RYAN, Dr Sarah, Chair, National Natural Resource Management Regions Working Group; and Chair, Australian Capital Territory Natural Resource Management Council

CHAIR: Welcome. Although the committee does not require you to give evidence under oath, I should advise you that the hearing is a legal proceeding of the parliament and warrants the same respect as proceedings of the House itself. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. The committee has received your submission. Are there any additional comments or opening statements you wish to make? We will then go to questions.

Dr Ryan : Thank you for the opportunity. The regional NRM bodies around Australia really support the objectives of this act. We are in the business of dealing with the impacts of past human actions on landscape change. We are really concerned about the additional impact that climate change is likely to have on natural resources in our regions, so anything we can do to prepare and ameliorate the impacts of carbon emissions globally is really important to us.

We also support actions like this one that will pay landholders for delivery of ecosystems services that have a real value to society but are not yet or are poorly paid for by society according to their value. We really welcome the measures in the act that deal with the interactions between carbon and other landscape attributes—I mean the measures in the act that are designed to counter perverse outcomes, encourage co-benefits and make our landscape more rather than less resilient. So we really do support the provisions that require projects to take account of the relevant regional NRM plan.

There are two areas that I would like to highlight in the opening and that we believe need a little strengthening, improvement or more thought about. The first one is the issue of permanence and the hundred years. The relinquishment period in forest carbon projects looks like being a strong disincentive to landholders around regions where preliminary discussions have been done. Notwithstanding the comments from Mark, who is also in the same business as us, we are getting quite a lot of feedback about it being so inconceivably long and risky that people are not ready to contemplate it. They cannot see how they could even begin to do long-term business planning with something like that in mind. There seem to be right out at that end very few incentives in the act and only penalties for breaking it. We understand people can relinquish their forest carbon and buy credits back, but of course people are so uncertain about how that might work even in 20 or 30 years, let alone 100. So it is a concern to us. It may be something in the perception. Mark also spoke about the importance of carbon literacy, and we think that is really important too. There are a lot of new concepts here, and we have to help people learn their way into thinking and working with these, so support for the activities that will increase people's carbon literacy are important. We believe it is really important for this scheme, if it is to deliver a workable market that actually achieves the outcomes, which are saving emissions or sequestering considerable amounts of carbon, that we have reasonably high levels of uptake. It is going to be really important to think about how that 100-year permanence rule is conveyed and communicated or even dealt with in ways like the international voluntary carbon scheme, which has more of a risks based approach built into it. But, in the end, not everyone at 100 years is going to cut down their forests. We could well imagine that a number of landholders in Australia are by that time likely to have payment for co-benefits like biodiversity and water management and will be used to having their forests there anyway, so it may not be an issue at all. You can build the risk of not all of those forests being cut down back into the way in which the permanence rule is stated.

So that was one point. Our feeling out there across Australia is that at the moment the permanence rule and the way it is working is likely to be a significant barrier. I think the Alberta scheme was mentioned before, and it is not working well. I believe that it is a contributing factor to the market being very thin; it just has not had enough uptake.

The other main point that I want to make is about the regional NRM plans. There is a mention in the act—the words are something like 'comply with the regional natural resource management plan'—but a lot of the plans are not yet capable of assessing what the impact of a carbon project would be. We certainly need a little bit of time and investment to be able to make those more carbon ready. But it is important to note in relation to the plans that a number of the plans—or their shape and form—are dictated by state legislation or requirements. Without paying some attention to that, it might be that we find the plans never will become suitable for assessments of carbon projects if the act is not a little more specific about what those plans should have in them. Our supplementary submission outlined a few of the characteristics that we thought should be in there. It would be counterproductive if the specification got very detailed, because we need to be able to have them satisfy state requirements as well, and every region is a little bit different. But, at a higher-level, principle basis, we believe the act would be strengthened with just a few more words along the lines of the ones that we put into our supplementary submission.

We believe the legislation will be at risk if this does not happen, because the term of complying with the regional NRM plan is too open at this stage and will not direct the plans, help direct the states or provide guidance to people about what needs to be in the plans. That is all I will say in an opening.

Ms HALL: You mentioned in your presentation that the legislation has a lack of incentives and only has penalties. Would you like to expand on that a bit more and share with the committee the kind of incentives that you would like to see in the legislation, detailing how you see that it is all penalties and no incentives?

Dr Ryan : I am speaking specifically there about the forest carbon sequestration projects and the 100-year permanence. I think that on some of the emissions reductions and the shorter-term carbon sequestration the incentive is in the payment that is going to come through the market, but in forest growth the payment will be made according to the carbon as it is accumulating in the forest. Between each period, the amount that has been additionally sequestered is what is being paid for. So the scenario to a landholder looks like the payments are coming upfront because the forest growth will go up, but then it will really taper off and there will be a very long period where there is a requirement to maintain the carbon and perhaps not much else.

Another, related concern would be, particularly if this is native vegetation, that there probably are some biodiversity co-benefits in there but there is no incentive to do the stewardship. There is no particular incentive to look after that forest for more than it might be providing in carbon.

Ms HALL: In your presentation you said that the 100-year permanency rule is inconsistent with international standards and the voluntary market, yet the previous presenter said it was consistent. I wonder if you could explain that to me. I am in a bit of a quandary as to whether it is consistent or inconsistent.

Dr Ryan : Yes. I am learning as we go too. What I believe is inconsistent is not the 100-year permanence or the concept of permanence—of course we support some amount of permanence, because keeping it there is the whole point of locking it up. What is inconsistent is the difference between the contract period and the length of time that needs to be kept—the relinquishment period. My understanding is that, in the international markets, the contract period and the relinquishment period can run to the same period.

Ms HALL: You also talked about carbon literacy. What needs to be done by government, by your own network and by everybody that is involved in this area to improve carbon literacy?

Dr Ryan : We need investment that will go beyond the $4 million that is being talked about as the rollout of the carbon farming initiative, which is much more focused on the act and the initiative itself—the rules and the regulations about what people can and cannot do. In order to make the market work really well people have to have sound judgment. It is going to be to no-one's benefit if landholders are making poor judgments. You might say it is a free market and there are people out there who will have all sorts of schemes and propositions to market to landholders. If landholders are not making sound judgments, there will be a lot of backlash against the scheme. Those sound judgments will come from a much better understanding of the ways in which carbon build-up in landscapes, the global carbon cycle and all sorts of farming activities and ecosystem processes interact with carbon.

We have not thought about or spoken about it. I did an agriculture degree myself. We did not learn about this before. So it is really new. There are exciting opportunities, but we do not want people picking off what appear to be easy and quick wins here, because they have not developed that sound judgment. So the sorts of things would be much more in-depth conversations. It would involve written material, local seminars, experts and probably some new media because younger landholders are probably going to be more attracted to that to get their heads around this sort of scheme. You would need a set of activities, and some of them would work better if there were some investment.

Ms HALL: Are you generally supportive of the legislation?

Dr Ryan : Absolutely we are. We really welcome it.

Ms HALL: It is really important for us as a committee to know that it has your support. You just think it needs tweaking in a couple of areas.

Dr Ryan : Yes.

Ms HALL: You were talking about the regional NRM plans. You talked about time, investment, and the fact that they were dictated by the states. Could you go into a little bit of detail about how the states will dictate in this area and the need for there to be more specifics?

Dr Ryan : When I say dictate I do not mean the content of each plan but the shape. What is a regional NRM plan trying to achieve and what does it need to look like in the states where the regional plans are made by statutory authorities—South Australia, New South Wales, Victoria and Tasmania in a sort of hybrid sense? The states will tend to say: 'The regional plan in your state needs to look like this. It needs to address A, B, C and D, and it has to have a section on this. It's got to,' in New South Wales, for example, 'show how it builds towards meeting the state objectives for natural resource management.' Not all states have yet set their objectives at that level, but in various shapes and forms—particularly in those three states—the form of the plan is dictated by the state. That will usually apply to the shape of every plan across the state. In the ACT, where I chair the ACT Natural Resource Management Council, there is no direction from the ACT government, so we look at what other people do and devise something and check that people think this is what it should be. Then we just do it. In Queensland there are incorporated community groups and they are free to choose the shape of their plans. I am talking about the current situation. The idea that there would be 56 NRM regions around Australia and they would all have a regional NRM plan came out of the Natural Heritage Trust, and it was a requirement under NHT2 that eventually everyone would have a plan that was accredited by the federal government in order to receive regional body funding under the Natural Heritage Trust. When Caring for our Country came in, the requirement for the regional plan to be accredited in order to have access to the base funding was removed. The Australian government stepped back from a sense that they needed any particular shape or form in the regional plan.

Ms HALL: My final question relates to the fact that this is a voluntary scheme. You did mention that the cap could impact upon the taker; but, given that it is a voluntary scheme, what sort of feedback are you getting about the level of take-up there will be? You might also like to give me a little bit of feedback on the proposed cap.

Dr Ryan : Do you mean the permanence rule?

Ms HALL: Yes. I was just looking at your submission. Garnaut recommends a cap on terrestrial offsets, and your preference is to have no cap. In particular you do not want anticipated rapid uptake in the early years.

Dr Ryan : We put that in because we knew that it had been talked about and was around, but it is not in the act. So, in one sense, this is just—

Ms HALL: It is just putting your thoughts on the record.

Dr Ryan : Yes—in a precautionary sense in case it had been more widely talked about.

Ms HALL: The final bit is about the voluntary nature and the take-up.

Dr Ryan : In the end, I think it will be an economic decision by farmers. They will be weighing up how a carbon project will relate to their particular land and the nature of the challenges on their particular land and also to their other sources of income. But I do not have any sense that there is a particular distinction between voluntary or any other aspect. I do not think that is a barrier. It would be mostly economic decisions.

Dr WASHER: You have mentioned that a similar scheme in Alberta failed. I do not know much about that. Are there reasons that you could give us that it did not look as successful as they had hoped?

Dr Ryan : I do not know any more detail about that scheme, but if you would like me to provide a bit more we could certainly do that.

Dr WASHER: The other thing is that the Climate Institute mentioned that you would have to put on a tonne of CO2 equivalent, as we will call it, for about $60 to make a scheme worthwhile. Have you thought about pricing that would make this a viable scheme? I know that was not in your submission, but they suggested that. You did mention it would have to be worthwhile for the farmers.

Dr Ryan : Yes. We did make one comment about price in our original submission. We thought that putting a floor price in place would be useful to try to give the market some guts as it got underway. Could you repeat the question?

Dr WASHER: That was in the Climate Institute's submission. You mentioned price. It is a bit unfair to pop it on you, but what would your gut feeling be for the price needed to make it worthwhile for the farmers? Has this been thought through?

Dr Ryan : We have not done the sort of modelling needed. I think that, if we have been taking guidance, it has been from some of the international voluntary schemes. Preparatory work that the Terrain NRM regional body did in the Wet Tropics region suggested that the current international voluntary market price was probably not going to be very economical for landholders in their region to sequester carbon. But I am not in a position to put a number on it.

CHAIR: I do not have any other questions. I think Ms Hall raised all the sorts of questions that most of us wanted to ask. Is there anything further that you wanted to say in respect of this legislation?

Dr Ryan : No. Thank you very much for the opportunity.

CHAIR: Thank you for attending the hearing today. The secretariat will provide you with a draft transcript of the proceedings. If there are any changes that you think ought to be made, could you please advise the secretariat accordingly?

Dr Ryan : Yes. Thank you very much.