A major NSW law aimed at protecting the environment failed to conserve biodiversity at the state level and in bioregions - which includes the Hunter, an independent review has found.
The review, led by former federal treasury secretary Dr Ken Henry, found the Biodiversity Conservation Act 2016 was "not meeting its primary purpose of maintaining a healthy, productive and resilient environment".
Furthermore, it was "never likely to do so".
"The natural environment is now so damaged that we must commit to 'nature positive'," Dr Henry said in the review's final report.
He said this ethos was needed "if we are to have any confidence that future generations will have the opportunity to be as well off as we are".
"This implies a major reset in public policy thinking, which many will find challenging."
Hunter Community Environment Centre researcher Paul Winn said the biodiversity law had been "poor" for the environment, but "good for development, if that's what you want".
Mr Winn said environmental protection in NSW had been "a losing game" under successive Coalition governments.
"They opened it up for development. With the biobanking scheme, they allowed developers to pay into a fund to chop down threatened species habitat," he said.
"If a developer had enough money, they developed."
UDIA NSW CEO Steve Mann said the NSW government was failing the Hunter in biodiversity and housing.
Mr Mann said the government had "a golden opportunity" to change the system to improve "regional scale biodiversity outcomes", while allowing industry to "move more quickly and build the houses we need to solve the housing supply crisis".
"The current biodiversity system is too complex and restricts the delivery of new housing."
Dr Henry said "sustainability concepts" had been central to policy development for more than a generation.
"Humanity's dependence upon the quality of the biosphere, in both social and economic dimensions, is as immutable as the laws of physics," he said.
"The case for giving primacy to environmental repair is inescapable. Our future depends upon it."
Yet the review found that more than 30 per cent of the state's original vegetation had been "substantially altered".
And all bioregions in NSW had "less than 25 per cent of their original capacity to retain their biodiversity under the projected rate of climate change".
The review made 58 recommendations that included amending the Act to "commit to halting and reversing biodiversity loss and ecosystem collapse and restoring threatened species and ecosystems".
NSW Environment Minister Penny Sharpe said the government would "closely consider the report's recommendations".
"The previous government presided over 12 years of environmental neglect that led to record numbers of threatened species and increased land clearing," Ms Sharpe said.
She added that koalas had become endangered and headed for extinction.
The Minns government would meet its "election commitments to fix the Biodiversity Offset Scheme, strengthen environmental protections and stop runaway land clearing".
