The Federal Government has stepped in over concerns about the controversial Islands Oasis development in Kurrajong Hills, warning the developer that the project may need to be assessed under national environmental law due to its potential impact on the Greater Blue Mountains World Heritage Area and protected species.

In a letter to a concerned resident, Federal Environment Minister Tanya Plibersek confirmed that her department has contacted the developer to ensure they understand their obligations under the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act). The project has not yet been formally referred for federal assessment, but Plibersek made it clear that if significant environmental impacts are identified, the developer will be required to submit the project for consideration.

“I have also spoken to your local member, Susan Templeman, about this project. Susan also wrote to me and brought it to my attention. Thanks again to you and Susan for your vigilance. Because of your work, this project is now on the department’s radar,” Plibersek wrote.

The proposed Islands Oasis development, backed by developer Tony Mehri of Merc Capital Group, would transform a large tract of bushland into a sprawling tourist complex featuring 311 permanent cabins, 120 lodge suites, camping and caravan sites, a clubhouse, six communal kitchens, and various recreational facilities. Local residents have raised alarm over the scale of the project, citing environmental destruction, bushfire risks, and inadequate infrastructure to support the development.

Critics warn that clearing large areas of native vegetation - including endangered Cumberland Shale-Sandstone Ironbark and Turpentine forests - would have devastating effects on local wildlife, including a documented koala colony. The project’s asset protection zone would also encroach on vital riparian areas, further threatening biodiversity in the region.

A resident who wished to remain anonymous called the project “a death trap,” pointing to the single narrow access road shared with an existing housing estate. “The 2019 Gospers Mountain fire came within a kilometre of this site. The developer’s suggestion of an alternative fire trail exit is completely unworkable,” he said.

Concerns over the developer’s intentions have also fueled public opposition. Residents note that Mehri previously attempted to rezone the land for a 450-lot residential development in 2013, a plan unanimously rejected by Council due to the site’s lack of infrastructure, environmental capacity, and fire safety measures. The latest project bears striking similarities, leading some to question whether it is a genuine tourism venture or an attempt to increase land value for resale.

The financial viability of the project has also been questioned, with costings for the $213 million development excluding key operational expenses such as marketing, sales, and maintenance. Residents argue that the estimated revenue falls far short of making the project sustainable, reinforcing suspicions that it is designed to be sold rather than operated as a long-term tourism enterprise.

Although classified as a State Significant Development - meaning the final decision rests with the NSW Independent Planning Commission (IPC) - the project’s environmental implications have now drawn federal scrutiny. If required, a federal referral under the EPBC Act would trigger public consultation and a more rigorous assessment of its impact

“This isn’t just about one project,” another resident said. “It’s about the future of the Hawkesbury. Do we allow short-sighted, profit-driven developments to destroy what makes this place unique, or do we stand up for our environment and our community?”

An artists impression (by the developer)of the tourist cabins.