BILLS DIGEST NO. 118, 2017–18              18 June 2018

Water Amendment Bill 2018

Bill McCormick and Sophie Power
Science, Technology, Environment and Resources Section 

Date introduced:  10 May 2018

House:  House of Representatives

Portfolio:  Agriculture and Water resources

Commencement: The day after Royal Assent or 1 July 2018, whichever is earlier.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at June 2018.

Purpose of the Bill

The purpose of the Water Amendment Bill 2018 (the Bill) is to amend the Water Act 2007 to enable the Commonwealth Water Minister to direct the Murray-Darling Basin Authority (MDBA) to prepare an amendment to the Basin Plan 2012 (the Basin Plan) that is the same in effect as a Basin Plan amendment that has previously been disallowed, or taken to have been disallowed, by either House of Parliament.[1]

Background

The Murray and Darling Rivers are the world’s 15th longest river system, but they are long and slow flowing rivers with high evaporation rates and carry one of the world’s smallest volumes of water for their size.[2] Water quality throughout the Murray-Darling Basin (MDB) declined through the 20th century due to increased salinisation (caused by salt stored in soils and/or groundwater being mobilised by extra water associated with human activities such as irrigation or land clearing) and more nutrients in the water from increased use of fertilisers and soil erosion. This decline in river health was further exacerbated when water diversions across the MDB increased substantially during the 1980s and early 1990s, raising concerns that these diversions were exceeding sustainable levels.

The Water Act established the Murray-Darling Basin Authority (MDBA) with responsibility for developing and implementing a Basin Plan, one of the key elements of which was to include sustainable diversion limits (SDLs) on the quantities of surface water and ground water that can be taken from the Basin's water resources.

The Basin Plan set a long-term average surface water SDL of 10,873 GL per year (GL/y) for urban, industrial and agricultural use in the MDB to be achieved by 2019. This is a reduction of 2,750 GL/y from the June 2009 Baseline Diversion Limit (BDL) for the MDB.[3] It also set SDLs for the extraction of the basin’s groundwater at 3,334 GL/y.[4]

The MDBA conducted a four year review of the Northern Basin[5] which involved research into socio-economic, hydrology and environmental aspects of the northern Basin and consultation with northern Basin communities.[6] Following this review, the MDBA developed amendments to the Basin Plan for the Northern Basin, groundwater as well as minor practical changes.[7] Requirements for amending the Basin Plan are set out in Subdivision F of Part 2 of the Water Act and include a significant period of public consultation. The key proposed change was a reduction in the total water to be recovered in the Northern Basin from 390 GL to 320 GL.[8] In addition, the amendments proposed to increase the overall groundwater SDL in the MDB from 3,334 GL/y to 3,494 GL/y.[9] These amendments were included in the Basin Plan Amendment Instrument 2017 (No. 1) which was tabled in the Senate on 14 November 2017.

On 14 February 2018, the Senate voted to disallow the Basin Plan Amendment Instrument 2017 (No. 1), a legislative instrument made under section 48 of the Water Act that had included the proposed northern Basin amendments, as well as the groundwater and minor practical changes.[10] ALP Senator Penny Wong said there were ‘extraordinarily serious allegations of water theft and corruption in the northern basin’ and ‘[u]ntil we can guarantee that water purchased by taxpayers gets to the parts of the river where it is needed, it is difficult for us to support the northern basin proposal.’[11] She quoted Shadow Minister for the Environment and Water, Tony Burke, saying:

… you can't have a situation where the Australian taxpayer is paying for environmental water and environmental watering events being organised and that exact water is being pumped straight back into dams.[12]

Senator Wong said that ‘we cannot allow a reduction in the volume while it is still possible for environmental water to be pumped back into irrigation.’[13] The ALP wanted the MDBA’s review of compliance and enforcement done comprehensively and the problems dealt with. She said that Labor had been in discussions with the new Minister for Agriculture and Water, David Littleproud, to try to resolve these issues.[14]

On 7 May 2018, the ALP came to an Agreement with the Government that it would not support the disallowance motion relating to another amendment to the Basin Plan (the Basin Plan Amendment (SDL Adjustments) Instrument 2017) and would ‘support legislative amendments to the Water Act to allow the Northern Basin instruments to be re-enacted and would then not support disallowance of those instruments.’[15] Tony Burke, Shadow Minister for the Environment and Water said:

It is critical now that work on acquiring the 450GL commences, that metering in the north proceeds, that improved compliance is a reality and that the new levels of transparency are observed in the letter and in the spirit of the agreement…

I am particularly pleased that we have also managed to include something that I had not been able to put into the Plan back in 2012. For the first time there will now be a fund for first nations in the Northern and Southern Basin to be able to acquire water entitlements[.] It by no means concludes what needs to be done with respect for cultural water but it is a step in the right direction and I am please[d] the Government has been willing to make it.[16]

The six page agreement includes the establishment of a Northern Basin Commissioner, funded for three years, to oversee the implementation of the Northern Basin Review.[17] It also states that the Government will implement the key outcomes of the MDBA’s review of compliance and enforcement, and will develop and deliver a Basin Compliance Compact.[18]

Committee consideration

Senate Rural and Regional Affairs and Transport Legislation Committee

The Bill was referred to the Senate Rural and Regional Affairs and Transport Legislation Committee for inquiry and the report was released on 12 June 2018.

The Committee recommended that the Senate pass the Bill.[19] In response to concerns raised about lack of consultation for the proposed amendments to the Basin Plan, the Committee said that since the new amendment instrument must be the same in substance as the disallowed instrument, it will have already been subject to the consultation requirements of the Water Act.[20] According to the Committee, the proposed power allowing the minister to direct the MDBA to prepare such an amendment is limited in scope and not open to abuse because of the 12-month time frame and other restrictions imposed.[21]

In a dissenting report, the Australian Greens opposed the passage of the Bill.[22] This was because: the Bill does not meet the Water Act’s requirement to base decisions on the best available science, permits the Minister to direct the MDBA to prepare Basin Plan amendments and so violates the independence of the MDBA, and allows for the disallowed instrument to be reconsidered without community consultation.[23] They also stated that ‘the Senate should not consider the Bill any further until the Federal Government makes available its legal advice that what is being proposed with this Bill is compatible with the Water Act 2007’.[24]

Senate Standing Committee for the Scrutiny of Bills

At the present time, the Senate Standing Committee for the Scrutiny of Bills has not considered this Bill.

Policy position of non-government parties/independents

As mentioned earlier, the ALP has stated its support for ‘legislative amendments to the Water Act to allow the Northern Basin instruments to be re-enacted.’[25]

As mentioned above, the Australian Greens oppose the Bill. After the disallowance motion for the Basin Plan Amendment (SDL Adjustments) Instrument 2017 was defeated in the Senate, Greens Murray-Darling Basin Spokesperson, Senator Hanson-Young said:

The Labor Party said they couldn't support handing 70 billion litres over to big corporate irrigators when they supported the Greens disallowance in February, because of the rorting, water theft and corruption rife in the northern basin, yet the only thing that has changed in the Northern Basin is that Labor is now on the side of big cotton.[26]

None of the other non-government parties or independents in the Senate have made their policy position known. However while the Pauline Hanson One Nation Party and the Liberal Democrat Senators voted against the disallowance motions for both Basin Plan amendments, the Centre Alliance Senators voted for both motions.[27]

Position of major interest groups

The Inland Rivers Network object to the Bill on the basis that, among other matters, it circumvents consultation provisions in the Water Act and permits the retrospective validation of the reallocation of water recovery from one river valley to another.[28]

The Australia Institute said that the Bill should not be passed because:

•       there has been no public consultation on fundamental changes to the Basin Plan;

•       future changes to the Sustainable Diversion Limits (SDLs) can be inconsistent with the Water Act;

•       future changes to the SDLs can be made outside the parliamentary process; and

•       the actual wording of the Amendment to the Basin Plan are ambiguous or not provided.[29]

Other the other hand, farming groups supported the Bill. For example, the National Irrigators Council support the Bill and said:

The overall assessment carried out by MDBA and verified independently, indicated that overall the proposed changes would actually improve the environmental outcomes of the Plan but without causing future socio economic harm to communities which, the reviews concluded, had already seen a significant negative impact.

Irrigators did not get all they wanted from the Northern Basin Review. In particular, communities in the North felt that they had already been required to give up enough water and there should be no further recovery. Despite this, we recognised that an extensive process had been undertaken and that the recommendation was an overall improvement over the original Basin Plan.[30]

Cotton Australia also support this Bill:

This Bill provides a mechanism to allow the previously disallowed regulation that would provide a 70Gl reduction in the northern basin environmental allocation to be implemented by ministerial order. The Bill provides certainty to the communities that the Plan can continue to be implemented in a measured manner consistent with the intent of the Act.[31]

Financial implications

There is no financial impact arising from this Bill.[32]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[33]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights has not yet considered this Bill.

Key issues and provisions

Ministerial directions to amend the Basin Plan

The key substantive provision in the Bill is item 2, which inserts a proposed section 49AA into the Water Act, to enable the minister to direct the MDBA to prepare an amendment to the Basin Plan 2012 that is the same in effect as an amendment that has previously been disallowed by either House of the Parliament.

In short, the Bill is a direct response to the disallowance of the Basin Plan Amendment Instrument 2017 (No. 1) (as discussed earlier in this Digest).[34] The Bill will allow that instrument to be remade[35] without going through the consultation process again, which the Department of Agriculture and Water Resources has estimated would take ‘at least eight months’.[36]

Currently, sections 45 to 49 of the Water Act provide a statutory process for making amendments to the Basin Plan whereby the MDBA prepares an amendment for adoption by the Minister. The proposed Basin Plan amendment is prepared in consultation with Basin States[37] and is also released for public comment.[38] Once public consultation has occurred, the MDBA must consult with the Murray-Darling Basin Ministerial Council in relation to the proposed amendment.[39] The process for the Minister to adopt the amendment (or not) is set out in section 48 of the Water Act. Amendments to the Basin Plan are a legislative instrument and can be disallowed by either House of Parliament.[40]

Section 49 of the Water Act also provides for regulations to be made to allow the MDBA to make specified kinds of minor, or non-substantive, amendments to the Basin Plan and sets out the process for the making of those amendments.[41]

Under proposed subsection 49AA(4), the usual consultation requirements in sections 46 to 48 of the Water Act outlined above will not apply to an amendment prepared under a direction pursuant to section 49AA. However:

•         the amendment must be the ‘same in effect’ as an earlier, disallowed amendment which was prepared in accordance with the consultation requirements[42] and

•         the proposed directions power is limited to amendments which have been disallowed in the previous 12 months.[43]

Proposed subsection 49AA(6) provides guidance as to the types of changes in an amendment that will be considered to the ‘same in effect’, which will include:

•         changes required because another amendment of the Basin Plan has commenced after the commencement of the earlier amendment

•         changes required because a requirement under the Basin Plan has already occurred, or been met, after the commencement of the earlier amendment and

•         changes that cause the amendment to commence later than the earlier amendment.

The note to proposed subsection 49AA(6) further clarifies that minor or non-substantive amendments do not prevent the amendment from being the same in effect as the earlier disallowed amendment, including minor or non-substantive amendments as prescribed in the Water Regulations 2008.[44]

However, as noted earlier in this Digest, the fact that the usual consultation requirements in the Water Act will not apply to an amendment prepared under a direction under section 49AA was a particular source of concern during the Senate committee inquiry into the Bill:

It was put to the committee that the disallowed NBR instrument, as presented to the parliament in late 2017, was substantially different to the version that was subject to public consultation in 2016. This made some submitters particularly concerned about a potential lack of public consultation on forthcoming amendments, resulting from the passage of the bill.[45]

Indeed, several stakeholders, such as the Environmental Defenders Office of New South Wales (EDO NSW) suggested that the Bill is designed to ‘circumvent’ the community consultation provisions in the Water Act.[46]

Nature of the Minister’s direction

Under proposed subsection 49AA(2), the MDBA must comply with the Minister’s direction by preparing the amendment, and giving it to the Minister for adoption, as soon as practicable.
Under proposed subsection 49AA(3), as soon as practicable after receiving the amendment, the Minister must either adopt the amendment or give the MDBA notice, in writing, that the Minister has decided not to adopt the amendment.

Proposed subsection 49AA(5) states that a Ministerial direction made under proposed subsection 49AA(1) is a legislative instrument. However, it is not subject to section 42 of the Legislation Act 2003, relating to disallowance, nor is it subject to the sunsetting provisions of the Legislation Act.[47]

This provision is similar in terms to existing subsections 44(4) and 48(4) of the Water Act, which provide that other, similar directions by the Minister to the MDBA (relating to the modification of the draft Basin Plan and Basin Plan amendments respectively) are also not legislative instruments, nor are they disallowable. As such, subsection 49AA(5) is likely to have been included in the Bill for clarification as in any case, the Minister’s direction is unlikely to be disallowable, even in the absence of subsection 49AA(5). In particular, regulation 9 of the Legislation (Exemptions and Other Matters) Regulation 2015 provides that certain classes of legislative instruments are not subject to disallowance, including ‘an instrument that is a direction by a Minister to any person or body’.[48]

However, concerns were expressed in some submissions to the Senate inquiry into the Bill that the Ministerial direction under section 49AA will not be subject to parliamentary oversight and may undermine the independence of the MDBA.[49]

Notably, although similar Ministerial directions under sections 44 and 48 of the Water Act (mentioned above) are not disallowable legislative instruments, they do have to be tabled in parliament along with the reasons for giving that direction.[50] The original Explanatory Memorandum for the Water Bill 2007 states in relation to the existing section 44:

A direction by the Minister is not a legislative instrument … However … the Minister must table any directions to the [Murray-Darling Basin] Authority. This ensures that the Minister is accountable for any directions given to the Authority.[51]

However, under the Bill, in this case, the Minister’s direction made under proposed section 49AA is not required to be tabled in parliament. An issue for consideration is whether the Bill should be amended to require direction made under section 49AA to be tabled in parliament, along the lines of subsections 44(7) and 48(7).

Disallowance of Basin Plan amendments made under section 49AA

Subsection 33(2) of the Water Act provides that amendments to the Basin Plan are a legislative instrument. Item 1 of the Bill amends subsection 33(2) to provide that amendments prepared under proposed 49AA are also legislative instruments. As such, any Basin Plan amendment (as opposed to the Ministerial direction) prepared under proposed section 49AA would be subject to disallowance under section 42 of the Legislation Act.[52]

Non-delegation

Section 251 of the Water Act enables the Minister to delegate his or her powers or functions to the Departmental Secretary, SES employees or acting SES employees of the Department, except for the powers listed in subsection 251(2).

Items 4 and 5 of the Bill amend subsection 251(2) to provide that the Minister’s power to adopt an amendment under proposed section 49AA, and the new Ministerial direction power in proposed section 49AA, cannot be delegated.

Transitional provisions

Item 7 of the Bill adds a new Schedule 10 to the end of the Water Act which will contain transitional provisions relating to the amendments in this Bill.

Proposed section 1 of Part 1 of Schedule 10 states that the amendments made by the Bill apply regardless of whether an earlier amendment to the Basin Plan was disallowed before, at or after the commencement of the Schedule.

Proposed section 2 of Part 1 of Schedule 10 refers directly to the disallowed Basin Plan Amendment Instrument 2017 (No. 1). Proposed subsection 2(2) lists certain changes that will be considered to be the ‘same in effect’ as the disallowed Basin Plan Amendment Instrument 2017 (No. 1), including:

•         an additional requirement to the definition of re-allocation adjustment request in subsection 6.05(6) of the proposed amendment to the Basin Plan to enable a request to be made in anticipation of this provision being amended in the Basin Plan[53]

•         an additional requirement in subsection 6.05(13) of the Basin Plan to require the MDBA to publish variations to the SDL resource unit shared reduction amounts on its website, even when there has not been an initial re-allocation adjustment requirement[54] and

•         a change to section 7.14A of the Basin Plan to reflect that the 2017 sustainable diversion limit adjustments have already occurred.[55]

Some interest groups have expressed concern with these transitional provisions. For example, the EDO NSW have made the point that these provisions of the Bill would ‘defeat’ provisions in the Legislation Act that invalidate legislative instruments that apply retrospectively and disadvantage or impose additional liabilities on people.[56] The EDO NSW further noted that the proposed clauses in the Basin Plan amendment that are listed in proposed subsection 2(2) are ‘significant’.[57] Moreover, the EDO NSW pointed out that the listed clauses were not part of the community consultation process for Basin Plan amendments as they were not contained in the Basin Plan amendment published for public consultation in 2017, but rather were first included in the Basin Plan amendment when it was tabled in parliament in 2017.[58] As noted earlier in this Digest, others stakeholders, including the Inland Rivers Network and EDO NSW, were particularly concerned that the transitional provisions would retrospectively validate requests that have already been made by a Basin State to reallocate water recovery from one valley to another, in anticipation of the Basin Plan being amended.[59]

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[1].              Explanatory Memorandum, Water Amendment Bill 2018, p. 2.

[2].              K Molloy, ‘The Murray-Darling Basin Plan: cooperation in transboundary water management’, in S Nicklin and B Cornwell, Free flow: reaching water security through cooperation, UNESCO publishing, Paris, 2013, pp. 77–80.

[3].              MDBA, ‘What’s in the Basin Plan’, MDBA website. Note that the BDL includes 823 GL/y of water that had already been recovered for the environment, through the Living Murray initiative, Water for Rivers Program and state water sharing plans and which is not part of the 2,750 GL reduction: MDBA, Regulation impact statement: Basin Plan.

[4].              MDBA, ‘Proposed Basin Plan amendments for groundwater’, MDBA website.

[5].              The Northern Basin zone comprises 12 catchment areas across south Queensland and northern New South Wales: see further MDBA, Basin Plan amendments—snapshot of northern Basin changes, February 2017, p. 3; see also Basin Plan, subsection 6.05(2).

[6].              MDBA, ‘Proposed Basin Plan amendments for the Northern Basin’, MDBA website.

[7].              MDBA, ‘Basin Plan amendments’, MDBA website.

[8].              MDBA, ‘Proposed Basin Plan amendments for the Northern Basin’, op. cit.; MDBA, Basin Plan amendments snapshot, op. cit.

[9].              MDBA, ‘Proposed Basin Plan amendments for groundwater’, op. cit.

[10].              Australia, Senate, Journals, 86, 2017–18, 14 February 2018, p. 2728.

[11].              P Wong, ‘Disallowance: Basin Plan Amendment Instrument 2017 (No. 1)’, Senate, Debates, 14 February 2018, pp. 1151–2.

[12].              Ibid., p. 1152.

[13].              Ibid.

[14].              Ibid.

[15].              T Burke (Shadow Minister for the Environment and Water), Murray-Darling Basin Plan survives, media release, 9 May 2018, p. 1; see also D Littleproud (Minister for Agriculture and Water Resources), Statement on the Murray-Darling Basin Plan, media release, 7 May 2018, Attachment.

[16].              Ibid.

[17].              Littleproud, Statement on the Murray-Darling Basin Plan, op. cit.

[18].              Ibid.

[19].              Senate Rural and Regional Affairs and Transport Legislation Committee, Inquiry into the provisions of the Water Amendment Bill 2018, The Senate, Canberra, 2018, p. 25.

[20].              Ibid.

[21].              Ibid.

[22].              Australian Greens, Dissenting report, Senate Rural and Regional Affairs and Transport Legislation Committee, Inquiry into the provisions of the Water Amendment Bill 2018, The Senate, Canberra, 2018.

[23].              Ibid., p. 27.

[24].              Ibid., p. 28.

[25].              Burke, Murray-Darling Basin Plan survives, op. cit.

[26].              S Hanson-Young (Greens Murray Darling Basin spokesperson), The Greens are the last line of defence for a healthy river system, media release, 10 May 2018.

[27].              See, in particular, Australia, Senate, Journals, 86, 2017–18, 14 February 2018, p. 2728.

[28].              Inland Rivers Network, Submission to the Senate Rural and Regional Affairs and Transport Legislation Committee, Inquiry into the provisions of the Water Amendment Bill 2018, 25 May 2018, pp 1–2.

[29].              The Australia Institute, Submission to the Senate Rural and Regional Affairs and Transport Legislation Committee, Inquiry into the provisions of the Water Amendment Bill 2018, May 2018, p. 3.

[30].              National Irrigators Council, Submission to the Senate Rural and Regional Affairs and Transport Legislation Committee, Inquiry into the provisions of the Water Amendment Bill 2018, 25 May 2018, p. 2.

[31].              Cotton Australia, Submission to the Senate Rural and Regional Affairs and Transport Legislation Committee, Inquiry into the provisions of the Water Amendment Bill 2018, 25 May 2018, p. 2.

[32].              Explanatory Memorandum, Water Amendment Bill 2018, p. 1.

[33].              The Statement of Compatibility with Human Rights can be found at page 2 of the Explanatory Memorandum to the Bill.

[34].              D Littleproud, ‘Second reading speech: Water Amendment Bill 2018’, Debates, House of Representatives, 10 May 2018, p. 3645.

[35].              Section 48 of the Legislation Act 2003 does allow a legislative instrument that has been disallowed to be re-tabled in Parliament. However, a legislative instrument that is the ‘same in substance’ as a disallowed instrument cannot be made within six months after being disallowed without the approval of the relevant House of Parliament. This means that the Basin Plan Amendment Instrument 2017 (No. 1), disallowed by parliament on 14 February 2018, could in any case be re-made after 14 August 2018. However, it would need to go through the consultation processes set out in the Water Act.

[36].              Department of Agriculture and Water Resources, Submission to the Senate Rural and Regional Affairs and Transport Committee, Inquiry into the provisions of the Water Amendment Bill 2018, 18 May 2018, p. 2.

[37].              Water Act, sections 46 and 47.

[38].              Ibid., section 47.

[39].              Ibid., section 47A.

[40].              Water Act, subsection 33(2); Legislation Act 2003, section 42.

[41].              This process is set out in regulation 2.03 of the Water Regulations 2008.

[42].              Water Amendment Bill 2018, proposed paragraph 49AA(1)(a); see also Explanatory Memorandum, Water Amendment Bill 2018, pp. 5–6.

[43].              Water Amendment Bill 2018, proposed paragraph 49AA(1)(b).

[44].              See further paragraph 49(1)(a) of the Water Act and regulation 2.03 of the Water Regulations 2008.

[45].              Senate Rural and Regional Affairs and Transport Legislation Committee, Inquiry into the provisions of the Water Amendment Bill 2018, op. cit., p. 19.

[46].              Ibid, pp. 18–19.

[47].              Explanatory Memorandum, Water Amendment Bill 2018, p. 6. For further information on sunsetting, see Attorney-General’s Department, ‘Legislation Act 2003’, Attorney-General’s Department website.

[48].              See also Legislation Act, section 44.

[49].              Senate Rural and Regional Affairs and Transport Legislation Committee, Inquiry into the provisions of the Water Amendment Bill 2018, op. cit., pp. 24–5.

[50].              Water Act, subsections 44(7) and 48(7).

[51].              Revised Explanatory Memorandum, Water Amendment Bill 2007, p. 14.

[52].              See also Department of Agriculture and Water Resources, Submission to the Senate Rural and Regional Affairs and Transport Legislation Committee, op. cit., p. 2.

[53].              Water Amendment Bill 2018, item 7, proposed paragraph 2(2)(a).

[54].              Ibid., proposed paragraph 2(2)(b).

[55].              Ibid., proposed paragraph 2(2)(c).

[56].              See especially Legislation Act, subsection 12(2). However, note that, under subsection 12(3) of the Legislation Act, this prohibition on retrospective application can be overcome by an express provision in an Act.

[57].              EDO NSW, Water Amendment Bill 2018 Briefing note and key issues summary, op. cit., p. 4.

[58].              Ibid.; The Australia Institute, op. cit., p. 8.

[59].              Inland Rivers Network, Submission to the Senate Rural and Regional Affairs and Transport Legislation Committee, op. cit., p. 1; EDO NSW, Water Amendment Bill Briefing note and key issues summary, 25 May 2018.