Chapter 1

Introduction

Conduct of the inquiry

1.1        On 13 May 2010 the Senate, on the recommendation of the Selection of Bills Committee, referred the Water (Crisis Power and Floodwater Diversion) Bill 2010 to the Environment, Communications and the Arts Legislation Committee for inquiry and report by 24 August 2010.

1.2        The bill is a private senators' bill introduced by Senator Xenophon and Senator Hanson-Young.

1.3        The committee advertised the inquiry on its website and in The Australian, and wrote to relevant organisations inviting submissions. The committee received 19 submissions (see Appendix 1), and held a public hearing on 30 June 2010 (see Appendix 2). The committee thanks submitters and witnesses for their contribution.

1.4        The committee was unable to complete the inquiry before the general election called on 17 July 2010 and held on 21 August. On 26 October 2010 the Senate re‑referred the inquiry, and authorised the committee to use the submissions and evidence received in the previous parliament.[1]

1.5        In the new parliament the committee's name was changed to Environment and Communications Legislation Committee.

Background to the bill

1.6        The bill should be considered in context of the current scheme of Murray‑Darling Basin water reform based on the National Water Initiative, the Water Act 2007, and the Murray-Darling Basin Plan which is now under development.[2]

1.7        A 1995 audit of water use in the Murray-Darling Basin found that water diversions, mostly for irrigated agriculture, had greatly reduced flow in the Lower Murray and had a significant impact on river health.[3]

1.8        In 2003 the Murray-Darling Basin Ministerial Council concluded that additional environmental flows were needed to ensure an environmentally sustainable Murray-Darling river system. Under the Intergovernmental Agreement on a National Water Initiative (25 June 2004) the parties committed to bring overallocated water systems back to environmentally sustainable levels of use, with substantial progress by 2010.[4]

1.9        The Water Act 2007 (Water Act) established the Murray-Darling Basin Authority (MDBA) as an independent statutory authority reporting to a Commonwealth minister.[5] It established basin-wide water planning through a Basin Plan to be prepared by the MDBA and adopted by the minister. A central element of the Basin Plan is to set sustainable diversion limits which local water resource plans will have to comply with.

1.10      Water resource plans for individual catchments will have to be consistent with the Basin Plan and accredited by the Commonwealth minister on the advice of the MDBA. It is intended that local water resource plans will continue to be made by state authorities as they are at present, although they can also be made directly by the MDBA under certain circumstances (the 'step-in' power).[6]^{, [7]}

1.11      A Guide to the proposed Basin Plan was released for public comment on 8 October 2010. Following further consultations, a proposed Basin Plan will be sent to the Commonwealth water minister for consideration and adoption.

1.12      High level rules about sharing of Murray-Darling water between New South Wales, Victoria and South Australia are in the Murray-Darling Basin Agreement (8 December 2008), which is a schedule of the Water Act.[8]

Description of the bill

1.13      The object of the bill is to give the MDBA overall control of water resources in the Murray-Darling Basin during declared periods of extreme crisis.[9]

1.14      This would give the MDBA detailed management of water resources including, for example, deciding periodic allocations to entitlement holders or the environment having regard to seasonal conditions. At present (and in future under the Basin Plan arrangements described above) this is done according to the rules in local catchment-based water resource plans made by state authorities.

1.15      If part of the Murray-Darling Basin was in extreme crisis as defined, but there was significant rainfall in other parts, the MDBA could allocate water for the benefit of the areas which remained in extreme crisis.[10]

1.16      The bill is acknowledged by one of its co-authors (Senator Xenophon) as 'an interim measure as we await the Basin Plan's release next year [2011] but we cannot wait until next year', however this position does not appear to be reflected in the provisions of the bill.[11]

1.17      The main provisions of the bill are described below.

Periods of extreme crisis

1.18      The bill defines a 'period of extreme crisis' as either:

• a period starting when the level of Lake Alexandrina is continuously less than +0.0m Australian Height Datum (AHD)[12] for more than three consecutive months; and ending when the level has been above +0.4m AHD for three consecutive months; or
• 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; and ending when these allocations have returned to above 40 per cent in any year.[13]^{, [14]}

1.19      The MDBA must advise the minister if it assesses that a period of extreme crisis has begun or ended.[15]

1.20      When the MDBA advises that a period of extreme crisis has begun, the minister must either declare that the basin has entered a period of extreme crisis, or publish reasons why the minister does not think it necessary or appropriate to make such a declaration.[16]

1.21      When the MDBA advises that a period of extreme crisis has ended, the minister must either declare that the period of extreme crisis has ended, or publish reasons why the minister does not think it necessary or appropriate to make such a declaration.[17]

Effects of a declaration of a period of extreme crisis

1.22      During a declared period of extreme crisis, the MDBA may make directions dealing with any matter capable of being dealt with by a 'water plan, arrangement or agreement'.[18] This would give the MDBA wide-ranging powers over water sharing, water allocation, storage management, water accounting rules, rules for movement or sale of water, and allocation of water for system maintenance, conveyance and environmental purposes.[19]

Constitutional basis of the bill

1.23      The Water Act relies on several of the Commonwealth's head of powers in section 51 the Constitution (for example the trade and commerce, corporations and external affairs powers), supplemented by the power under section 51(xxxvii) (matters referred by a state).[20] Much of the operation of the Water Act depends on the referrals by states.[21]

1.24      The bill relies on the same heads of power, but excluding section 51(xxxvii).[22]

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