Chapter 1Introduction
1.1On 7 September 2023, the Senate referred the Water Amendment (Restoring Our Rivers) Bill 2023 (the bill) to the Environment and Communications Legislation Committee (the committee) for inquiry and report by 8 November 2023.
1.2The bill was referred for inquiry because it seeks to address a ‘matter of public concern and environmental significance’, requiring wide consultation with ‘community members and experts’.
1.3Among other things, this chapter outlines key aspects of the bill, including its purpose, background and key provisions.
Purpose of the bill
1.4The Explanatory Memorandum (EM) to the bill states that its purpose is to amend the Water Act 2007 (the Water Act) and the Murray-Darling Basin Plan (Basin Plan) to implement the:
Basin Plan in full, including recovering 450 gigalitres (GL) of additional environmental water; and
recommendations from the Water Market Reform: Final Roadmap to restore transparency, integrity and confidence in water markets and water management in the Murray-Darling Basin (the Basin).
1.5In introducing the bill to the House of Representatives, the Minister for the Environment and Water, the Hon Tanya Plibersek MP, stated:
This bill offers more time, more options, more money and more accountability. It delivers more water for the environment, more certainty for farmers and industry, more financial support for affected communities, more protection for native plants and animals, and more hope for Australia’s most important river system.
Background to the bill
1.6The Basin is the largest and most complex river system in Australia. It traverses much of south-eastern Australia, across New South Wales (NSW), Queensland (Qld), South Australia (SA), Victoria (Vic) and the Australian Capital Territory (ACT) covering an area of more than a million square kilometres.
1.7The Basin is home to more than 2.3 million Australians. It holds significant Indigenous cultural heritage, with members of more than 50 different First Nations residing in the Basin.
1.8The river system is important for communities, industries and the environment. It is important ecologically, containing 16 internationally recognised and protected wetlands. The Basin also provides tourism services worth $11billioneach year.
1.9The Basin supports one of Australia’s most significant agricultural areas, with around 40 per cent of Australia’s agricultural produce coming from the Basin and producing $24 billion in agricultural production a year.
1.10However, the Millennium drought, combined with increasing water needs and ‘many years of over-allocation’, has caused significant social and environmental damage.
1.11In response, the Water Act was passed in 2007, establishing the Murray-Darling Basin Authority (MDBA) and the Commonwealth Environmental Water Holder (CEWH), as well as laying the foundations for the Basin Plan.
1.12The Basin Plan is a legislative instrument made under the Water Act. The purpose of the Basin Plan is to provide for the integrated management of the Basin water resources in a way that promotes the objects of the Water Act, including ‘the use and management of Basin water resources in a way that optimises social, economic and environmental outcomes’.
1.13In July 2023, the MDBA advised the Minister for the Environment and Water that full implementation of the Basin Plan would not be possible by 30 June 2024 under the current settings.
1.14In August 2023, the Australian Government, as well as the NSW, Qld, SA, and ACT Governments agreed to changes to implement the Basin Plan in full. The bill proposes amendments to the Water Act and Basin Plan to deliver the changes set out in this agreement.
1.15An overview of the key provisions of the bill is set out below. Discussion of these key features and views raised by inquiry participants is included separately in respective chapters as outlined below.
Key provisions of the bill
1.16The bill would amend the Water Act, the Basin Plan and the Competition and Consumer Act 2010. These amendments are intended to deliver the Basin Plan in full by:
repealing the statutory 1500GL cap on Commonwealth water purchases;
enabling funds from the Water for the Environment Special Account (WESA) to be used more flexibly to enhance environmental outcomes in the Basin;
providing more time for Basin States to deliver their Sustainable Diversion Limit Adjustment Mechanism (SDLAM) projects to 31 December 2026 and to allow new projects to be included;
providing more options to deliver the 450GL target including on-farm and off-farm efficiency projects, and voluntary buybacks, and extending the timeframe to 31 December 2027 to allow more time for water for the environment to be delivered;
introducing new accountability measures including strengthening the role of the Inspector-General of Water Compliance (IGWC) including where a state has not complied with the long-term average annual diversion limit obligations; and
implementing new transparency and integrity measures including a Water Market Intermediaries Code, and new water markets functions and powers for the Australian Competition and Consumer Commission (ACCC), the Bureau of Meteorology (BoM) and the IGWC.
1.17These provisions are set out in further detail in the respective chapters of this report. A detailed discussion of these provisions is also available in the Parliamentary Library’s Bills Digest.
Amendments passed by the House of Representatives
1.18On 18 October 2023, the House of Representatives passed several amendments to the bill. These included:
requiring the Secretary to prepare annual progress reports relating to water recovery targets beginning on 1 July 2023 and each subsequent year up to and including the financial year beginning on 1 July 2027;
clarifying the IGWC’s obligations to consult with Basin States and have regard to any submissions made by Basin States in preparing guidelines for the preparation of action plans relating to compliance with long-term annual diversion limits for water resources;
ensuring that the review of the WESA to occur by 30 September 2025 also considers the effectiveness of payments made, or expected to be made, using WESA funds to address any socio-economic impacts of voluntary water purchases made using the WESA;
strengthening the IGWC’s powers by providing the IGWC the ability to undertake an audit of the MDBA’s sustainable diversion limit calculations or appoint another independent body to undertake the audit;
ensuring the ACCC can enforce its new information gathering powers, including a proposed civil penalty provision for contraventions;
ensuring the IGWC’s oversight functions do not extend to any Commonwealth agency, including the ACCC or Basin States agencies’ obligations under the proposed integrity and market conduct reforms; and
other minor and technical amendments to ensure the bill would operate as intended.
Consultation
1.19At the February 2023 Murray-Darling Basin Ministerial Council meeting, ministers tasked officials to develop a package to deliver the Basin Plan in full. Aspects of the package including accountability measures, were negotiated over several months with Basin States and are reflected in the bill.
1.20The Department of Climate Change, Energy, the Environment and Water (DCCEEW) undertook a five-week public consultation process on delivering the Basin Plan from 29 May to 3 July 2023, with 131 submissions received.
1.21An exposure draft of the water market reform measures in the bill was released for limited consultation with Basin States and peak bodies, including irrigation infrastructure operators and water market intermediaries in July 2023.
Financial implications
1.22The EM states that an undisclosed sum, which cannot be publicly released due to commercial sensitivities, was secured in October 2022 and May 2023 to deliver the Basin Plan.
1.23In November 2022 and May 2023, $64.3 million was announced to restore the confidence in Basin water markets. This included $30.5 million over four years for the ACCC, IGWC, and DCCEEW and $32.7 million for the BoM.
Human rights compatibility
1.24The EM states that the bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. The Parliamentary Joint Committee on Human Rights did not comment on the bill.
Scrutiny of Bills Committee consideration
1.25The Senate Standing Committee on the Scrutiny of Bills Committee (Scrutiny of Bills Committee) reviewed the bill raising a number of concerns. These include that significant matters are provided for in delegated legislation; the privacy implications of certain provisions of the proposed Intermediaries Code; the procedural fairness of the ACCC’s proposed ability to issue a public warning notice under the bill; and the appropriateness of the penalty for refusing or failing to comply with a written notice from the ACCC.
1.26While the Scrutiny of Bills Committee acknowledged that it is sometimes appropriate to include certain administrative and technical matters within delegated legislation:
…the explanatory memorandum has not provided an explanation as to why the bill and Code are framed in this way. As no explanation has been given, and the matters left to be determined in the Code are all left to delegated legislation, it is difficult for the committee to assess the appropriateness of some of the provisions and whether adequate safeguards are in place. For example, of particular concern are provisions which prescribe broad delegations of administrative powers or functions, or those that have privacy implications…
1.27Similarly, the Scrutiny of Bills Committee expressed concerns about the proposed penalty provisions for a failure to comply with a notice:
While acknowledging the comparison with penalties in the Competition and Consumer Act 2010, it is not clear that a significant penalty of up to two years imprisonment or 100 penalty units for a failure to comply with a notice is a comparable penalty to other similar offences.
1.28Regarding the Intermediaries Code, the Minister for the Environment and Water, the Hon Tanya Plibersek MP, advised that it is necessary for it to be in delegated legislation to mirror the existing industry codes framework under the Competition and Consumer Act 2010, to subject water market intermediaries to comparable safeguards in similar industries and the need for flexibility:
Prescribing the Code in delegated legislation would ensure that water markets intermediaries are subject to the standard safeguards that apply in similar industries. This approach would allow for greater flexibility to update the Code in accordance with best industry practices and industry behaviours as they evolve over time. This approach would allow the Code to respond quickly to changes in the regulatory landscape and ensure that the Code remains an effective and useful tool in the overall regulatory framework.
1.29In relation to the penalty provisions, the Minister outlined that the proposed maximum penalty for a failure or refusal to comply with a notice must be sufficient to act as a deterrent and reflect the seriousness of the offence:
The proposed maximum penalty in subsection 239AJ(5) [failure or refusal to comply with a notice] would be appropriate because section 239AJ of the Water Act would likely be the ACCC’s primary tool for investigating contraventions of the water market integrity provisions in the Water Act, such as market manipulation and insider trading, which attract significant penalties
Section 239AJ may be used in relation to individuals and corporations. It is appropriate that the penalty for non-compliance be sufficient as a deterrent to require a corporation to comply with a notice, and not be seen as a cost of doing business.
1.30In relation to the other concerns raised, the Minister advised that she was satisfied that the bill provides an appropriate delegation of powers, sufficiently manages privacy concerns and provides sufficient procedural fairness protections.
1.31The Scrutiny of Bills Committee thanked the Minister for her response, and requested that an addendum to the explanatory memorandum containing the key information provided by the minister be tabled in the Parliament as soon as practicable.
Structure of this report
1.32This report comprises 7 chapters:
Chapter 1 provides background information to the bill, its key purposes and provisions, and the conduct of the inquiry;
Chapter 2 explores issues raised in relation to proposed changes to SDLAM (water saving) projects;
Chapter 3 outlines the key arguments with respect to the proposed broadening of water purchases, or ‘buybacks’;
Chapter 4 explores the key issues raised in relation to the bill’s proposed changes to compliance arrangements;
Chapter 5 examines the issues raised on the proposed water market reform measures of the bill;
Chapter 6 explores the various perspectives heard on First Nations issues; and
Finally, Chapter 7 outlines submitters’ views on the impact of climate change on water management in the Basin.
Conduct of the inquiry
1.33Details of the inquiry were advertised on the committee’s website on 7September2023, including a call for written submissions by 29September2023. The committee subsequently extended the closing date for submissions to 11 October 2023. The committee also wrote directly to various stakeholders, inviting them to make submissions.
1.34The committee received 124 submissions. These are listed at Appendix 1 of this report, and available in full on the committee’s website.
1.35The committee also received two different types of form letters. A sample of the documents were published by the committee with an indication of how many documents were received of each.
1.36The committee held two extended public hearings in Canberra on 31 October and 1November 2023. In formulating the programs for these hearings, the committee gave broad coverage to a wide range of stakeholders. Due to the high level of interest in the inquiry, the programs were significantly oversubscribed.
1.37Overall, the committee heard from 102 individual witnesses, spanning 45organisations, with another five witnesses appearing in a private capacity. These witnesses represented Basin States, agricultural and irrigators interests, food processors, legal experts, environmental groups, First Nations representatives, local governments, water market participants, scientists and academics, community groups and Australian Government agencies. The perspectives of many of these contributors, as well as those of written submitters, are reflected throughout this report.
1.38The witnesses who appeared are listed at Appendix 2 of the report, and Hansard transcripts are available on the committee’s website.
Acknowledgements
1.39The committee thanks the organisations and individuals that provided submissions and appeared at the committee’s public hearings.