The Victorian government has failed to protect critically endangered grasslands as promised under a deal with the federal government for the urban expansion of Melbourne, the state’s auditor has found.
The Victorian auditor general’s report, published on Wednesday, investigated whether the state government delivered two reserves that were promised by 2020 as offsets for the development of new suburbs to support the city’s population growth.
It found the government had acquired just 10% of the land needed for one of the protected areas and none of the land required for the second in the decade since the state struck an agreement with the commonwealth that streamlined environmental approvals for developments within Melbourne’s urban growth boundary.
The report comes days after the prime minister, Scott Morrison, used a speech to support further deregulation of environmental assessments and greater use of bilateral arrangements between state and federal governments.
Conservationists say the Victorian auditor general’s report highlights how the environment can suffer when federal oversight is removed from processes that involve nationally significant species and ecosystems.
The natural temperate grassland and the grassy eucalypt woodlands of the Victorian volcanic plain are two of Australia’s most endangered ecosystems. Less than 5% of them remain as a result of clearing and invasive weeds.
The Melbourne Strategic Assessment was an agreement between the Victorian and federal governments that switched off federal approvals for individual projects within Melbourne’s urban growth area, leaving environmental assessments in the hands of the state.
Under the deal – signed in 2010 – the Victorian government agreed it would establish a western grassland reserve and a grassy eucalypt woodlands reserve by 2020 to offset clearing for the development of new suburbs, such as Wyndham Vale and Tarneit to the city’s west.
The auditor general’s report states the government “has not met its commitments” to do this.
It finds the state’s Department of Environment, Land, Water and Planning had acquired 1,568ha of the 15,000ha promised for the western grassland reserve and none of the 1,200ha required for the grassy eucalypt woodlands reserve.
“The delays in acquiring these reserves also mean they will likely require a significantly greater investment to restore and retain these ecological values than if they had been purchased within the intended 10‐year timeframe,” the report states.
The report finds that rather than purchasing the land upfront after it made its agreement with the federal government, the state was acquiring parcels of land for the reserves as new areas were developed. It pays for this using fees collected from developers.
While the rate of acquisition had kept pace with the rate of development, the consequence of this approach was that the cost of delivering the full reserves had risen by 80% between 2013 and 2019, mostly as a result of rising land values.
Under the Melbourne strategic assessment, Victoria agreed the 15,000ha grassland reserve would be the primary offset for about 3,278ha of native grassland it expected would be cleared due to urban expansion. This equates to about 4.5ha protected for every one hectare cleared.
The auditor general’s report finds that the land protected so far covered 2ha for every 1ha already cleared.
Crucially, it also finds that the state government could not demonstrate that the land in the offset areas was of the same quality as the critically endangered grasslands and woodlands already cleared.
The report makes seven recommendations, including that the state government set a strategy for how the land for the grassy eucalypts reserve will be acquired and funded.
James Trezise, a policy analyst with the Australian Conservation Foundation, said the review showed what happened when federal oversight was switched off under national environmental law.
He said the grasslands were incredibly important and provided habitat for a range of species and wildflowers.
“To put it simply the Melbourne strategic assessment is a basket case when it comes to protecting matters of national environmental significance,” he said. “The federal government has effectively washed its hands of protecting these critically endangered grasslands through the strategic assessment process.”
Matt Ruchel, the executive director of the Victorian National Parks Association, said the organisation had been trying to raise concerns about the state government’s implementation of the plan for some time.
“The Victorian government has failed to deliver and the federal government has failed to do anything to ensure they deliver,” he said. “It [the strategic assessment] was sold as a win-win for the environment and property developers. But a decade later, the environment is the loser.”
Ruchel said if governments were going to rely on streamlined processes then environmental outcomes – in this case the acquisition of land for reserves – should be secured upfront.
He said the piece by piece approach taken by the Victorian government meant the environment was wearing all of the risk associated with Melbourne’s expansion and the trajectory of the ecosystems was continuing towards extinction.
A Victorian government spokeswoman said the government welcomed the audit and supported all seven recommendations.
“The Victorian government’s acquisition of land for these reserves has kept pace with the rate of land development, as the VAGO report demonstrates,” she said. “Legislation was passed last year to ensure that the grassland reserves would be delivered.”
Brendan Sydes, the chief executive of Environmental Justice Australia, said the case highlighted a failure in federal government oversight.
“The fact is, it hasn’t delivered what it’s promised and the commonwealth hasn’t been willing to step in and sort it out,” he said. “The commonwealth endorsed the program and has continued oversight and they’ve been content to just leave it to the Victorian government.”
Sydes said the review of Australia’s national environment law, being undertaken by the former competition watchdog chair Graeme Samuel, was likely to examine whether Australia’s system for environmental assessments should lean more heavily toward agreements similar to the one that had been used here.
“While on paper, strategic assessment seems to have the capability of delivering a better overall package for conservation, in practice the results have been really poor,” he said.
Guardian Australia sought comment from the federal environment minister, Sussan Ley.