Chapter 2
Issues raised in submissions
2.1
Most submissions were from irrigators' organisations. Most submissions,
and all those from irrigation interest groups, opposed the bill. The main
reason given was that it would undesirably upset the longstanding agreed
direction of water reform based on cooperative Commonwealth-State relations, including
the National Water Initiative, the Water Act, and the Basin Plan now under
development.[1]
2.2
Submitters' concerns about the bill follow. Submissions that supported the
bill, or made related comments or suggestions, are mentioned further below.
Is the bill constitutionally valid?
2.3
The Gilbert + Tobin Centre of Public Law argued that the bill is
unlikely to be constitutionally valid. Its submissions states that, while the
bill relies on the same heads of power as the Water Act (other than referral of
powers by the states), 'we are not satisfied that the bill is drafted in a
manner that takes advantage of such powers through establishing a clear
constitutional connection to them.'[2]
2.4
While the Commonwealth has extensive capacity to legislate under section
51 of the Constitution, there must be a sufficient connection between the
proposed law and the claimed head of power.[3]
The Gilbert + Tobin Centre of Public Law argued that in the present case the connection
is doubtful:
It is really, apart from anything else, a matter of approach
and drafting... You would really need to tailor it very carefully to things
like making sure that obligations are just placed upon corporations and entities
engaged in interstate trade and commerce. It is the breadth of the legislation
here that takes it beyond even what are quite substantial Commonwealth powers.[4]
Detrimental effect on current water reform
2.5
Most submissions argued that the bill would have a detrimental effect on
the longstanding agreed direction of water reform based on cooperative
Commonwealth-State relations including referral of powers by the states.[5]
2.6
Submitters argued that this would create uncertainty and insecurity for
water users. For example:
Reversing the level of certainty and security that exists
within the property right of water through an attack on its fundamental will
set the cause of water reform back in excess of a decade.[6]
It undermines the work being undertaken to develop a properly
researched Basin Plan where all areas of the Basin are consulted and appropriate
technical expertise has been engaged.[7]
The bill would completely undermine the market based system
of water entitlements.[8]
2.7
The states' referral of powers which supports important parts of the
Water Act is governed by an intergovernmental agreement. The agreement provides
that the Commonwealth will not repeal or amend a referred provision except with
the agreement of the affected state(s).[9]
The Gilbert + Tobin Centre of Public Law argued that the bill may breach the
agreement, since by extending the MDBA's power in the way proposed, 'it would
constitute an amendment, albeit, indirect, of those referred provisions.'[10]
2.8
Submitters were particularly concerned at the uncertainty that would be
created by the possibility of overriding established water resource plans:
This process would see the replacement of a known and secure
allocation system being replaced by an unknown, unverified and untried system
based on uncertain rules emanating from an office in Canberra with little or no
local knowledge or understanding.[11]
The adoption of this bill would remove elements of certainty
for irrigated agriculture which we are looking to the Basin Plan to deliver.[12]
2.9
The Queensland Government opposed the bill because the implications for
security of entitlements, and the prospect of 'unilateral changes to state
water shares':
The bill as drafted raises concerns that, in crisis
situations, water plans might be overridden without consultation, appeal or
compensation. This would undermine the security of entitlements and the market
principles underlying national water reform. The prospect of unilateral changes
to state water shares is equally concerning to Queensland.[13]
2.10
Queensland considers that 'the Murray-Darling Basin Plan, together with
the agreed reform actions underway, is the proper basis for management of
drought and climate change in the Basin.'[14]
2.11
The Gilbert + Tobin Centre of Public Law argued that for the sake of
stability a cooperative approach is needed, given the doubts about the extent
of the Commonwealth's powers under the Constitution:
The cooperative approach has been considered to be in the
interests of all parties because it was seen as the most likely to deliver
stability and certainty to the management of the Basin. A Commonwealth‐initiated scheme of
the sort contemplated by this Bill would almost certainly invite a challenge on
the grounds of constitutional validity and, in doing so, place that stability
and certainty at risk.[15]
Concerns about the Murray-Darling Basin Authority's powers
2.12
Many submissions were concerned at the extensive powers proposed for the
MDBA. For example the Queensland Government submitted that 'the powers
conferred on the Authority by the bill are extremely broad and largely
undefined':
As a result those powers may – as currently drafted – be able
to be exercised in a far reaching manner and to an extent not necessary to
achieve the objectives of the bill.[16]
2.13
Some submitters were particularly concerned that this would be without
accountability through a responsible minister.[17]
For example the National Irrigators Council submitted:
Our supposition is that this is a deliberate act by the
authors designed to “take the politics out of water”. But at the end of the day
a Minister must be accountable for decisions such as this and we believe the
Bill would in effect create an all-powerful water bureaucrat with little
accountability to the people.[18]
2.14
The Queensland Government argued that management of crisis situations
should occur within the framework of the Basin Plan.[19]
Doubts about the MDBA's management role
2.15
Some submitters argued that if the MDBA, during periods of extreme
crisis, took over the detailed management of water resources that is now done
by state authorities, it would imply wastefully maintaining two parallel
bureaucracies.[20]
They doubted whether the MDBA would have the resources and expertise to undertake
the detailed management now done by state water managers:
The MDBA does not have the physical resources, skills,
knowledge or experience to suddenly start managing water resources across four
states.[21]
We have long argued that transferring control of water from
one group of politicians and bureaucrats to another group of politicians and
bureaucrats (or in this case a single, unelected bureaucrat) does not create
any more water, nor does it guarantee more equitable sharing arrangements.[22]
Problems with definitions and triggers
2.16
Several submissions argued that key definitions and triggers in the bill
are unclear or inappropriate.
2.17
One of the triggers of a 'period of extreme crisis' is, a period
starting when allocations to 'high security water entitlement holders' in any
irrigation district have been below 20 per cent for more than two consecutive
years.[23]
However, some submitters noted that different entitlements have different names
in different states, which may leave it unclear what 'high security' refers to.
For example, the National Irrigators Council submitted that:
In NSW, regulated entitlements in the main are either General
Security or High Security. In Victoria, entitlements in the main are either
High Reliability or Low Reliability. In South Australia, only one form of
entitlement is issued for MDB surface water. On strict interpretation, it would
appear that the ill-defined trigger point in 9(3) references only water
allocation in NSW.[24]
2.18
The National Farmers' Federation argued that the reference to high security
allocations 'will create confusion as allocations vary significantly during an
irrigation season. This will result in the powers switching on and off in quick
succession.'[25]
2.19
Similarly, in the conditions for existence of a 'period of extreme
crisis', the bill does not define 'irrigation district'.[26]
Irrigator interest groups noted that the 'irrigation district' trigger could
apply to irrigation districts that are not within the Murray-Darling Basin;[27]
or which are not regularly connected to the main system. They regarded this as
inappropriate:
Under the proposed trigger in the Bill, a groundwater user in
Parilla, South Australia, could potentially have all rules relating to his
water use scrapped or suspended because of a dry period affecting high security
entitlement holders in the Gwydir system more than 1300km away. Note that the
Gwydir River ends in terminal wetlands and does not connect to the rest of the
system except in extreme flood events. Clearly this would be absurd.[28]
Claimed bias toward the Lower Lakes
2.20
Many submitters argued that the policy behind the bill is biased to
ensuring environmental outcomes for the Lower Lakes at the expense of balanced
management of the whole system. For example:
It seems very parochial to describe ‘crisis conditions’ in such
narrow terms, i.e. a specific location within the Basin. The Basin has been in
and out of water crisis due to drought in many locations over the last decade.
The definition provided in the Bill is specific to one location/key indicator environmental
site, yet the MDBA advise there are 18 sites.[29]
The last four years’ season-ending irrigation allocations
have been dreadful for South Australian irrigators – but the following table [showing
end of season irrigation allocations as a percentage of entitlements in sample
catchments throughout the Murray-Darling Basin] demonstrates the level of
difficulty elsewhere... Similarly, upstream environmental assets have also
suffered... No change in management arrangements would have changed the situation
for these assets or irrigation districts in the face of the worst drought in
100 years.[30]
2.21
The Queensland Government argued that 'from a Queensland perspective,
[using the height of Lake Alexandrina as a trigger] would result in unduly long
periods of crisis powers and give the appearance of a narrowly focussed
intent.'[31]
2.22
Submissions and evidence discussed the floods of early 2010 which, in the
opinion of some, did not deliver enough water to the Lower Lakes. This appears
to have been one of the issues that motivated the bill.[32]
2.23
Irrigator interest groups argued that the treatment of recent floodwater
was reasonable in the circumstances:
Yes, a significant portion of flood waters that occurred in
southern Queensland and northern New South Wales was diverted for economic use.
At the same time, a significant portion of those floodwaters flowed down the
Darling system, through Menindee, through the lower Darling and into the
Murray, feeding a whole range of environmental assets, including the Lower
Lakes.[33]
The severity of the drought however, meant that rainfall
inflows of 6700GL in the Northern Rivers, were soaked up in the extremely dry
landscapes... The expectation that large volumes would reach the Lower Lakes
ignored the extent of the drought in NSW and the behaviour of flood flows,
revitalizing parched landscapes.[34]
2.24
On the other hand, Professor Bell argued that 'after the recent rains
and flooding of 2009 and 2010, it is no longer credible to blame the drought
alone for the lack of end of river flows':
It has become apparent that it is not just rain that is
needed, but policies that will ensure that the floodwaters flow through the
system.[35]
2.25
Professor Young noted that 'the predictions about how much water would
arrive [at Menindee Lakes] were wrong. They were wrong because the situation
which occurred had never occurred before... There were management decisions
made on the best available knowledge'.[36],
[37]
Alternative views
2.26
A few submissions either supported the bill, or made related comments or
suggestions.[38]
2.27
Professor Bell thought that the bill 'could be an important part of resolving
the current crisis but...it needs to be clear how ‘balance’ is to be struck;
what criteria are used in declaring a crisis; in whose interests decisions are
made and by whom and; whether such decisions are reviewable'.[39]
2.28
The Water Action Coalition (WAC) supported the 'the good intentions' of
the bill but argued that it does not go far enough. WAC recommended a 'national
public inquiry with the powers of a royal commission' into the management of
the Murray-Darling Basin. WAC argued that South Australia's current right under
the Murray-Darling Basin Agreement to 1850 gigalitres per year is 'a meagre
share of the total resource'.[40]
2.29
The WAC argued that the interstate sharing rules of the Murray-Darling
Basin Agreement do not work well in drought. Professor Young said that 'this
nation needs to plan properly for a drier regime, and that needs an inquiry not
into the [Menindee] lake at the moment, or the structure at the moment, but
into the opportunities to manage the entire system more efficiently from top to
bottom'.[41]
2.30
Professor Young likened the proposed powers of the MDBA during a period
of extreme crisis to a company insolvency, when the board is replaced by an
administrator. 'Under such an administrative arrangement, board members have a
strong incentive to prevent the corporation from becoming insolvent.'[42]
2.31
The committee notes that water sharing during severe water shortages is
one of the priority issues being considered in a current review of the
Murray-Darling Basin Agreement which is now being conducted by the Basin
Officials Committee.[43]
Committee comment
2.32
The committee agrees with the weight of evidence that the bill is
flawed. It appears uncertain whether it is constitutionally valid. If passed,
it would risk lengthy and expensive legal battles. It would also run counter to
the longstanding agreed direction of water reform based on cooperative
Commonwealth-State relations including referral of powers by the states. The
possibility that a local water resource plan might be set aside unilaterally by
the MDBA, depending on seasonal variations, would create an undesirable level
of insecurity for entitlement holders.
2.33
The committee acknowledges the concerns that prompted the bill. However,
the committee believes that it is important that efforts are focussed on
delivering sustainable long term management structures in the Murray-Darling
ahead of short term or emergency measures.
2.34
In relation to the general concern that the interstate sharing rules in
the Murray-Darling Basin Agreement may not be adequate to cope with long
droughts – any change should be by negotiated change to the agreement.
2.35
In the committee's view water sharing during periods of crisis should be
managed within the agreed framework of the Basin Plan.
Recommendation
2.36
The committee recommends that the bill should not be passed.
Senator Doug Cameron
Chair
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