Australia's environmental offsets system is under intense scrutiny due to a government audit revealing widespread breaches by developers in major projects worth billions of dollars.

Audit findings show one in seven projects did not comply with approval conditions, and one in four failed to secure sufficient environmental credits.

The offsets system allows companies to compensate for environmental damage by protecting something of equal or greater value elsewhere.

Non-compliant developers are facing legal consequences, including fines and mandated changes in operations.

The government is enacting reforms, such as establishing Environment Protection Australia, a national watchdog agency with the authority to issue stop work orders on non-compliant projects.

The audit exposed various violations, including land clearing and failure to protect habitats for threatened species, underscoring the need for stronger enforcement of offset conditions.