two decades, it has been the primary mechanism for federal assessment and approval of development projects—from mines and infrastructure to residential subdivisions—that are likely to have a significant impact on a 'matter of national environmental significance'.

However, the Act has been subject to sustained criticism from a wide range of stakeholders. Environmental groups have argued it has failed to arrest Australia's dramatic biodiversity decline, pointing to the country's world-leading rate of mammal extinction (source: Australian Government, State of the Environment 2021). Conversely, industry groups have criticized the Act for creating costly project delays and regulatory uncertainty through a slow, duplicative process that often overlaps with state and territory-based approvals. The average time for a federal decision on a major project has been cited as over 1,000 days (source: Samuel Review, 2020).

A comprehensive independent review of the EPBC Act, led by Professor Graeme Samuel in 2020, concluded that the law was "ineffective," "not fit for current or future challenges," and that Australia's natural environment was in a state of overall decline. The Samuel Review recommended fundamental reforms, including the introduction of legally enforceable National Environmental Standards and the establishment of an independent 'cop on the beat' to oversee compliance and enforcement.

The current Labor government came to power with a commitment to implement these reforms through its 'Nature Positive Plan'. The recent deal with the Greens party breaks a political impasse, allowing the government to proceed with the first stage of its legislative agenda. What changed is that the government has secured the necessary Senate votes to pass bills establishing two new key institutions: an independent national Environment Protection Agency (EPA) to handle project assessments and enforce the law, and Environment Information Australia (EIA) to serve as a centralized source of environmental data and information. In a significant concession to secure the deal, the government has decoupled this structural reform from the more contentious second stage: the creation of the National Environmental Standards themselves. This means the new institutions will be created first, while the detailed rules they will enforce are to be legislated at a later date.

Stakeholders

Federal Government (Labor Party): The primary driver of the reform. The government aims to deliver on a key election promise, create a more effective environmental protection regime, and streamline the approvals process to provide greater certainty for business. The deal with the Greens is a major political victory, but they now face the challenge of designing and implementing the subsequent National Environmental Standards.

The Greens Party: A crucial stakeholder whose votes in the Senate are necessary for the legislation to pass. They have long advocated for an independent EPA and stronger environmental protections. While they have supported this first stage, they will continue to exert pressure on the government to ensure the forthcoming standards are robust and that the EPA is genuinely independent and well-resourced.

Industry & Business Groups: This includes bodies like the Minerals Council of Australia, the National Farmers' Federation, and the Property Council. They are among the most impacted stakeholders. While generally supportive of measures that increase efficiency and certainty ('single touch' approvals), they are deeply concerned about the potential for the new EPA to create more 'green tape', impose higher compliance costs, and delay projects. They will be formidable lobbyists during the development of the National Environmental Standards.

Environmental & Conservation Groups: Organizations like the Australian Conservation Foundation and WWF-Australia have campaigned for these reforms for years. They strongly support the creation of an independent EPA. However, they remain cautious, fearing that the final National Environmental Standards could be weakened by industry pressure or that the new EPA could be underfunded and unable to perform its role effectively.

State & Territory Governments: As administrators of their own environmental laws, states are critical partners. The reforms aim to accredit state-based processes that meet national standards, reducing duplication. States will be keen to retain their authority and will resist any perceived federal overreach, making their cooperation essential for the 'single touch' approval system to work.

Indigenous Australians: As traditional owners and managers of a significant portion of the Australian continent, Indigenous groups have a profound stake in environmental and cultural heritage protection. They will seek a central role in the new framework, ensuring that Indigenous knowledge and rights are embedded in the decision-making processes of the new EPA and the data frameworks of the EIA.

Evidence & Data

The case for reform is built on extensive evidence of systemic failure. The 2021 State of the Environment Report, a five-yearly government-mandated scientific assessment, painted a stark picture of environmental degradation, stating that the environment is "poor and deteriorating" due to increasing pressures from climate change, habitat loss, invasive species, and pollution (source: Australian Government, State of the Environment 2021). Australia has lost more mammal species than any other continent and continues to have one of the highest rates of species decline among developed countries (source: IUCN Red List).

The economic case is equally compelling. The Samuel Review found that the current EPBC Act framework leads to significant inefficiencies. For example, between 2000 and 2017, the median time for approval of a resources project that required the highest level of assessment was 1,043 days (source: Samuel Review, 2020). Such delays impose substantial holding costs on proponents and create investment uncertainty. The resources sector, which is heavily regulated by the EPBC Act, contributed approximately 13.6% of Australia's Gross Domestic Product in 2022-23, highlighting the macroeconomic significance of an efficient and predictable regulatory system (source: abs.gov.au).

The establishment of Environment Information Australia (EIA) is a direct response to another key finding: a lack of quality, accessible data. The Samuel Review noted that decision-making is often hampered by a poor or incomplete evidence base. The EIA is intended to centralize data collection, analysis, and reporting, providing a common operating picture for regulators, project proponents, and the public, thereby reducing disputes over baseline environmental conditions.

Scenarios (3) with probabilities

Scenario 1: Cohesive & Legislated Reform (Probability: 55%): The bills establishing the EPA and EIA pass smoothly. The government leverages this momentum to successfully negotiate and legislate a comprehensive suite of National Environmental Standards within the next 18-24 months. Industry and environmental groups find enough common ground, resulting in a framework that is stricter but also clearer and more predictable. This leads to a more stable, albeit more rigorous, investment environment for major projects over the medium term.

Scenario 2: Fractured & Contested Implementation (Probability: 35%): The EPA and EIA are established, but political consensus on the National Environmental Standards proves elusive. The government either delays their introduction indefinitely or passes a watered-down version that faces immediate legal challenges from environmental groups. The new EPA is forced to operate in a legal grey area, relying on old policies and discretionary powers. This outcome would heighten regulatory uncertainty, potentially worsening project delays and litigation risk compared to the current system.

Scenario 3: Political Reversal & Gridlock (Probability: 10%): The initial legislation is passed, but a change of federal government occurs before the new institutions are fully embedded and operational. A new government, ideologically opposed to the reforms, moves to repeal the legislation or critically under-reserves the EPA and EIA, rendering them ineffective. This would represent a return to the status quo, but with significant wasted political and financial capital, entrenching regulatory uncertainty for the long term.

Timelines

Short-term (0-12 months): Legislation to establish the EPA and EIA is expected to be introduced and passed by Parliament. Recruitment for senior leadership of the new agencies will commence. The government will launch a formal, intensive consultation process with stakeholders on the draft National Environmental Standards.

Medium-term (1-3 years): The EPA and EIA become fully operational, taking over assessment and compliance functions from the existing department. The first set of National Environmental Standards is likely to be legislated. Early major project proposals begin to be assessed under the new system, providing the first real-world test cases.

Long-term (3-5+ years): The full impact of the reforms becomes measurable. Data from the EIA begins to inform regional planning and strategic assessments, shifting the focus from project-by-project approvals to landscape-scale management. A body of legal precedent develops around the EPA's decisions and the application of the new standards, clarifying the regulatory landscape.

Quantified Ranges (if supported)

Federal Budget Impact: The establishment and initial four-year operation of the national EPA and EIA are likely to require federal funding in the range of AUD $200-300 million over the forward estimates, based on the scale of similar regulatory bodies and the data infrastructure required (author's estimate).

Compliance Costs for Industry: In the short-to-medium term, large-cap proponents in mining, infrastructure, and property can expect an increase in compliance costs of 5-20%. This will be driven by more stringent data requirements for environmental impact statements and potentially higher levies to fund the EPA (author's estimate). Over the long term, these costs may be offset by reduced legal and holding costs if the system becomes more efficient.

Project Approval Timelines: During the 1-3 year transition period, approval timelines for complex projects could temporarily increase by 10-25% as proponents and the new EPA navigate the new procedures. The government's stated goal is that a mature system will ultimately reduce overall approval timelines, but this is unlikely to be realized for at least 3-5 years.

Risks & Mitigations

Risk: Regulatory Vacuum: The key risk is the time lag between the EPA's creation and the legislation of National Environmental Standards. An EPA with enforcement powers but without clear, legally-binding rules to enforce could lead to inconsistent, ad-hoc decision-making and a surge in legal challenges.

Mitigation: The government must issue clear, legally sound interim statements of expectation and policy guidance for the EPA. A firm, public, and legislated timeline for the delivery of the standards is essential to provide certainty to all stakeholders.

Risk: Duplication and Bureaucracy ('Green Tape'): A poorly designed interface between the new federal EPA and existing state/territory approval bodies could result in an additional layer of bureaucracy, increasing costs and delays, contrary to the reform's objectives.

Mitigation: The government must prioritize negotiating and finalizing legally robust bilateral agreements with each state and territory. These agreements must clearly define roles, responsibilities, and data-sharing protocols to enable a genuine 'single touch' environmental approval system.

Risk: Regulator Capability and Independence: The EPA's effectiveness hinges on its statutory independence and its ability to attract and retain deep technical expertise. There is a risk of it being under-resourced or its independence being eroded over time through political appointments or budget cuts.

Mitigation: The enabling legislation must contain strong provisions guaranteeing the EPA's operational and funding independence. The appointment process for its CEO and board should be transparent and merit-based. Securing multi-year funding commitments is crucial to insulate it from short-term political cycles.

Sector/Region Impacts

Mining & Resources: This sector will be the most significantly impacted. Projects will face a more powerful and independent regulator. Scrutiny of impacts on biodiversity, water resources, and cultural heritage will intensify. While facing higher compliance standards, the sector could benefit in the long term from clearer rules of engagement and a more defensible social license to operate.

Infrastructure & Property Development: All major public and private infrastructure projects (transport, energy, water) and large-scale residential developments will be subject to the new regime. Renewable energy projects, while critical for climate goals, will not be exempt and will face rigorous assessment of their land-use and biodiversity impacts.

Agriculture: The regulation of land clearing, a major driver of habitat loss, will be a critical focus. The agricultural sector will face increasing pressure to adopt and demonstrate sustainable practices, which may affect land values and development potential in some regions.

Regional Australia: The economic base of many regional areas is tied to the resources, agriculture, and infrastructure sectors. These regions will experience the impacts of the new laws most directly. The reforms could create both challenges for existing industries and opportunities for new economies based on environmental restoration and stewardship.

Recommendations & Outlook

For Government Agencies (Infrastructure, Treasury, Regional Development): It is imperative to begin integrating the anticipated National Environmental Standards into all forward planning and cost-benefit analysis for major projects. Agencies should prepare for enhanced data-sharing protocols with the new EIA and establish clear liaison points with the EPA to ensure a coordinated, whole-of-government approach.

For Large-Cap Industry Actors & Boards: Proactive engagement is critical. Companies in affected sectors must actively participate in the consultation on the National Environmental Standards to ensure their operational realities are understood. Boards should direct management to conduct scenario analysis on project pipelines, modeling the potential impacts of a stricter regulatory regime on costs and timelines. Investment in internal environmental data capture and management should be prioritized to meet the higher evidentiary burden the EPA will demand.

For Investors & Public Finance: Due diligence frameworks for Australian infrastructure and resources assets must be updated to incorporate heightened regulatory risk. In the short term, a risk premium may be warranted for projects yet to receive environmental approval. (Scenario-based assumption) Looking forward, under the successful implementation scenario (Scenario 1), assets and companies that can demonstrate leading environmental performance and data transparency are likely to command a premium, as they will be better positioned to navigate the new system and secure both regulatory and social license.

Outlook: This reform is a watershed moment for environmental regulation in Australia. The political agreement to establish an independent EPA and a national environmental data custodian is a structural change that will endure. (Scenario-based assumption) The primary uncertainty now lies in the strength and workability of the forthcoming National Environmental Standards. If the government successfully navigates the complex stakeholder landscape to legislate strong but clear standards, the long-term outcome will be a more predictable, transparent, and sustainable framework for development. This will create a more challenging environment for projects with significant environmental impacts but will ultimately reduce risk and enhance value for high-quality, well-managed projects and their proponents.