Bills Digest no. 79 2015–16
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WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.
Bill McCormick and Sophie Power
Science, Technology, Environment and Resources Section
5 February 2016
Contents
Purpose
of the Bill
Structure of the Bill
Background
Committee consideration
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions
Other provisions
Concluding comments
Appendix 1: Timeline of Key Review and Milestones in the
Water Act and Basin Plan
Date introduced: 3
December 2015
House: House of
Representatives
Portfolio: Agriculture
and Water Resources
Commencement:
Item 1 of Schedule 1 on 1 January 2020.
Items 2 to 9 of Schedule 1, Parts 2 to 6 of Schedule 1
and Part 3 of Schedule 2 on the day after Royal Assent.
Part 1 of Schedule 2 on 15 December 2008 (immediately
after commencement of Schedule 1 of the Water Amendment Act 2008).
Part 2 of Schedule 2 on the commencement of Schedule 1
to the Acts and Instruments (Framework Reform) Act 2015, or the day
after Royal Assent, whichever is later.
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 ComLaw
website.
The purpose of the Water Amendment (Review Implementation
and Other Measures) Bill 2015 (the Bill) is to amend the Water Act 2007 to
give effect to the recommendations of a review of the Water Act
conducted in 2014.[1]
The Bill contains two schedules. Schedule 1 contains
amendments arising from the review of the Water Act and comprises six
parts:
- Part
1 contains amendments to ‘rephase’ or postpone review and reporting
arrangements
- Part
2 amends provisions relating to the accreditation of water resource plans
- Part
3 contains amendments to provide for greater incorporation of Indigenous
expertise in the governance of the Murray-Darling Basin’s water resources
- Part
4 amends provisions relating to trading by the Commonwealth Environmental Water
Holder
- Part
5 repeals provisions relating to the Murray-Darling Basin Water Rights
Information Service and
- Part
6 contains miscellaneous amendments to the Water Act.
Schedule 2 comprises three parts containing minor,
technical amendments.
The Murray-Darling Basin (MDB) is the catchment for Australia’s
largest river system, comprising the Murray and Darling rivers and their
tributaries. Ranked fifteenth in the world in terms of length (3,780 km) and twentieth
for area (covering 1,056,000 km2), it extends across 14 per cent of
Australia’s landmass.[2]
Over the years there has been an over-allocation of water entitlements in many
areas of the Murray-Darling Basin (MDB). Water resources have not been able to
meet the water needed for environmental flows and human requirements.[3]
In 2007 the Commonwealth intervened to address over-allocation and establish
the Murray-Darling Basin Authority (MDBA). The MDBA is a statutory authority
established under the Water Act that, with the Basin state and territory
governments, manages the MDB’s water resources.
The Murray-Darling Basin Plan
As required under the Water Act, the MDBA has
prepared a Basin Plan,
which was adopted in November 2012, to provide for the integrated management of
the MDB’s water resources in a sustainable manner.[4]
Key elements of the Basin Plan include:
- long-term average sustainable diversion limits (SDLs) to the
quantities of surface water and ground water that can be taken from the Basin's
water resources for consumptive use
- an environmental watering plan
- a water quality and salinity management plan
- water resource plan requirements and
- water trading rules.
Sustainable Diversion Limits
The SDLs are intended to reflect an environmentally
sustainable level of water use (or ‘take’) of both surface water and
groundwater for each catchment and aquifer in the MBD, as well as for the Basin
as a whole.[5]
Essentially SDLs are a cap[6]
on consumptive water use in the MDB and ‘will commence in 2019, by which point
they will be incorporated in state water resource plans’.[7]
The Basin-wide long-term average SDL for surface water is
10,873 gigalitres per year (GL/y), comprising 3,468 GL/y in the northern
Basin and 7,405 GL/y in the southern Basin, and represents a Basin-wide
reduction of 2,750 GL/y of water from the 2009 baseline diversion level of
13,623 GL/y. The Basin-wide long-term average total SDLs for groundwater was
determined to be 3,334 GL/y, representing an increase of 949 GL/y of water from
baseline diversion level of 2,385 GL.[8]
The 2,750 GL of surface water entitlements are to be recovered through a
combination of investment in infrastructure efficiency and water buybacks, with
at least 600 GL to be recovered through infrastructure efficiency improvements.
As at 31 December 2015, Commonwealth environmental water holdings in the MDB
were 1,664 GL: 1,383 GL in the Southern Connected Basin and 281 GL in the
non-Southern Connected Basin.[9]
Under the Basin Plan, the MDBA can propose adjustments to
the surface water SDLs if infrastructure changes and other measures are planned
by 30 June 2016 and will come into operation by 30 June 2024.[10]
These are adjustments due to the impacts of a ‘supply measure’ or an
‘efficiency measure’. Supply measures permit an increase in the SDL while
efficiency measures permit a reduction in the SDL:
a ‘supply measure‘ is a measure that increases the quantity
of water available before take for consumptive use. The measure may do this
either by making water available for environmental management without reducing
consumptive take (e.g. through reducing evaporation losses at suitable
storages) or by allowing environmental managers to achieve equivalent outcomes
more efficiently, thus reducing the amount of water needed for the environment.
Supply measures allow equivalent environmental outcomes to be achieved without
needing to reduce consumptive take as much as originally anticipated in the
Basin Plan.
The additional water provided by supply measures will be made
available for consumptive use (as it will no longer need to be recovered from
such use). An adjustment made because of supply measures will increase the SDL
(decrease the reduction amount).
An ‘efficiency measure’ is one that makes savings in the
amount of water required for consumptive purposes. Examples include investment
in more efficient irrigation infrastructure. The water saved by efficiency
measures will be allocated to environmental use but, due to the nature of
efficiency measures, this will achieve neutral or improved social and economic
impacts. An adjustment made because of efficiency measures will decrease the
SDL (increase the reduction amount).[11]
Since the contributions from the efficiency measures will
vary over time as water access entitlements are acquired, these water access
entitlements will be converted to a common unit by using ‘long-term equivalent
factors’. These have already been used to calculate the long-term average
annual yield from the water access entitlements in the Commonwealth environment
water holdings. The 31 December 2015 holdings of 2,396 GL in entitlements were
converted into 1,664 GL of Long Term Average Annual Yield.[12]
Water entitlements and water
allocation
A water access entitlement is defined in the National
Water Initiative[13]
as a ‘perpetual or ongoing entitlement to exclusive access to a share of water
from a specified consumptive pool as defined in the relevant water plan’, while
a water allocation is defined as the ‘specific volume of water allocated to water
access entitlements in a given season, defined according to rules established
in the relevant water plan’.[14]
Environmental watering plans
The environmental watering plan specifies: the
environmental objectives for the water-dependent ecosystems of the MDB; targets
to measure progress towards achieving these objectives; an environmental
management framework for environmental water; methods to identify environmental
assets; and principles to be used to determine priorities for applying
environmental water.[15]
The 2014 Basin-wide
environmental watering strategy, prepared by the MDBA, listed the expected
environmental outcomes and outlined water management strategies for maximising
environmental outcomes.[16]
The water quality and salinity management plan sets out
the key causes of water quality degradation in the MDB, the water quality
objectives for the MDB’s water resources and the water quality targets.[17]
Water resource plans
Water resource plans set out how water will be managed in
an area. The Basin Plan outlines the requirements for the water resource plans
that are to be developed by the relevant Basin state and accredited by the
Australian minister responsible for water. There are 36 water resource plan
areas which generally correspond with existing Basin state water management
areas and will cover the 110 surface water and groundwater sustainable
diversion limit units.[18]
The requirements include:
- the
long-term annual diversion limit for each SDL resource unit in the water
resource plan area and the sustainable use and management of water resources of
the water resource plan area within these limits
- the
regulation of water interception activities with a significant impact on Basin
water resources
- planning
for environmental watering
- water
quality objectives
- the
circumstances and conditions under which tradeable water rights in the water
resource plan area may be traded
- approaches
to addressing risk to water resources of the water resource plan area
- information
about measuring the water taken from the water resource plan area and
monitoring the water resources of the water resource plan area
- reviews
of the water resource plan and amendments of the plan arising from those
reviews
- the
scientific information or models on which the water resource plan is to be based
- planning
for extreme events and
- Indigenous
values and uses.[19]
Basin water market and trading
objectives and principles
The Basin water market and trading objectives and
principles are set out in Schedule 3 of the Water Act. The Basin Plan’s water trading rules,
contained in Chapter 12 of the Basin Plan, outline:
- the
restrictions on the trade of tradeable water
- information
about water delivery rights and irrigation rights that must be given to
irrigation infrastructure operators
- approval
processes for trade of water access rights and
- the
information that must be made available by the states and irrigation
infrastructure operators.[20]
The Basin Plan water trading rules commenced in July 2014
and a series of guidelines have been developed for these rules. There are also Basin
state water trading rules and water
trading rules within irrigation networks.[21]
Section 253 of the Water Act required a review of
the operation of the Act, and the extent to which its objects have been
achieved, to be conducted before the end of 2014. Accordingly, an independent
review of the Water Act was conducted, with a final
report released in December 2014 (the Water Act review).[22]
The review considered that overall, the Water Act is ‘an effective
legislative framework’ but there is nevertheless ‘scope to improve the ways in
which the objects of the Act are being delivered’.[23]
The review also acknowledged that ‘many of the reforms established under the
Act and the Basin Plan are in transition and are yet to be fully implemented’.[24]
The Water Act review made 23 recommendations,
including recommendations for amendments to the Water Act. These
recommendations are considered as relevant in the ‘key issues and provisions’
section of this Digest.
Government response to the
independent review
The government response to the Water Act review was
released on 3 December 2015.[25]
The government
response accepted all the recommendations of the Water Act review, with
recommendations 9 and 21 agreed in part.[26]
Selection of Bills Committee
On 4 February 2016, the Selection of Bills Committee referred
the provisions of the Bill to the Senate Rural and Regional Affairs and
Transport Legislation Committee for inquiry and report by 10 March 2016.[27]
Senate Standing Committee for the
Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills had no
comment on the Bill.[28]
At the time of writing, no non-government parties or
independents have commented on the Bill.
The Australian Conservation Foundation (ACF) is critical
of the amendment that will allow water trade revenue to be used for
environmental activities other than buying water for the environment, saying
that this would create incentives to defund existing programs that pay for
environmental works such as fish ladders and shift funding responsibility over
to the Commonwealth Environmental Water Holder.[29]
ACF was also reported as saying that the ‘Water Holder should not have to sell
its environmental water to pay for essential works’[30]
and called on the Minister to:
... explain how the proposed changes will not result in a net
loss of environmental water and to reveal where ongoing funding for the
Commonwealth Environmental Water Holder and the revived Sustainable Rivers
Audit will come from.[31]
According to the Explanatory Memorandum, the Bill will
have no financial impact and ‘[a]ll new measures are being implemented within
existing resourcing of relevant portfolios and within existing Environmental
Water Holdings Special Account’ arrangements.[32]
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 considers
that the Bill does not raise human rights concerns.[34]
Review and reporting requirements
The Water Act contains a number of review and
reporting requirements. These include:
- annual
reports by the MDBA, to include an analysis of the effectiveness of the Basin
Plan[35]
- a
requirement for the MDBA to give advice to the MDB Ministerial Council (the
Council) on the impacts of the Basin Plan five years after the Basin Plan takes
effect[36]
- five
yearly reviews of the water quality and salinity management plan targets and
the environmental watering plan and[37]
- ten
yearly reviews of the Basin Plan.[38]
These requirements are also reflected in the Basin Plan, including
Chapter 13, which outlines a program for monitoring and evaluating the
effectiveness of the Basin Plan, and Schedule 12, which lists matters against
which the effectiveness of the Basin Plan will be evaluated.
As the Water Act review observed, ‘a total of 16
reviews (or similar processes...) are scheduled to occur between 2014 and 2024’.[39]
‘Rephasing’ or postponement of
reviews
Part 1 of Schedule 1 of the Bill proposes to amend
a number of the review and reporting requirements under the Water Act.
The proposed amendments would:
- postpone
the first five yearly reviews from 2017 to 2020 (items 1 and 2)
- postpone
the first ten year review of the Basin Plan by the MDBA to 2026 instead of 2022
(items 3 and 4)
- provide
for a further review of the Water Act, to be conducted in 2024 (item 7)
and give the Minister discretion to determine the terms of reference for the
review, in consultation with the states (item 8)
- remove
the requirement for the MDBA to include an analysis of the Basin Plan’s effectiveness
in its annual report, allowing the analysis to be contained in a separate
report (items 5 and 6) and
- add
a requirement for the five yearly reviews of the impacts of the Basin Plan to
consider the social and economic impacts of the Basin Plan (in addition to
water and salinity targets and the environmental water plan) (item 1).
These amendments are explained in further detail below. A ‘Timeline
of Key Review and Milestones in the Water Act and Basin Plan’ from the Water
Act review is included in Appendix 1 of this Digest.
Part 1 of Schedule 1 reflects a number of recommendations
in the Water Act review which considered that ‘rephasing and aligning’
of the review requirements in the Water Act would ‘provide a simpler and
more effective approach’.[40]
In particular, the Water Act review found that ten-yearly reviews of the
Basin Plan should be informed by five-yearly evaluations in the year
immediately prior to the ten year reviews. The Water Act review also
suggested that ‘by delaying commencement of these activities a few years the
results would be more meaningful, given that full implementation of the Basin
Plan will not be achieved until 2019, or in the case of sustainable diversion
limit adjustment measures, 2024’.[41]
The proposed changes are shown in the timeline from the Water Act review
that is included in Appendix 1.
In his second reading speech, the Minister explained in
relation to these amendments that:
In line with the review panel's recommendations, a further
review of the Water Act will be conducted in 2024. Furthermore, the
first legislated review of the Basin Plan, previously set for 2022, will now
take place in 2026, with 10-yearly reviews thereafter. This strikes the
appropriate balance between regulatory certainty and allowing the Basin Plan to
be reviewed when its outcomes can be better assessed.[42]
Five yearly reviews
Section 49A of the Water Act provides that the MDBA
must give advice to the MDB Ministerial Council (the Council) on the impacts of
the Basin Plan as soon as possible after the end of the first five years after
the Basin Plan takes effect (that is, from 2017). Item 2 of Part 1 of
Schedule 1 of the Bill amends this so that the MDBA must give that advice to
the Council before the end of 2020, effectively postponing this advice by three
years. Note that the five year review is a one-off: there are no subsequent
reviews under this section, although section 50 provides for regular ten yearly
reviews of the Basin Plan (this is discussed further below).
In addition, the Basin Plan itself is required to provide a
program for monitoring and evaluating the effectiveness of the Basin Plan. This
must include five yearly reviews of water quality and salinity targets, and the
environmental watering plan.[43]
Item 1 amends this requirement to provide that the first five yearly
review must be completed ‘before the end of 2020’.[44]
Given that the Basin Plan commenced in November 2012, this means the first five‑yearly
review would actually occur eight years after the commencement of the Basin
Plan. The Explanatory Memorandum notes that this will also require
consequential amendments to Chapter 13 of the Basin Plan, which sets out the program
for monitoring and evaluating the Basin Plan, to delay the timing of existing
five yearly reviews.[45]
The items are consistent with recommendation 4 of the Water
Act review, which recommended that the first five yearly report on the
Basin Plan be postponed from 2017 to 2020.[46]
The Water Act review considered that this would ‘ensure that the advice
is undertaken after sustainable diversion limits take effect’ and ‘better
inform the review of the Act (recommended to occur in 2024)’.[47]
Ten yearly reviews
Section 50 of the Water Act currently provides for
regular ten yearly reviews of the Basin Plan by the MDBA, and paragraph 50(1)(a)
indicates that the first review should take place during the tenth year after
the Basin Plan first takes effect (that is, 2022). Item 3 of Part 1 of
Schedule 1 of the Bill amends paragraph 50(1)(a) to specify that the first ten yearly
review will occur during 2026, effectively delaying the first ten yearly review
by four years. This is consistent with recommendation 4 of the Water Act review,
that the first scheduled review of the Basin Plan should be in 2026, with ten yearly
reviews thereafter.[48]
Under subsection 50(5) of the Water Act, the MDBA
must prepare a report of the results of the ten year review, which must be
given to the Commonwealth Minister and the relevant State Minister for each
Basin State, and made available on the MDBA’s website. Item 4 inserts a
new subsection 50(6) which provides that the requirements in subsection 50(5)
must be complied with before the end of the year during which the ten yearly
review is conducted. So, for example, the first ten year review must be
finalised, published and provided to relevant Ministers before the end of 2026.
Review of the operation of the Water
Act
As noted in the background section of this Digest, section
253 of the Water Act required a review of the operation of the Act, and
the extent to which its objects have been achieved, to be conducted before the
end of 2014. Item 7 of Part 1 of Schedule 1 amends section 253 to repeal
the date ‘2014’ and substitute it with ‘2024’. This means that another review
of the Water Act will now be required in 2024.
Subsection 253(2) currently sets of the terms of reference
for reviews of the operation of the Water Act. For example, they currently
require an assessment of matters including:
- the
extent to which:
- management
objectives and outcomes of the Basin Plan, long-term average sustainable
diversion limits, and targets in the Basin Plan are being met
- water
trading is occurring effectively and efficiently
- other
key elements of the Basin Plan are being implemented and
- water
is being used in higher value uses
- the
level of Basin-wide consistency in water charging regimes and the contribution
made by those charging regimes to achieving the Basin water charging objectives
and
- the
progress in the implementation of improved water information systems, including
the National Water Account.
The terms of reference may also include any other
requirements and matters determined by the Minister in consultation with the states.
Item 8 repeals the existing subsection 253(2), and proposes
to substitute it with a statement that ‘the terms of reference for the review
are to be determined by the Minister in consultation with the States’.
These items are consistent with recommendation 23 of the Water
Act review, which recommended that section 253 of the Water Act
be amended to provide for a review of the Act in 2024 and to repeal the
mandatory terms of reference for that and other such reviews.[49]
The review suggested that mandatory terms of reference should not be subscribed
‘to provide flexibility for tailoring to the needs of the review at the time’.[50]
It will be a matter for Parliament to consider whether it is appropriate to
provide the Minister, in consultation with the states, with total discretion to
determine the matters that might be addressed in the next review of the Water
Act.
Annual reporting and analysis of
the Basin Plan
Items 5 and 6 of Part 1 of Schedule 1 of the Bill
amend the requirement in paragraph 214(3)(a) of the Water Act for the
MDBA’s annual report to include an analysis of the effectiveness of the Basin
Plan. Item 6 repeals paragraph 214(3)(a) and item 5 then inserts
a new section 52A into the Water Act which will require the MDBA to
conduct an annual analysis of the Basin Plan’s effectiveness. The report of the
analysis must be provided to the Minister within six months after the end of
the financial year (that is, by 31 December). The report must also be tabled in
Parliament within 15 sitting days of the Minister receiving the report, and be
given to each other member of the Murray-Darling Basin Ministerial Council.[51]
In effect, this breaks the link between the MDBA’s annual
report and its analysis of the Basin Plan’s effectiveness: the analysis will
now be contained in a separate report. This gives effect to recommendation 22
of the Water Act review, which recommended an amendment:
...to de-link the requirement for the Murray–Darling Basin
Authority to produce an annual effectiveness report on the Basin Plan from the
Murray–Darling Basin Authority’s annual report requirements, with the
effectiveness report to be submitted to the Minister by 31 December annually
for tabling in Parliament.[52]
The Water Act review explained that the current
requirement for the analysis to be included in the MDBA annual report is
problematic, given that under Australian Government annual reporting
requirements, the Annual Report is usually provided to the Australian
Government Minister by October, and must be provided by the end of December.
However:
The analysis of the effectiveness of the Basin Plan relies on
information provided by Basin States following the end of the water year (30
June). The Basin Plan recognises that this information may take considerable
time to process and therefore provides a reporting date to the MDBA of 31
October each year. Section 13.18 of the Basin Plan requires the MDBA to provide
the proposed evaluation findings and recommendations arising out of the
analysis of effectiveness to Basin States, the Australian Government Department
of the Environment, and the Commonwealth Environmental Water Holder for comment
before the Report can be published.
Given this, it is not possible for the MDBA to analyse the
information, prepare the report on effectiveness and consult on the findings in
time to include it in the MDBA Annual Report, which is generally provided to
the Minister in October and tabled by December.[53]
While neither the new section 52A nor the existing
paragraph 214(3)(a) provide any further detail as to how the analysis of the
Basin Plan’s effectiveness might be conducted, further guidance is contained in
Chapter 13 and Schedule 12 of the Basin Plan, including key evaluation
questions and principles to be applied.
Five yearly reviews to consider
social and economic impacts of the Basin Plan
Subsection 22(1) of the Water Act contains a table
listing certain matters that must be included in the content of the Basin Plan.
Item 13 in that table states that the Basin Plan must include a program for
monitoring and evaluating the effectiveness of the Basin Plan. This program
must include five yearly reviews of the water quality and salinity targets in
the water quality and salinity management plan; and the environmental watering
plan.
Item 1 of Part 1 of Schedule 1 of the Bill amends
item 13 of the table in subsection 22(1) to add that the five yearly reviews
must also consider the social and economic impacts of the Basin Plan (in
addition to the water and salinity targets and environmental watering plan).
This item reflects recommendation 2 of the Water Act
review.[54]
In making this recommendation, the Water Act review stated its belief
that ‘five-yearly reviews provide a chance to look at all outcomes, including
the opportunity to assess social and economic impacts’. The review panel noted:
This amendment, while consistent with existing Basin Plan
requirements, would ensure that this monitoring endures beyond this version of
the Basin Plan and appropriately elevates recognition of this requirement to
the Act. It also recognises that the social and economic impacts of the Basin
Plan are inextricably linked with the environmental outcomes: while the
community needs sustainable environmental objectives achieved to maintain a
healthy river system, sustainable environmental objectives can only be achieved
when there is community confidence in the objectives and support for how they
are to be met.
This represents a practical amendment in response to many
stakeholders’ concerns about the balance of considerations in the Act and the
need to consider the impacts on industries and the community. It is critical
that the social and economic outcomes can be measured and assessed against
broader Basin Plan outcomes when the Basin Plan is reviewed.[55]
The Basin Plan already contains similar requirements for
the MDBA to consider how the Basin Plan has contributed to changes to the
environmental, social and economic conditions in the MDB, for example, when evaluating
the effectiveness of the Basin Plan in its annual reports.[56]
In his second reading speech, the Minister suggested that
this amendment is ‘incredibly important’ and ‘responds to many stakeholders'
concerns that insufficient attention is being paid to the social and economic
impacts of the Basin Plan’.[57]
Accrediting water resource plans
Part 2 of Schedule 1 of the Bill amends provisions
of the Water Act relating to the accreditation of water resource plans.
About water resource plans and
their accreditation
Section 54 of the Water Act provides for water
resource plans to be prepared for each water resource plan area in the Basin.
The Basin Plan defines 36 water resource plan areas, which generally correspond
with existing Basin state water management areas.[58]
Water resource plans must be consistent with the Basin Plan and the relevant
long-term annual diversion limit (that is, the maximum quantity of water that
can be taken for consumptive purposes) for the area.[59]
Water resource plans may be prepared by a Basin State and
then accredited by the Minister under the process set out in section 63 of the Water
Act.[60]
Under this process, the Basin State provides the proposed plan to the MDBA for
its consideration. The MDBA makes recommendations for the Minister as to
whether the proposed water resource plan should be accredited. The final
decision on whether to accredit the plan (or not) is made by the Minister,
although the Minister must accredit the plan if satisfied that the plan is
consistent with the relevant Basin Plan.[61]
The MDBA is working with Basin States to prepare water
resource plans to be accredited under the Water Act by 1 July 2019.[62]
Amendments to the Basin Plan and
accreditation of water resource plans
Sections 45 to 49 of the Water
Act set out the process for amending the Basin Plan. In short, the MDBA may
prepare an amendment of the Basin Plan to give to the Minister for adoption,
following certain consultation requirements. Item 11 adds a new
subsection 48(8) which would provide that if an amendment to the Basin Plan
is prepared by the MDBA as a result of a ten year review of the plan (under
section 50), then the Minister must, by notifiable instrument,[63]
determine that the amendment ‘affects water resource plan accreditations’.[64]
Section 56 of the Water Act sets out the general
basis for accrediting and making water resource plans. For example, subsection
56(1) provides that the MDBA and the Minister must have regard to the Basin
Plan and the extent to which the water resource plan is consistent with the Basin
Plan.
Duration of water resource plans
Under section 64 of the Water Act, water resource
plans may currently be accredited for a period of ten years or until the plan
ceases to have effect under the State water management law, whichever is the
earlier.[65]
Item 17 proposes to amend subsection 64(1) to provide that the
accreditation of a water resource plan ceases to have effect at the earlier of:
- when
the water resource plan ceases to have effect (under State water management
law) or
- three
years after an amendment to the Basin Plan that ‘affects water resource plan accreditations’
(which, as defined in the new subsection 48(8) is any amendment made as a
result of a ten year review of the Basin Plan under section 50).[66]
In other words, an amendment to the Basin Plan made as a
result of ten yearly review will cause all water resource plan accreditations
to expire after three years.[67]
The Explanatory Memorandum explains that:
Changes to the Basin Plan as a result of section 50 reviews
will be adopted by all water resource plans within three years. This means that
changes to Basin Plan water management approaches will be reflected in Basin
State water management plans in a timely manner, consistent with adaptive
management principles.[68]
However, these amendments also mean that, if the Basin
Plan is not amended following a ten year review, accreditation will continue
indefinitely unless the water resource plan cases to have effect under State
law. The Explanatory Memorandum states that:
This will reduce the regulatory burden associated with having
to reaccredit water resource plans simply because they are older than 10 years,
even though they remain consistent with the Basin Plan and relevant for state
water management purposes.[69]
Version of the Basin Plan to be
used for accrediting water resource plans
Subsection 56(2) of the Water Act contemplates the
possibility of the Basin Plan being amended and clarifies the version of the
Basin Plan that must be used for the purposes of accreditation. Currently, if
the water resource plan is submitted within two years after the Basin Plan
first takes effect (on 24 November 2012), then it is the original version of
the Basin Plan that is used.[70]
After that time, it is the version of the Basin Plan that was in effect two
years before the water resource plan is given to the Minister.[71]
This approach was:
... intended to give Basin States certainty that their water
resource plans would be assessed against the Basin Plan that was in place at
the time the water resource plan was prepared and provided to communities for
consultation. This avoided the possibility that a water resource plan might be
prepared based on one set of requirements, and assessed against another more
recent set of requirements in a recently revised version of the Basin Plan.[72]
However, during the Water Act review, the MDBA
proposed that subsection 56(2) be amended to provide Basin States with
flexibility to nominate a more recent version of the Basin Plan that the MDBA
should use when assessing water resource plans for accreditation. The review
supported this proposal, suggesting that it:
... may be beneficial to a Basin State as the increased
flexibility may provide an opportunity to consider water resource plans in line
with any improvements made to the Basin Plan, in cases where doing so accords
with state processes and timeframes. It could also provide a more efficient and
effective management of Basin water resources by allowing water resource plans
to incorporate the most current and up-to-date requirements under the Basin
Plan.[73]
Recommendation 5 of the Water Act review therefore
proposed that subsection 56(2) be amended to provide flexibility for Basin
States to nominate a more recent version of the Basin Plan for the MDBA to use
when assessing water resource plans for accreditation.[74]
The review panel noted that Basin States should ‘still be able to elect the
version of the Basin Plan in place two years prior to accreditation if this is
preferred’.[75]
The government response agreed with this recommendation
for the current phase of water resource plan accreditations but further
proposed that:
For the accreditation of second and subsequent generation
water resource plans, the Government will propose amendments to align
accreditation processes with Basin Plan reviews. This approach will ensure that
future water resource plans are accredited against the Basin Plan as amended
consequential to a 10 yearly section 50 review. This will ensure that changes
are adopted in state water resource plans in an efficient and consistent
manner.[76]
This recommendation is reflected in item 15 of
Schedule 1 of the Bill, which proposes to repeal subsection 56(2) and replace
it with new subsections 56(2) and (2A).
New subsection 56(2) will provide general guidance
by providing that, subject to subsection 56(2A), when the MDBA and Minister are
exercising powers or performing functions in relation to water resource plans,
the version of the Basin Plan to be applied is the Basin Plan in effect when
the power is exercised or when the function is performed.
New subsection 56(2A) then sets out a table with
four specific scenarios and specifies which version of the Basin Plan will
apply in each case:
- Scenario
One is where the proposed water resource plan is given to the Minister before
the first ten year review of the Basin Plan. In this case, the Basin Plan to be
applied is the version that was in effect two years before the proposed water
resource plan is given to the Minister, unless the Basin State makes a
nomination which is covered under scenario four (see below). This is a
continuation of the current approach.
- Scenario
Two is where the proposed water resource plan is given to the Minister after
the first ten year review of the Basin Plan AND an amendment of the Basin Plan
that affects water resource plan accreditations came into effect within three
years before the proposed water resource plan was given to the Minister. In
this case, the Basin Plan to be applied is the version that was in effect
immediately after that amendment, unless the Basin State makes a nomination
under scenario four (see below). This scenario reflects amendments in items
17–20 (as discussed above) which mean that water resource plan
accreditations expire three years after an amendment to the Basin Plan that
affects water resource plan accreditations.
- Scenario
Three is where the proposed water resource plan is given to the Minister after
the first ten year review of the Basin Plan AND within three years of a ten
year review report AND no amendment to the Basin Plan has been made as a result
of that review. In this case, the Basin Plan to be applied is the version that
was in effect immediately before the report was provided to the Minister unless
the Basin State makes a nomination which is covered by scenario four (see
below). The Explanatory Memorandum states that this recognises that ‘Basin
States may nevertheless wish to review and revise some or all of their water
resource plans’, even in the absence of an amendment that affects water
resource plans.[77]
- Scenario
Four is where the Basin State nominates a version of the Basin Plan to be
applied. In this case, the nominated version of the Basin Plan applies provided
that the version is not older than the version that would apply under scenarios
one, two or three. This gives effect to recommendation 5 of the review, by
providing flexibility for Basin States to nominate a more recent version of the
Basin Plan to be applied.
The Explanatory Memorandum suggests that the amendments are
consequential to the postponement of the first ten year review of the Basin
Plan to 2026 and are:
... necessary because, under the current accreditation
arrangements, the 2026 review and any subsequent amendments are unlikely to be
complete before many water resource plans require remaking (noting that plans
accredited as early as 2016 will require reaccreditation by 2026).[78]
The Explanatory Memorandum also suggests that ‘the new
arrangements’ proposed in Part 2 of Schedule 1 of the Bill will have ‘a number
of benefits’. According to the Explanatory Memorandum, these benefits include
that ‘all water resource plans will be accredited against the same version of
the Basin Plan’, which ‘will improve the consistency of water management
approaches across the Murray-Darling Basin’.[79]
In his second reading speech, the Minister similarly suggested that the Bill
will ‘streamline the Water Act by improving regulatory clarity, [and]
simplifying the process of water resource plan accreditation’.[80]
However, it is questionable as to whether these amendments improve clarity and
simplify the processes for accreditation. Rather, the proposed provisions seem
to provide a potentially more complicated and convoluted process for
determining which version of the Basin Plan might apply to the accreditation of
a proposed water resource plan.
The Water Act review found that the accreditation
processes in the Water Act are ‘generally sound’ and was ‘cognisant that
they have not yet been tested in practice’. Indeed, the Water Act review
took a ‘cautious approach to recommending changes to the current accreditation
process’.[81]
For this reason, the Water Act review recommended that the Australian
Government consult with Basin States on amendments ‘to streamline accreditation
processes for water resource plan amendments with the aim of ensuring that
implementation of the Basin Plan through Basin State frameworks is as
responsive as possible’.[82]
The Basin States were consulted on an exposure draft of this Bill.[83]
Nevertheless, it appears arguable that this process will streamline and simplify
the accreditation processes as suggested.
However, scenario four, which allows the Basin State to
nominate the version of the Basin Plan to be applied (provided it is a more
recent version), is consistent with the Water Act review.
Indigenous matters relevant to
Basin water resources
Part 3 of Schedule 1 of the Bill amends the Water
Act to provide for greater incorporation of Indigenous expertise in the
governance of the Basin’s water resources. There are a number of existing
provisions in the Water Act and Basin Plan which incorporate Indigenous
involvement or require Indigenous matters to be considered. For example, membership
of the Basin Community Committee established under section 202 of the Water
Act must include an individual with expertise in Indigenous matters and the
Basin Community Committee must establish an Indigenous water subcommittee to
guide the consideration of Indigenous matters relevant to the Basin’s water
resources.[84]
However, the Water Act review ‘heard a strong desire
from a number of Indigenous and environmental groups for greater recognition of
Indigenous interests’ in the Water Act. The review panel expressed
general support for amendments to ‘facilitate more effective incorporation of
Indigenous interests and expertise in the [Water] Act’s planning and management
framework’.[85]
Indigenous expertise in Basin
governance
Section 172 of the Water Act sets out the functions
of the MDBA. Item 23 proposes to insert a new paragraph 172(1)(ia)
to add a new function for the MDBA of engaging the Indigenous community on the
use and management of Basin water resources.
Section 178 provides for the appointment of members to the
MDBA. Under subsection 178(2), to be eligible for appointment as an MDBA
member, an individual must have a high level of expertise in one or more fields
relevant to the MDBA’s functions (and not be a member of the governing body of
a relevant interest group). Subsection 178(3) lists fields relevant to the MDBA’s
functions. Item 24 proposes to amend this list to add ‘Indigenous
matters relevant to Basin water resources’ as a field relevant to the MDBA’s
functions.
Section 202 establishes the Basin Community Committee, the
function of which is to advise the MDBA about the performance of its functions.
The Basin Community Committee consists of a Chair and up to 16 other members. Under
subsection 202(5), the Basin Community Committee’s membership must include:
- at
least one MDBA member
- at
least eight individuals who are water users or representatives of one or more
water users and
- an
individual with expertise in Indigenous matters relevant to the Basin’s water
resources.
Item 25 proposes to amend this last requirement to
require at least two Indigenous persons with expertise in Indigenous matters
relevant to the Basin’s water resources to be included on the Basin Community
Committee. In turn, item 21 inserts a definition of ‘Indigenous person’
into the definitions in subsection 4(1) of the Water Act. This increases
the requirement for members with expertise in Indigenous matters from one to
two and also means that these members must now be Indigenous.
All the above amendments reflect recommendation 20 of the
Water Act review, which recommended amendments to these sections of the Water
Act in order to increase the recognition of Indigenous interests and
expertise in the management of the MDB.[86]
However, item 25 goes further than the review, which
did not specify that the individuals with expertise in Indigenous matters appointed
to the Basin Community Committee be Indigenous.[87]
The government response indicated it would be amending the Water Act so
as to require the individuals with expertise in Indigenous matters to be
Indigenous.[88]
Water resource plans and Indigenous
matters
Subsection 22(1) of the Water Act contains a table
listing certain matters that must be included in the content of the Basin Plan.
Under item 11 of this table, the Basin Plan must include the requirements for a
water resource plan area to comply with in order for the plan to be accredited
or adopted. Subsection 22(3) then lists a number of requirements for water
resource plans. Item 22 proposes to amend subsection 22(3) to add a new
paragraph 22(3)(ca) to require water resource plans to have regard
to ‘social, spiritual and cultural matters relevant to Indigenous people in
relation to the water resources of the water resource plan area in the
preparation of the water resource plan’.
The Explanatory Memorandum notes, for clarity, that ‘nothing
in this amendment will require specific water entitlements or reduce
availability or affect the reliability of existing water access rights’.[89]
The amendment in item 22 reflects recommendation 1 of
the review, which recommended that consideration be given to amending subsection
22(3) to reflect ‘existing Basin Plan water resource plan requirements dealing
with Indigenous values and uses’. However, the review recommended that this consideration
occur after 1 July 2019 when water resource plans have been accredited.[90]
The government response indicated that the government would ‘seek to amend the
Act to require that water resource plans are prepared having regard to
Indigenous values and uses’.[91]
Neither the government response nor the Explanatory Memorandum specifically
explain why the amendment is being made now, rather than after 1 July 2019 as
recommended by the review.
However, the Explanatory Memorandum does note that this
amendment reflects and acknowledges existing water resource plan requirements
in Part 14 of Chapter 10 of the Basin Plan.[92]
For example, section 10.52 of the Basin Plan requires water resource plans to
identify the objectives of Indigenous people in relation to managing the water
resources of the water resource plan area, having regard to the social,
spiritual and cultural values and uses of the water resources of the water
resource plan area for and by Indigenous people.
Trading by Commonwealth
Environmental Water holder
Part 6 of the Water Act establishes the Commonwealth
Environmental Water Holder (CEWH). The functions of the CEWH are set out in
section 105 of the Water Act.[93]
In short, they involve managing the ‘Commonwealth environmental water holdings’
— that is, water (in the form of water rights) recovered by the Commonwealth to
protect and restore environmental assets such as rivers, wetlands and
floodplains.[94]
Commonwealth water holdings are the result of government purchases of
entitlements and investment in more efficient water infrastructure in the MDB.[95]
The functions of the CEWH are to be performed ‘for the
purpose of protecting or restoring the environmental assets of the
Murray-Darling Basin ... so as to give effect to relevant international
agreements’.[96]
The CEWH must also manage the Commonwealth environmental water holdings in
accordance with certain planning documents, including the MDB environmental
watering plan, set out in Chapter 8 of the Basin Plan.[97]
Commonwealth environmental water holdings are actively
managed, which means water may be:
- delivered
to meet current environmental needs
- carried
over to future years to meet future environmental needs or
- traded
(disposed of or acquired).
As the Water Act review explains:
Trade of Commonwealth environmental water, either allocations
or entitlements, is one of the management tools that enhance the capacity of
the portfolio to meet environmental watering requirements. For example, trade
can be used to manage variability in water availability and environmental water
demand across the Basin by selling allocations in one catchment where
environmental watering needs have largely been met and purchasing in another
catchment or at a later time when additional environmental water would provide
a net improvement in environmental outcomes. It can also be used to re-balance
the portfolio of entitlements based on improvements in knowledge of
environmental watering requirements.[98]
However, section 106 of the Water Act limits the
disposal of Commonwealth environmental water holdings. The CEWH may only
dispose of water which is not currently required to meet objectives of the environmental
watering plan or any applicable environmental water schedules and would otherwise
be forfeited.[99]
The reason for imposing the limitation was to ensure that the CEWH operates to
meet environmental objectives rather than as a profit making enterprise.[100]
However, the limitation does not apply in circumstances where proceeds from any
sale can be used by the CEWH to acquire other water or water holdings which will
better protect or restore environmental assets.[101]
Item 27 of Part 4 of Schedule 1 of the Bill proposes
to repeal and replace section 106 in order to amend the limits on disposal of
water by the CEWH. This reflects recommendations 15 and 16 of the Water
Act review.[102]
Use of proceeds for non-water
acquisition
Proposed subsection 106(3) in item 27 provides
that the CEWH may dispose of water or Commonwealth environmental water holdings
if the CEWH uses the proceeds of the disposal for acquiring water or
Commonwealth environmental water holdings. In the case of disposal of a water
allocation, the CEWH may use the proceeds for environmental activities,
provided the long-term annual diversion limit has been complied with in
relation to the disposal.[103]
However, the CEWH must reasonably believe, at the time of
the disposal, that using the proceeds would improve the capacity of the
Commonwealth environmental water holdings to be applied to meet the objectives
of relevant plans, including the Murray-Darling Basin environmental watering
plan.
In short, the objective of the new subsection 106(3)
is to provide ‘increased flexibility’ for the CEWH to sell water allocations
and use the proceeds for other activities to meet environmental objectives, as
well as the purchase of other water or water holdings. As the Explanatory
Memorandum states, this recognises that:
...in some circumstances, the intended environmental outcomes
from the application of Commonwealth environmental water can be more
effectively achieved by investing in works and measures that are complementary
to environmental water use, and not always by purchasing additional water.[104]
The Explanatory Memorandum gives the examples of
‘fish-ways or carp exclusion screens that support the delivery of water to
off-river wetlands’, suggesting that:
By selling a small volume of allocations in one year to fund
the construction of such works, it could improve the effectiveness of larger
volumes of environmental water delivered over several years, thereby improving
environmental outcomes. Particular environmental activities are not prescribed
or defined, which provides the flexibility to respond to changing priorities
and invest in the activities that provide the best environmental outcomes
possible based on conditions at the time. This provision is intended to enable
additional targeted activities that complement, rather than duplicate or
replace, natural resource management programmes implemented by other entities.[105]
The Minister reiterated this in his second reading speech:
The flexibility will enable the Commonwealth Environmental
Water Holder to get the best environmental outcomes possible, as efficiently as
possible, whilst also assisting in the socioeconomic requirements of Basin
communities.
This recognises that achieving environmental outcomes in the
Basin will often require both water and complementary environmental activities.
We know it is not just about adding water, because the lack of environmental
works and measures, such as fish ladders and carp screens, can be a real
barrier to maximising environmental outcomes.[106]
Under proposed subsection 106(4), the proceeds of
trade cannot be used to pay fees and charges for holding and delivering
Commonwealth environmental water. This subsection is designed to ensure that the
CEWH’s operating costs continue to be met from Commonwealth consolidated
revenue, rather than from the sale of Commonwealth environmental water
holdings.[107]
These amendments are consistent with recommendation 15 of
the Water Act review, which supported the suggestions that the CEWH
should have greater flexibility and discretion in using the proceeds of
allocation trade in achieving environmental outcomes, subject to stringent
safeguards and limitations. The review report explained that this ‘could involve
investment in fish ladders,[108]
complementary natural resource measures such as carp eradication, or investment
in works and measures that make watering more efficient’.[109]
The review therefore recommended that section 106 of the Water
Act be amended to allow water trading revenue to be used for other
environmental activities in addition to water acquisitions to maximise
environmental outcomes from the use of Commonwealth environmental water,
subject to the following safeguards:
- only
revenue generated from the trade of Commonwealth environmental water
allocations (not Commonwealth environmental water entitlements)[110]
may be used for environmental activities other than acquisitions
- any
disposal of water and use of proceeds for non-water acquisition purposes must
reasonably be expected to improve environmental outcomes from the use of
Commonwealth environmental water
- trading
activity should not impact on the achievement of sustainable diversion limits
in the long-term and
- trade
revenue cannot be used to fund operational expenses of the Commonwealth
Environmental Water Holder such as holding and delivery fees and charges.[111]
It appears, however, that not all stakeholders agreed with
the proposed changes to section 106. The report of the Water Act review states
that, while some submissions supported changes to the limits on the CEWH’s
ability to trade, ‘other submissions took the contrary view that the needs of
the environment are best served by continuation of the current limitations on
the use of proceeds of trade’.[112]
The report does not identify which stakeholders held which view on this matter.
However, when the Bill was introduced to Parliament, the
Australian Conservation Foundation issued a media release expressing concern
that the proposed changes ‘would shift the burden of paying for important
environmental works like fish ladders and carp exclusion devices onto the
underfunded’ CEWH. ACF explained:
The proposed changes create an incentive for government
agencies to defund existing programs and make the Environmental Water Holder
responsible for funding unlimited ‘environmental activities’. There is nothing
in the legislation to prevent cost-shifting.
If the government was serious about environmental health it
would restore funding to the Native Fish Strategy and other important programs,
not expect the environment to auction off its only asset, water, in order to
pay for basic infrastructure.[113]
In his second reading speech, the Minister stated:
The Government wishes to make it clear that the Commonwealth
Environmental Water Holder will not use this new flexibility to invest in
natural resource management activities that are already being funded by other
programmes, whether at the local, state or federal level.[114]
Forfeited or forgone water
allocations
Currently, section 106 applies to water which is likely to
be forfeited because it cannot be carried over to the next water year, due to
carryover limits which apply in parts of the southern Murray-Darling Basin.
However, in the northern parts of the Basin, which use continuous accounting
systems, allocations remain until used or sold. This means that the holder can
be prevented from receiving additional allocations that would exceed the
account limit. As such, allocations may be forgone due to account limits,
rather than forfeited due to carryover limits.[115]
Proposed subsection 106(2) in item 27 aims
to cover water that is likely to be forfeited and water that is likely
to be forgone by providing that the CEWH may dispose of water during a water
accounting period if he or she reasonably believes the water is not required to
meet the objectives of relevant plans, including the environmental watering
plan or any applicable environmental watering schedules and either:
- the
water or the water holdings cannot be carried over into the next water
accounting period or
- a
water allocation in respect of particular Commonwealth environmental water
holdings is likely to be reduced if the disposal does not occur.[116]
This proposed amendment reflects recommendation 16 of the Water
Act review, which recommended that section 106 of the Water Act be
amended to ‘remove the restriction on disposal of allocations that could be
reasonably expected to result in forgoing future allocations, such as in
continuous accounting systems’.[117]
In his second reading speech, the Minister explained that
this amendment will:
...bring the conditions of the sale of water allocations in
systems with continuous accounting into line with systems which have an annual
accounting framework. This means that if the water is not required to meet
environmental objectives in a water period, the Commonwealth Environmental
Water Holder will have the option to sell the water rather than forego
allocations due to account limits.[118]
Item 28 of Part 4 of Schedule 1 amends the annual
reporting requirements of the CEWH in section 114 of the Water Act to
add a requirement for the CEWH to publish information in its annual report
detailing each disposal of water, the amount of the proceeds from each disposal
and the purposes for which the proceeds were used.[119]
This is consistent with recommendation 17 of the Water
Act review, which noted that the CEWH already publishes information
relating to each trade on its website and a summary of trading activity in its
annual report. However, the Panel considered that amending section 114 to
require the CEWH to report annually on trading decisions will ‘provide greater
confidence that trade is improving environmental outcomes by increasing the
legislated transparency of trading decisions’.[120]
Murray-Darling Basin Water Rights Information Service
Part 5 of the Water Act 2007 provides that the
Murray–Darling Basin Authority (MDBA) may establish an information service (the
‘Water Rights Information Service’) providing access to registrable water
rights information for the Basin. ‘Registrable water rights’ include water
access rights, water delivery rights, irrigation rights and other rights that
relate to access to, or the use of, Basin water resources.[121]
Item 31 of Schedule 1 will repeal Part 5, thus
repealing the provisions for the establishment of the Water Rights Information
Service. Item 32 consequentially repeals a reference to Part 5 and the
Water Rights Information Service in the list of the MDBA’s functions in section
172 of the Water Act, while item 30 repeals the reference in the
definitions in section 4 of the Water Act to ‘registrable water rights’.
The Explanatory Memorandum states that ‘the Water Rights
Information Service has not been established and there are no plans to
establish it in the future’ and:
Prime responsibility for water access rights information,
including responsibility for keeping information up to date, has and will
continue to rest with Basin States.[122]
The repeal of Part 5 is consistent with recommendation 14
of the Water Act review, which noted that the Water Rights Information
Service had not been established, but if it were ‘there are likely to be
regulatory impacts for businesses and Basin State government agencies
associated with any information reporting requirements imposed on these
bodies’.[123]
The review stated that the aim of the Water Rights Information Service was to
facilitate the operation of efficient water markets and minimise transaction
costs for market participants by providing information about the Basin that is
easy to access and consistent. In recommending the repeal of Part 5, the review
suggested that:
Other policy settings, such as the Basin Plan water trading
rules, which commenced on 1 July 2014, are expected to contribute to open and
efficient Basin water markets. A Water Rights Information Service might also
duplicate Basin States’ responsibilities and existing Basin State water
registers, require Basin State cooperation and require funding, resourcing and
commitment by all Basin jurisdictions to support its establishment.[124]
The review was also ‘cognisant of the Australian
Government’s deregulation agenda’ and concerns raised in submissions to the
review about existing information reporting requirements under the Act and
associated costs for businesses. The review found that:
Should such a service be considered in future, it should be
assessed against other possible policy options, including the relative benefits
of a Basin-wide rather than a national solution, and be supported by a full
cost–benefit analysis to ensure that any regulatory impacts are necessary and
are outweighed by the benefits to the market and market participants. Any
necessary legislative amendments could be prepared at that time and be tailored
to the delivery of the preferred option.[125]
However, according to the Explanatory Memorandum to the
Water Bill 2007, the original aim of establishing the Water Rights Information
Service’ was to link to the registers of registrable water rights kept by State-based
agencies and infrastructure operators in order to:
...bring together all of the information contained in various
registers and provide a single information service. The intent is to support
distribution of information about water access rights and to facilitate trading
in these rights.[126]
The repeal of provisions for the Water Rights Information Service
comes on top of the termination of the National Water Markets System program. A
key component of the National Water Markets System program was the establishment
of a national common registry system, including increased interoperability of
state and territory water registers and the automated exchange of information
between state and territory water registers to facilitate efficient interstate
trade, particularly in the Murray-Darling Basin.[127]
However, the National Water Markets System program was terminated in the
2014–15 Budget ‘following an assessment that the remaining work would exceed
the resources available’.[128]
Indeed, there would seem to be value in a centralised
source for information on water rights, especially in light of the fact that
the Government is committed to introduce legislation to establish a national register
of foreign ownership of water entitlements.[129]
Currently, each
state and territory publishes its own water register.[130]
The Government accepted the Water Act review’s
recommendation for the establishment of an interagency working group led by the
Bureau of Meteorology to report on:
(a) current
water information reporting requirements under the Act and associated
regulatory burdens for data providers, including an estimate of current costs
(b) the benefits of the suite of information products with
reference to associated costs borne by data providers
(c) options
to reduce the regulatory burden imposed on data providers in the order of 20
per cent or more compared to current regulatory burdens. [131]
The Interagency Working Group on Commonwealth Water
Information Provision completed this review in June 2015 but there has been no government
response to date.[132]
Section 92 of the Water Act provides that the
Minister may make rules to regulate water charges in the Basin States (‘water
charge rules’). These water charge rules may provide for the Australian
Competition and Consumer Commission (ACCC) to make a determination or approval
of regulated water charges. Under subsection 92(4), the effect and duration of
a particular ACCC determination or approval relating to regulated water charges
may be specified in the water charge rules.
However, during the Water Act review, the ACCC
suggested that subsection 92(4) be amended to enable regulators to set the
duration of a pricing determination or approval ‘in order to be more responsive
to wider economic conditions, or other factors that may influence the
efficiency and operation of existing or future determinations’.[133]
The Water Act review therefore recommended that subsection 92(4) be
amended to give regulators applying the water charge rules discretion to
determine or vary regulatory periods, ‘so long as the regulatory periods are
longer than those already provided for in the rules’.[134]
Item 37 gives effect to this recommendation by
proposing a new subsection 92(4) which provides that the water charge
rules may:
- specify
the effect and the period of effect of a determination or approval by the ACCC
and
- allow
the ACCC to extend the period of effect of a particular determination or
approval beyond that period.
The Explanatory Memorandum suggests that this amendment
will enable the water charges rules to be amended to ‘reduce regulatory burden
through greater alignment of regulatory processes’ and to ‘set the regulatory
period having regard to issues relevant to a particular infrastructure
operator, to the water industry or to the wider economy’.[135]
Item 36 amends section 74 of the Water Act, which
sets out a simplified outline of the provisions relating to ‘risks arising from
reductions in diversion limits’. In short, these provisions provide that when
the long-term average sustainable diversion limit for the water resources of a
water resource plan area is reduced, despite Commonwealth efforts to manage
that reduction, a water access entitlement holder may be entitled to
compensation in certain circumstances.
Item 36 proposes to replace subsection 74(4) to
clarify that the Commonwealth may make a payment in certain circumstances if
there is a reduction in, or change in reliability of, a water
entitlement holder’s allocations. This change will provide clarity and more
accurately reflect the relevant provisions in the Water Act,
particularly section 77 (which relates to payments for water access entitlement
holders).
The Explanatory Memorandum states that this item gives
effect to ‘the Government’s response to recommendation 7 of the Water Act
review’.[136]
Recommendation 7 actually recommended that section 77 be amended to provide a ‘presumption
that a water access entitlement holder should be fully compensated for any
reduction in the market value of the entitlement that is reasonably
attributable to the Commonwealth share of the diversion limit reduction’.[137]
The Government response agreed with this recommendation,
but indicated:
The Australian Government will amend the Act to clarify
further that the holder of a water access entitlement who qualifies for a
payment under section 77 of the Act is entitled to receive a payment equal to
the reduction in market value of the holder’s water access entitlement that is
reasonably attributable to the Commonwealth’s share of the diversion limit
reduction.
The Government is committed to avoiding any such reduction in
value by ‘bridging the gap’, prioritising on-farm and off-farm infrastructure
investment.[138]
So, while this amendment does not exactly correspond to
recommendation 7 of the Water Act review, it does give effect to the
general spirit of the recommendation and is line with the government response
to the review.
Items 33 to 35 of Part 6 of Schedule 1 of the Bill
make minor amendments to clarify a number of definitions in the Water Act,
in line with recommendation 13 of the Water Act review.[139]
Schedule 2 of the Bill contains a number of minor
technical amendments, including to the definition of ‘referring State’ to align
with Basin State legislation and to repeal spent provisions (relating to the
application of the Water Act before the Basin Plan came into effect).
The Bill makes a number of procedural amendments to the Water
Act, which are largely consistent with the recommendations of the review of
the Water Act in 2014.
Appendix 1: Timeline of Key Review and Milestones in the Water Act
and Basin Plan
Source: Water
Act review, op. cit., p. 31.
Members, Senators and Parliamentary staff can obtain
further information from the Parliamentary Library on (02) 6277 2500.
[1]. E
Moran et al, Report
of the Independent Review of the Water Act 2007 (Water Act
review), report prepared for the Department of the Environment, Department of
the Environment, November 2014, accessed 11 January 2016; see also
Department of Agriculture and Water Resources, Report
of the Independent Review of the Water Act 2007: Australian Government response
(Government response), Department of Agriculture and Water Resources, December
2015, accessed 11 January 2016. The Government accepted 21 of the 23
recommendations of the panel in full and two of the recommendations in part.
[2]. Murray-Darling
Basin Authority (MDBA), Basin-wide
environmental watering strategy, MDBA, 24 November 2014, p. 1, accessed
11 January 2016.
[3]. B
McCormick, ‘Murray-Darling
Basin water issues’, Briefing Book: key issues for the 43rd
Parliament, Parliamentary Library, Canberra, 12 October 2010,
accessed 2 February 2016.
[4]. Basin Plan 2012,
accessed 11 January 2016. The Basin Plan is made under subsection 19(3) of the Water
Act. See also section 20 of the Act which sets out the purpose of the Basin
Plan. For further information on the development of the Basin Plan, see MDBA, ‘Developing the
Basin Plan’, MDBA website, accessed 11 January 2016.
[5]. MDBA,
‘Sustainable
diversion limits’,
MDBA website, accessed 27 January 2016.
[6]. Prior
to the development of SDLs, there was a limit on the amount of surface water
taken for consumptive use called a ‘cap’ which was set based on historic use
rather than what was sustainable.
[7]. MDBA,
‘Sustainable
diversion limits’,
op. cit.
[8]. Ibid.
[9]. Department
of the Environment, ‘Environmental
water holdings’, Department of the
Environment website, accessed 4 February 2016.
[10]. Basin
Plan, Chapter 7.
[11]. Basin
Plan, p. 36.
[12]. Department
of the Environment, ‘Environmental
water holdings’, op. cit.
[13]. The
National Water Initiative is an
Intergovernmental Agreement that was signed at the Council of Australian
Governments meeting on 25 June 2004. It is a blueprint for water reform
that set out to achieve a nationally compatible market, regulatory and planning
based system. This system is intended to manage surface and groundwater
resources for rural and urban use, and optimise economic, social and
environmental outcomes: National Water Commission, ‘National Water Initiative’, National Water
Commission website, accessed 4 February 2016.
[14]. Bureau
of Meteorology (BoM), ‘Water rights’,
BoM Water Market Information website, accessed 27 January 2016.
[15]. Basin
Plan, Chapter 8.
[16]. MDBA,
Basin-wide
environmental watering strategy, MDBA, 24 November 2014, accessed 25
January 2016.
[17]. Basin
Plan, Chapter 9.
[18]. MDBA,
‘Water
resource plans’,
MDBA website, accessed 27 January 2016.
[19]. Basin
Plan, Chapter 10.
[20]. Basin
Plan, Chapter 12.
[21]. MDBA,
‘Basin
Plan water trading rules’,
MDBA website, accessed 25 January 2016.
[22]. E
Moran et al, Report
of the Independent Review of the Water Act 2007, op. cit.
[23]. Ibid.,
p. i.
[24]. Ibid.,
p. ix.
[25]. B
Joyce (Minister for Agriculture and Water Resources), Water
Act improvements deliver greater certainty for Basin communities, media
release, 3 December 2015, accessed 12 January 2016.
[26]. Department
of Agriculture and Water Resources, Report
of the Independent Review of the Water Act 2007 Australian Government response,
(Government response), op. cit., p. 2.
[27]. Senate
Selection of Bills Committee, Report,
1, 2016, The Senate, Canberra, 4 February 2016, p. 3, accessed 4 February 2016.
[28]. Senate
Standing Committee for the Scrutiny of Bills, Alert
digest, 1, 2016, The Senate, Canberra, 3 February 2016, p. 49, accessed
4 February 2016.
[29]. Australian
Conservation Foundation, Water
Act changes could result in cuts to environmental programs, media
release, 3 December 2015, accessed 21 January 2016.
[30]. ABC
News, ‘Mixed
response to Water Act review proposal on changes to Commonwealth Water Holder’,
ABC News, (online edition), 23 December 2014, accessed 1 February
2016.
[31]. Australian
Conservation Foundation, op. cit.
[32]. Explanatory
Memorandum, Water Amendment (Review Implementation and Other Measures) Bill
2015, p. 4.
[33]. The
Statement of Compatibility with Human Rights can be found at pages 5–6 of the
Explanatory Memorandum to the Bill.
[34]. Parliamentary
Joint Committee on Human Rights, Thirty-third
report of the 44th Parliament, The Senate, Canberra, 2 February 2016,
p. 2, accessed 4 February 2016.
[35]. Water
Act, paragraph 214(3)(a).
[36]. Water
Act, section 49A.
[37]. Water
Act, subsection 22(1), item 13.
[38]. Water
Act, subsection 50(1).
[39]. Water
Act review, op. cit., p. 30 and see also Figure 2.1 which provides a
timeline of key reviews and milestones in the Water Act and Basin Plan
(and as also set out in Appendix 1 of this Digest).
[40]. Ibid.
[41]. Ibid.
[42]. B
Joyce, ‘Second
reading speech: Water Amendment (Review Implementation and Other Measures) Bill
2015’, House of Representatives, Debates, 3 December 2015, p. 14623,
accessed 18 January 2016.
[43]. Water
Act, subsection 22(1), item 13.
[44]. Note
that item 1 also adds a requirement to consider social and economic
impacts: this is discussed further below.
[45]. Explanatory
Memorandum, op. cit., p. 8.
[46]. Water
Act review, op. cit., pp. 30–32; see in particular paragraph (b)(i) of
recommendation 4.
[47]. Ibid.,
p. 30.
[48]. Ibid.,
p. 32.
[49]. Ibid.,
p. 111. By deleting subsection 253(2), item 8 also implements recommendation
10: that section 253 be amended to remove the term ‘higher value uses’, which
the review found to be ‘misleading’. The review found ‘there are a range of
factors that influence water use and that what might be considered a high-value
use in one year may not be so the next’. The review panel considered that it
would be more appropriate to refer to ‘optimal use’. Water Act review, op. cit., p. 57.
[50]. Water
Act review, op. cit., p. 111.
[51]. Item
9 of Part 1 of Schedule 1 clarifies the application of the amendments in
items 5 and 6 in their first year.
[52]. Water
Act review, op. cit., p. 108.
[53]. Ibid.,
p. 107.
[54]. Ibid.,
p. 20.
[55]. Ibid.
[56]. Basin
Plan, section 13.06.
[57]. B
Joyce, ‘Second
reading speech: Water Amendment (Review Implementation and Other Measures) Bill
2015’, House of Representatives, Debates, 3 December 2015, p. 14623,
accessed 18 January 2016.
[58]. For
further information, see MDBA, ‘Water
resource plans’, op. cit.
[59]. Water
Act, subsection 55(2). For further information on sustainable diversion
limits, see MDBA, ‘Sustainable
diversion limits’,
op. cit.
[60]. Alternatively,
the plans may be developed by the MDBA and then adopted by the Minister under sections
68-69 (these are known as the ‘step-in’ powers). Water resource plans are
legislative instruments, but those accredited under section 63 are not subject
to disallowance: see Water Act, subsection 63(7).
[61]. Water
Act, subsection 63(6).
[62]. MDBA,
‘Water
resource plans’, op. cit.
[63]. A
notifiable instrument is an instrument described or declared by law and
registered on the Federal Register of Legislation. Unlike a legislative
instrument, notifiable instruments are not subject to parliamentary scrutiny
nor are they subject to automatic repeal ten years after registration: see
section 11 of the Legislation Act 2003 (which at the time of writing,
was yet to commence), at item 12 of Schedule 1 to the Acts and Instruments
(Framework Reform) Act 2015, accessed 4 February 2016.
[64]. Note
that item 10 is a consequential amendment which inserts new definitions
of ‘notifiable instrument’ and ‘affects water resource plan accreditations’
into subsection 4(1) of the Water Act.
[65]. Note
that the accreditation period may be extended under subsection 64(2) for up to
one year.
[66]. Explanatory
Memorandum, op. cit., p. 14. Items 18-20 of Part 2 of Schedule 1 are
consequential amendments relating to this amendment.
[67]. See
also the note to new subsection 48(8) in item 11; and Explanatory
Memorandum, op. cit., p. 11. Note that the three year period may still be
extended for up to one year.
[68]. Explanatory
Memorandum, op. cit., p. 11.
[69]. Ibid.,
p. 10.
[70]. Water
Act, paragraph 56(2)(a).
[71]. Water
Act, paragraph 56(2)(b).
[72]. Water
Act review, op. cit., p. 32.
[73]. Ibid.,
p. 33.
[74]. Ibid.
[75]. Ibid.
[76]. Government
response, op. cit., p. 5.
[77]. Explanatory
Memorandum, op. cit., p. 13.
[78]. Ibid.,
p. 10.
[79]. Ibid.,
p. 11.
[80]. B
Joyce, ‘Second
reading speech: Water Amendment (Review Implementation and Other Measures) Bill
2015’, op. cit.
[81]. Water
Act review, op. cit., p. 35.
[82]. Ibid.,
p. 36 (recommendation 6).
[83]. Explanatory
Memorandum, op. cit., p. 4.
[84]. Water
Act, paragraphs 202(3)(c) and 202(5)(c).
[85]. Water
Act review, op. cit., pp. 5–6.
[86]. Ibid.,
pp. 104–105.
[87]. Ibid.,
p. 105.
[88]. Government
response, op. cit., p. 13.
[89]. Explanatory
Memorandum, op. cit., p. 14.
[90]. Water
Act review, op. cit., p. 19.
[91]. Government
response, op. cit., p. 3.
[92]. Explanatory
Memorandum, op. cit., p. 14.
[93]. Further
information about the Commonwealth Environmental Water Holder is available at
Department of the Environment, ‘The
role of the Commonwealth Environmental Water Holder’, Department of the
Environment website, accessed 18 January 2016.
[94]. See
section 108 of the Water Act for the full definition of ‘Commonwealth
environmental water holdings’.
[95]. Department
of the Environment, ‘About
Commonwealth environmental water’, Department of the Environment website,
accessed 15 January 2016.
[96]. Water
Act, subsection 105(3).
[97]. The
purposes of the environmental watering plan are set out in section 28 of the Water
Act.
[98]. Water
Act review, op. cit., p. 75.
[99]. Water
Act, subsection 106(1).
[100]. Explanatory
Memorandum, Water Bill 2007, p. 31.
[101]. Water
Act, subsection 106(2) and see also subsection 86AE(2).
[102]. Water
Act review, op. cit., p. 78.
[103]. Proposed
subsections 106(3)(a)(ii) and 106(3)(b). Proposed subsections 106(5) and (6)
provide further detail as to when the long-term annual diversion limit condition
is satisfied, including, for example, if before the disposal, the MDBA had
published information indicating that the limit had been complied with in the
area where the disposal will occur.
[104]. Explanatory
Memorandum, op. cit., p. 16.
[105]. Ibid.,
p. 17.
[106]. B
Joyce, ‘Second
reading speech: Water Amendment (Review Implementation and Other Measures) Bill
2015’, House of Representatives, Debates, 3 December 2015, p. 14621,
accessed 18 January 2016.
[107]. Explanatory
Memorandum, op. cit., p. 18. This is also in line with finding 6.2 of the Water
Act review, op. cit., p. 77.
[108]. A
fish ladder is a structure placed on or around constructed barriers (such as
dams or weirs) to give native fish the opportunity to migrate.
[109]. Water
Act review, op. cit., p. 77.
[110]. For
further information on different types of water rights, see Bureau of
Meteorology (BOM), ‘Water rights’,
op. cit.
[111]. Water
Act review, op. cit., p. 77.
[112]. Ibid.,
p. 76.
[113]. Australian
Conservation Foundation, ‘Water
Act changes could result in cuts to environmental programs’, media release,
3 December 2015, accessed 18 January 2016.
[114]. B
Joyce, ‘Second
reading speech: Water Amendment (Review Implementation and Other Measures) Bill
2015’, op. cit., p. 14622.
[115]. Water
Act review, op. cit., p. 78; see also Government Response, op. cit., p. 11.
[116]. A
water allocation is the specific volume of water allocated to a water access
entitlement in any given water accounting period: Water Act, section 4.
[117]. Water
Act review, op. cit., p. 78.
[118]. B
Joyce, ‘Second
reading speech: Water Amendment (Review Implementation and Other Measures) Bill
2015’, op. cit., p. 14622.
[119]. Item
29 provides that the new requirement only applies to the disposal of water
on or after the commencement of these amendments.
[120]. Water
Act review, op. cit., p. 82.
[121]. Water
Act, section 101.
[122]. Explanatory
Memorandum, op. cit., p. 19.
[123]. Water
Act review, op. cit., p. 69.
[124]. Ibid.,
p. 70.
[125]. Ibid.
[126]. Explanatory
Memorandum, Water Bill 2007, accessed 12 January 2016.
[127]. Department
of the Environment, ‘National
Water Market System’, Department of the Environment website, accessed 14
January 2016. See also Water Act review, op. cit., p. 69.
[128]. Water
Act review, op. cit., p. 69; see also B McCormick, ‘Water’,
Budget Review 2014–15, Parliamentary Library, Canberra, accessed
2 February 2016.
[129]. B
Joyce, ‘Second
reading speech: Water Amendment (Review Implementation and Other Measures) Bill
2015’, op. cit., p. 14622–14623.
[130]. Bureau
of Meteorology (BoM), ‘Water
registers and accessing market information’, BoM Water Market Information
website, accessed 3 February 2016.
[131]. Government
response, op. cit., p. 12.
[132]. Ibid.
[133]. Water
Act review, op. cit., p. 65.
[134]. Ibid.,
p. 66 (recommendation 12).
[135]. Explanatory
Memorandum, op. cit., pp. 21–22.
[136]. Explanatory
Memorandum, op. cit., p. 21.
[137]. Water
Act review, op. cit., p. 39.
[138]. Government
response, op. cit., p. 6.
[139]. Water
Act review, op. cit., p. 66.
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