Chapter 2


Chapter 2

Views on the general direction of water reform

Summary of views on the direction of water reform

2.1        Most submissions, from both farmer and irrigator groups and environment groups, supported the current direction of water reform based on the Water Act 2007 and the National Water Initiative – its key elements being:

  • the Basin Plan;
  • local water resource plans made by state authorities subject to the Basin Plan's sustainable diversion limits; and
  • the National Water Initiative principle of tradeable water entitlements.[1]

2.2        Submissions generally supported Basin Plan arrangements. Most submissions did not support suggestions sometimes made that the Commonwealth should take over the detailed water planning which is now done by the states. For example:

Irrigators are comfortable with the current state management and water sharing arrangements, and would need a significant amount of convincing that a full Commonwealth takeover is warranted.[2]

NFF does not support further interventions in water planning management beyond what has been agreed between the Commonwealth and the States.[3]

2.3        Submissions supporting present arrangements argued that the state authorities' detailed local knowledge would be hard to duplicate at Commonwealth level, and cooperation among the states within the NWI framework will give better results:

We do not always agree with what the state governments do, but they have the corporate knowledge and the understanding and for many years have managed the system. To try to uproot all of that and move it into a Commonwealth sphere would be a huge change to things and not necessarily one for the better.[4]

The VFF can't see any benefit or need for additional takeover or referral of powers from the states to the Commonwealth. All that is needed now is more co-operation among all jurisdictions.[5]

2.4        Groups and experts with a predominant environmental focus tended to be more critical of the states' current water management, mostly because of concerns about:

  • the slowness in dealing with past overallocation (as noted in the NWC's second biennial assessment);
  • whether water planning takes place without adequate scientific knowledge of environmental needs; and
  • the regulation of floodplain harvesting.[6]

2.5        Some comments or concerns about particular issues follow:

  • concerns about the delay in bringing sustainable diversion limits into operation, as a result of the policy to allow existing state water resource plans to run their course; and
  • issues relating to entitlements, such as whether issuing new entitlements should be allowed; or the treatment of 'sleeper' licences in conversion to NWI‑compliant entitlements.

Concerns about delay in bringing the Basin Plan into force

2.6        When the Basin Plan is made in 2011, existing state water resources plans will be allowed to run their course, which is until 2014 for most plans in South Australia, NSW and Queensland (involving about 60 per cent of Murray-Darling Basin surface water), and until 2019 for most plans in Victoria (involving about 40 per cent of Murray‑Darling Basin surface water).[7]

2.7        There has been some concern that a reduction in diversions (which is expected in line with the MDBA's sustainable diversion limits now under development) is needed more urgently. For example the Australian Floodplain Association submitted that:

The Commonwealth Basin Plan should take precedence over the state water resource plans and be enacted before 2014 as the decline in our MDB rivers is occurring at a rapid rate.[8]

2.8        There has also been concern that allowing existing water resource plans to run to 2019 in Victoria (compared with 2014 elsewhere) raises issues of competitive neutrality.[9] The National Farmers Federation commented on this issue:

NFF understands that there has been some angst over the expiry of the Victorian Plans in 2019 and note that this will be a problem in maintaining competitive neutrality between each State’s irrigators. However, it should be well understood that these plans cannot be less consistent with the Basin Plan and the majority of water will be covered by the Basin Plan from 2014.[10]

Committee comment

2.9        The committee acknowledges concerns about the delay in bringing sustainable diversion limits into force. However, the committee notes that the provision to respect existing water resource plans until their expiry was a commitment endorsed by Parliament in the Water Act 2007. The committee considers that for the security of irrigators and the stability of water reform it is important to maintain the commitment.

Issue of new entitlements and treatment of existing rights

Conversion of water rights to NWI-compliant entitlements

2.10      Rights to take water for consumptive use are controlled by state laws, and have historically taken a number of forms; for example:

  • volumetric allocations calculated under a water resource plan;
  • various conditions such as threshold to pump conditions (that is, permission to pump when the river reaches a certain height) or related conditions such as maximum rates of take or pump sizes or storages;
  • area-based licences;
  • authorisation to use approved structures (for example, to take overland flow).[11]

2.11      Under the National Water Initiative agreement, water rights should be in the form of secure tradeable entitlements separate from land. An entitlement is an ongoing share of the consumptive pool of a water resource as determined by a water resource plan. Exceptions are allowable for 'poorly understood and/or less developed water resources, and/or where the access is contingent upon opportunistic allocations, and/or where the access is provided temporarily as part of an adjustment strategy, or where trading may otherwise not be appropriate.'[12]

2.12      The NWI agreement is silent on the question of whether creating new water rights should be controlled in any way. These are matters for state government policy, subject to the NWI commitment to return systems to an environmentally sustainable level of extraction.[13]

2.13      The National Water Commission has noted that implementation of the NWI water access entitlements framework remains slow in some jurisdictions. The Commission considers that NWI-consistent entitlements should be implemented where possible.[14]

Whether all existing rights should be converted into NWI-compliant entitlements

2.14      The goal of achieving NWI-compliant entitlements could be achieved by converting present non-compliant rights, or by withdrawing them. Whether any rights should be withdrawn is a matter for state/territory government policy, since under NWI principles the states/territories remain responsible for creating rights to take water.

2.15      Debate over this possibility has occurred, for example, in relation to floodplain harvesting (take of overland flow), particularly in the Lower Balonne. The Lower Balonne is a 'flood-pulse' river', where large floods may be separated by years of low flow. Opportunistic floodplain harvesting is a significant form of water use in that area; it is relatively hard to measure; and it is controversial because past overdevelopment has affected beneficial flooding of downstream floodplains, including the RAMSAR listed Narran Lakes.[15]

2.16      The Lower Balonne Floodplain Association argued for a complete abolition of overland flow entitlements.[16] The Australian Floodplain Association argued that 'future planning must target improved overland (floodplain) flow by removing existing structures so they reflect the intention of at least the original cap...'

Governments do not currently have any commitment to do this and instead generally are 'grandfathering' the current infrastructure on floodplains. This potentially just creates another major problem for future governments in the same way that overallocation of rivers in the past has created the problem for present governments.[17]

2.17      The Australian Floodplain Association argued that 'if floodplain diversions are to be licenced, they should not be allowed to be traded because of the significant issues about transfer rates.'[18]

2.18      The Queensland government advised that water resources plans in the Queensland Murray-Darling Basin establish a cap on diversions and are 'no-growth' plans:

The replacement of existing authorisations with new and better specified entitlements is consistent with the National Water Initiative, and will not increase the amount of water that can be taken for consumptive use.[19]

2.19      Queensland is currently implementing a process for converting overland flow authorisations to water access entitlements.[20] In the Lower Balonne it is proposed to change rights based on 'existing works' to licences that authorise the amount of overland flow that can be taken. The licences will not be tradeable because they are linked to actual works. The Queensland Government advised that this process will not result in an increased level of allocation.[21] The Queensland Farmers Federation argued that 'this licensing and management of overland flow take is the most advanced system to be introduced in Australia.'[22]

2.20      In NSW, the Gwydir Valley Irrigators Association argued that formal licensing of existing floodplain harvesting 'will lead to a reduction in overland flow extractions, because licencing will give the state the legal ability to enforce the Cap...'

All licencing is doing is formally recognising a legitimate activity, in keeping with the requirements of the NWI and the Water Management Act 2000.[23]

2.21      Similarly the NSW Irrigators Council said:

This form of irrigation water harvesting has underpinned production in large parts of the state for many years, is a recognised part of the resource set and is best managed at a macro-level with the issue of permanent licenses.[24]

Treatment of sleeper licences

2.22      The treatment of 'sleeper' licences (unused rights) is a particular instance of the debate over whether all existing rights should be converted into NWI-compliant entitlements. There has long been debate over whether sleepers should be treated equally with active rights during the conversion to NWI-compliant entitlements. An issue is that when converted to tradeable entitlements, sleepers are likely to be traded and brought into use, which could increase extractions (or reduce reliability for other water users, if total extractions are capped by the relevant water resource plan). An alternative would be to withdraw the right on a 'use it or lose it' principle.

2.23      Some stakeholders argued that government should retain the right to cancel sleepers if necessary to meet the needs of the environment. For example the Australian Wetlands and Rivers Centre said:

Sleeper licences may be activated through commitment to trade under the National Water Initiative, but if deemed unacceptable there needs to be commitment to cancellation (e.g. Cooper Creek, Queensland).[25]

2.24      On the other hand irrigators' interest groups mostly argued that sleepers are property with value that should be respected:

A licence is a licence and therefore a property right which needs to be recognised as such. The fact that a licence has not been activated should not diminish the value or right that this licence possesses. Treating them differently is to discriminate against them.[26]

2.25      The National Water Commission submitted that treating sleepers in a discriminatory way sets an 'undesirable precedent' against the principle of secure title:

We as a commission think that a really important principle is security of licences, including sleeper licences. If there is an arbitrary change to licences which are otherwise described as sleeper licences, that sets an undesirable precedent.[27]

2.26      For example, in the case of the Queensland Murray-Darling Basin, the Queensland government advised that sleeper licences are treated equally with active licences. An exception is the Condamine Balonne water resource plan, which treats sleepers differently by converting them to entitlements at a reduced volume, and imposing high flow conditions compared with active licences. Queensland government officials explained that 'the activation of these entitlements has been accounted for in the hydrologic modelling for each valley.'[28]

2.27      Agforce Queensland submitted that 'sleeper licences [in the Queensland Murray-Darling Basin] have been recognised by the Queensland Government in line with the objectives and requirements of the National Water Initiative.'[29]

2.28      In the context of the discussion of sleepers, several submissions raised concerns about possible inappropriate development of water resources of the Lake Eyre Basin. For example, the Cooper's Creek Protection Group said:

The [National Water Initiative] trading requirement is counterproductive if applied to rivers such as the Lake Eyre Basin rivers where irrigation is inappropriate. In Cooper's Creek, for example, application of water trading would force the activation of unused "sleeper" entitlements and thus have an ecologically undesirable effect.[30]

2.29      In relation to sleeper licences on Cooper Creek, the Queensland Government advised that:

We are going through a water resource planning review process. ... At this stage we are still awaiting advice from our minister on how he would like to see them dealt with.[31]

2.30      The Lake Eyre Basin, not being part of the Murray-Darling Basin, will not be covered by the Basin Plan. However it is the subject of the Lake Eyre Basin Intergovernment Agreement agreed by the Commonwealth, Queensland, South Australian and Northern Territory Governments. The Agreement aims to manage water and related natural resources to avoid adverse cross-border impacts. The Lake Eyre Basin Ministerial Forum, which is responsible for implementing the agreement, has agreed a policy that water resource development proposals in the basin will be assessed to determine their potential impact on river flows and water quality, and will be based on the best available scientific information and local knowledge.[32]

Committee comment

2.31      The committee agrees that the important National Water Initiative principle of secure property rights in water should be respected. The environmental effects of this, for example resulting from activation of sleepers, should be handled by the water planning process subject to sustainable diversion limits, not by discriminating against sleepers. In the committee's view it is fundamentally important to maintain public trust in the underpinning principles of the National Water Initiative.

2.32      In relation to concerns about possible activation of sleeper licences in the Lake Eyre Basin, the committee notes that this area will not be covered by the Murray-Darling Basin Plan. The committee urges the Lake Eyre Basin states to plan the water resources of the Lake Eyre Basin according to the same principles of sustainability as are being applied in the Murray-Darling Basin.

Whether issuing new water rights should be allowed

2.33      The committee was advised that in fact there is now little or no issuing of new water rights in the Murray-Darling Basin. The National Farmers Federation stated:

In most water plan areas, the granting of additional water entitlements is now embargoed. It is only low development catchments such as the Paroo that Governments have retained the right to issue new entitlements.[33]

2.34      The Queensland Government advised that there has been a moratorium on the issuing of new water licences in the Queensland Murray-Darling Basin since 1995 and a moratorium on new overland flow diversions since 2001. Since then controls have limited the issuing of additional entitlements or the construction of new overland flow capture structures.[34]

2.35      New South Wales has drafted a policy for floodplain harvesting that will require all floodplain harvesting activities to be licensed, and subjected to volume limits. Furthermore, no new licences will be issued to existing licence holders.[35]

2.36      However the question of principle remains whether the states should be able to issue new water rights. Submissions that mentioned this point mostly argued that the right of the states to issue new rights should be respected, providing it is done consistently with the NWI principle of bringing systems back to an environmentally sustainable level of extraction, and the Water Act principle that water resource plans must be consistent with the sustainable diversion limits of the Basin Plan.

2.37      For example, the NSW Irrigators Council submitted:

A decision to issue new licenses in any system ought be based on best‑available science to show that the system has not reached its sustainable extraction limit or must be done on the basis of underpinning existing legal practice with a property right... [L]icenses ought be issued to reflect existing and long-term legal practice to then enable the suite of extraction reduction policies currently in position (all of which are based on property rights in existence), including the Basin Plan, to reduce extraction to sustainable levels.[36]

2.38      The Department of the Environment, Water, Heritage and the Arts (DEWHA[37]) argued that the core concern is not the number of rights on issue, but the principle that consumptive use is limited by a water resource plan consistent with the sustainable diversion limits of the Basin Plan:

If we are living in a world where entitlements progressively are being issued on the basis of a share of what is available, in a sense it does not matter how many entitlements are issued provided the consumptive pool is still as it was intended in the plan and the environment’s pool is not undermined by the issuing of more entitlements. Those are the key things.[38]

2.39      This raises the possibility that the Commonwealth may buy entitlements for environmental flows at the same time as a state issues new rights (although, as noted above, in fact there is now little or no issuing of new rights in the Murray Darling Basin). The Gwydir Valley Irrigators Association commented on this possibility:

To the uninformed, it may not appear to make sense, for the Commonwealth to be seen to be purchasing licenses in a jurisdiction with the aim of increasing the environment’s share, while at the same time the jurisdiction is issuing new extractive use licenses.

However, if those new licenses are being issued in accordance with the Cap then it is part of the process to ensure all jurisdictions are entering this new phase of Commonwealth involvement in water purchases with a level playing field (at least in terms of licencing)...

What would not be legitimate is for the Commonwealth to prevent the State from issuing these licenses, which recognise long standing and legal water extraction, properly accounted for under the Murray-Darling Basin Cap... [T]he proper and legal issuing of entitlements is absolutely critical to the long term success of coordinated Basin water resource management.[39]

Committee comment

2.40      The committee notes that under the National Water Initiative issuing water rights remains a state responsibility. The core principle is that water use should reflect environmentally sustainable levels of extraction and in future comply with the sustainable diversion limits of the Basin Plan. Providing this is achieved there is no reason of principle why issuing new rights should be generally forbidden. In practice the demands of achieving environmentally sustainable levels of extraction may well prevent issuing new rights in overused or overallocated systems, as it should. The committee does believe that the Commonwealth should closely monitor any such decisions, especially to avoid any conflict with Commonwealth sustainability, infrastructure or water buyback activities.

Navigation: Previous Page | Contents | Next Page