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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