Findings and Recommendations

The Senate Environment and Communications Legislation Committee undertook its inquiry into the provisions of the Water Amendment (Restoring Our Rivers) Bill 2023 at a time of expected transition, following three wet years and almost full storages, into several dry years with the onset of El Niño.

The bill was introduced following the August 2023 agreement between basin Governments (except Victoria) to implement the Basin Plan in full, with the Senate agreeing to the bill’s referral as the matters it seeks to address are of public concern and environmental significance.

The committee received over 120 written submissions and heard from over 100 witnesses, spanning 45 organisations representing government at all levels, industry including irrigator and agriculture interests, environmental groups, First Nations representatives, and scientists. These diverse perspectives have informed and shaped the committee’s findings and 15 recommendations. The majority of the recommendations should be fast tracked as amendments to the bill while others will require more detailed consideration by basin governments in consultation with a range of interest groups.

The following material largely reproduces the key findings and recommendations from the body of the report.

Publish an implementation schedule for existing SDLAM projects

The committee received a range of evidence on whether new SDLAM projects should be allowed to be proposed and whether the deadline for implementation of projects should be extended.

The committee acknowledges submitters’ concerns regarding water efficiency schemes, that is, that they are significantly more expensive than other mechanisms, are yet to be reconciled, and that some may be delayed past the extended deadline proposed by the bill. The committee agrees with various submitters that basin states have had a significant period to implement agreed water savings projects and is concerned by the lack of progress. The Australian Government has committed significant funding to these projects with the understanding they would be delivered by the original deadline of 30 June 2024.

The committee supports the Productivity Commission’s suggestion to improve transparency by requiring the Australian Government to provide regular public reports on the feasibility and cost-effectiveness of these projects.

To further restore public faith in the Basin Plan and in basin governments there is now a need to ensure certainty in the delivery of current viable projects. To this end, the committee suggests that basin governments publish as soon as practicable a detailed implementation schedule outlining how current supply and constraints projects will be fully operable by the extended deadline of 31 December 2026.

The committee recommends that, as soon as practicable, the Australian Government, in consultation with relevant state governments, release a detailed public implementation schedule that outlines how supply and constraints projects will be operable by 31 December 2026.

Withdraw unviable SDLAM projects as soon as possible

The committee shares submitters’ concerns that there are SDLAM projects that have been known to be unfeasible for some time, yet these projects have not been withdrawn or amended by the basin states as required. Basin states should be required to withdraw unviable projects as soon as they become aware that projects will not meet the required deadlines.

The committee agrees with the Productivity Commission that where basin states do not withdraw or amend unviable projects within a reasonable period, the Australian Government should be required to withdraw the project after 3 months has elapsed. The committee suggests that this arrangement be formalised in legislation.

The committee recommends that unfeasible SDLAM projects should be either rescoped to meet the proposed new deadline or discontinued immediately and that the Australian Government be made responsible for withdrawing these projects where the relevant basin state fails to do so within a reasonable timeframe.

Mitigate future delays and non-compliance

The committee shares submitters’ concerns that some projects may not be operable by even the proposed extended deadline of 31 December 2026. To increase accountability of the actions of basin governments and provide certainty that these projects will not be further delayed past the revised extension date, the committee is of the view that consideration must be given to implementing an appropriate mechanism to prevent future delays or other non-compliance.

The committee recommends that the Australian Government, in consultation with relevant state governments, consider and implement an appropriate mechanism before the proposed 31 December 2026 deadline to prevent future delays or other non-compliance.

No new supply projects

The committee heard evidence that the Basin Plan in its current form does not recover enough water to achieve meaningful environmental outcomes in key areas of the basin; meaning there is an even greater imperative to achieve the agreed water recovery targets set out in the plan. The committee supports the Productivity Commission’s assessment that there is a low likelihood that new supply projects will represent value for money, make a meaningful contribution, and be implemented by the end of 2026. Noting these significant risks, the committee is of the view that no new projects should be allowed to be proposed.

Separate constraints from supply measures

The committee heard submitters’ calls for greater urgency towards constraints relaxation as well as concerns that the bill’s proposed constraints roadmap may slow rather than assist delivery of the relaxation projects themselves. The committee acknowledges that some Basin Plan outcomes are dependent on successfully removing constraints and notes commentary on the potential need for compulsory acquisition. The committee agrees with the Productivity Commission that constraints should be separated from supply projects and pursued through a separate program to allow greater flexibility where needed.

The committee recommends that constraints removal projects be separated from supply projects and pursued under a different program.

Voluntary buybacks

The committee acknowledges the diverging views on the bill’s proposals regarding voluntary buybacks. Concerns regarding buybacks were raised in evidence and the committee appreciates this is a sensitive topic for many, particularly those areas that rely heavily on irrigated agriculture. However, the committee agrees with submitters’ who put the contrary view that over a decade has passed since legislating agreed water recovery targets, and there is now an urgent need to recover the agreed volumes of water for the environment. The need for action is particularly pressing as the basin is coming off three wet years, where storage levels are likely to be high, and transitioning to what is likely to be several dry years with the onset of El Niño.

‌The committee accepts that buybacks have an impact on communities but views some of the concerns regarding buybacks as overinflated and not supported by the high‑quality evidence base. The committee notes evidence that voluntary buybacks have proven to be the most reliable and cost-effective and efficient form of water recovery, with water recovered via irrigation infrastructure costing Australian taxpayers at least 3.1 times more per megalitre.

The committee supports the expanded use of voluntary buybacks from willing sellers as an effective way to contribute to the achievement of the Basin Plan. The Australian Government should exercise caution in the manner in which it approaches buybacks to minimise any negative impact and allow the market and communities sufficient time to adjust.

Community adjustment assistance

The committee notes that the Australian Government has committed to providing community adjustment assistance where needed. The committee supports the Productivity Commission’s suggestion to couple the water recovery program with a monitoring program to assess the broader community impacts of water recovery and help target and design effective structural adjustment assistance. The committee suggests that further information on future community adjustment assistance packages could alleviate some concerns in the community. Noting evidence regarding historical structural adjustment programs, the committee agrees that stricter eligibility parameters could also be implemented to ensure assistance reaches those communities who need it most.

The committee recommends that the Australian Government provide public information on how lessons from previous community assistance programs will inform the current package, as well as information on what will trigger a community assistance package and how these will be implemented.

The committee recommends that the Australian Government implement appropriate eligibility parameters for community assistance packages by requiring communities to demonstrate how they were impacted by water acquisition, be proximate to the purchase area, and for the assistance to be directed into projects that produce and maintain jobs for the long-term.

Transparency

The committee acknowledges concerns regarding the transparency of water resource information and the reliability of both actual and reported water across the basin. The committee heard calls for a regular, independent audit of real and reported water to be conducted and agrees an independent audit mechanism would improve accountability of basin governments and serve to improve public confidence in the management of the basin.

The committee notes the Government’s reinstatement of the Sustainable Rivers Audit to track and report on the health of basin rivers that will inform the 2026 Basin Plan Review.

The committee also notes the amendments passed by the House of Representatives which require annual reporting on progress towards increasing the volume of the basin water resources that is available for environmental use by 450GL, the Commonwealth’s water recovery target in relation to SDL resource units, and projects that relate to adjustment of long-term average SDLs. However, accountability and transparency could be further strengthened by implementing system to allow public, real-time tracking of water recovery.

The committee recommends increasing accountability and transparency for all water recovery through a public, real time tracking mechanism.

Compliance arrangements

‍The inquiry received general support for the bill’s revised compliance arrangements as well as various suggestions to close outstanding gaps in accountability and transparency. The committee supports the recommendations of the ProductivityCommission to improve transparency and extend the IGWC’s oversight of intergovernmental agreements where appropriate.

‍The committee heard concerns that the ongoing absence of NSW’s remaining WRPs is undermining the effectiveness of the compliance regime. The committee is troubled that there is no existing legal basis upon which the IGWC can either assess NSW’s compliance with SDLs in those areas, or enforce non‑compliance and reasonable excuse claims. The SDL accounting arrangement are perversely penalising states that have provided WRPs on time while benefiting those that missed the 2019 deadline. In light of this, the committee agrees with submitters that argued for improved and more equitable SDL accounting arrangements. The committee supports amending the bill to allow for SDL accounting provided prior to the commencement of WRPs to more effectively hold all jurisdictions equally to account.

The committee recommends that the Basin Plan be amended to require effective SDL compliance from 1 July 2019, including allowing for the Register of Take to commence at that date for all areas, to hold all jurisdictions to account for over-use in the absence of accredited Water Resource Plans.

Water market reforms

The committee welcomes the broad support of inquiry participants, including basin states, business and industry including irrigators and water market intermediaries, legal experts and environmental groups, for measures in the bill that would improve the transparency and integrity of water markets in the Murray-Darling Basin. This echoes feedback received through other processes, including DCCEEW’s consultation on an exposure draft of these measures, the Final Roadmap and the ACCC’s inquiry into Murray-Darling Basin water markets.

The committee notes that various submitters have raised the need for proper consultation on the subordinate legislation if the bill is passed, particularly the intermediaries code and water markets data standards. This is necessary to ensure that the regulations are fit-for-purpose, do not have unintended consequences, and that its intended benefits exceeds the regulatory costs that would be imposed on water market participants.

The committee acknowledges the extent to which BoM, the ACCC and DCCEEW have consulted on these measures to date, and that the technical issues raised by stakeholders will be addressed through consultation on the subordinate legislation.

Finally, the committee notes the recent findings of the Productivity Commission’s interim report on its implementation review of the Murray-Darling Basin Plan. This includes reviewing the effectiveness of the Basin Plan’s trading rules and proposals to amend the Water Act to enable the ACCC to provide advice to the MDBA about the trading rules on its own initiative. The committee considers that, where appropriate, the Australian Government should give regard to this recommendation as part of this bill.

Recognition of First Nations’ water interests

The evidence received in this inquiry highlighted that there is overwhelming support across governments, legal experts, environmental groups, and industry including irrigators, that significantly more needs to be done to incorporate the values and interests of First Nations people in Basin Plan management.

‍Concerns were expressed by submitters about the inadequacy of the existing legal framework to address the water rights of First Nations people in the basin. Various proposals were put forward on how this could be achieved. These included recognising the principles in the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) in the Water Act 2007. The committee notes that while becoming a signatory to the declaration in 2009, Australia has not taken steps to ratify UNDRIP into domestic law.

The committee supports the recognition of First Nation water rights and interests in national water laws and recommends accordingly.

‍The committee recommends that the Australian Government consider amending the Water Act 2007 and the Basin Plan 2012 to expressly provide for First Nations’ values and interests in the basin, having regard to the proposals received in this inquiry and the principles of UNDRIP.

Funding for First Nations’ water entitlements

The inquiry heard strong concerns about the delays in allocating the Australian Government’s $40 million funding to increase First Nations’ water entitlements, and the significant reduction in value since this funding was announced in 2018. The committee heard there are also divergent views amongst First Nations regarding a preferred strategy and approach going forward. While noting DCCEEW’s advice that it is conducting further consultation through to mid-2024 to determine purchasing options, the committee supports the Water Minister considering additional funding to progress First Nations’ communities’ investment in cultural and economic water entitlements as a priority.

The committee recommends that the Minister for the Environment and Water consider additional funding for the Aboriginal Water Entitlements Program to improve First Nations’ investment in cultural and economic water entitlements.

The review of the Basin Plan to take into account First Nations’ interests and values

Submitters also raised the need for the 2026 Basin Plan Review to consider the interests and values of First Nations people. This could occur by requiring the MDBA to take into account key matters relevant to Indigenous people as part of its review of the Basin Plan.

‍The committee recommends the Water Act 2007 be amended to require the Murray‑Darling Basin Authority, in its review of the Basin Plan, to ensure that the management of basin water resources takes into account spiritual, environmental, social, cultural and economic matters relevant to Indigenous people.

Representation of First Nations in Basin Plan management

The committee heard from various First Nations submitters about the need for meaningful and genuine engagement and consultation. Concerns were raised about rushed consultation processes, and the lack of capacity and cultural competency in non-Indigenous engagement to date. The committee acknowledges that there are diverse perspectives on First Nations representation and engagement in the basin, including proposals to establish a First Nations water holder, or a new body to represent First Nations people in the basin.

The committee recognises that these issues will be considered in the context of the Australian Government’s consultation on governance models for the Aboriginal Water Entitlements Program, and its response to the Productivity Commission’s final report on its implementation review of the Murray-Darling Basin Plan.

The committee welcomes the interim findings and recommendations of the Productivity Commission’s review of the Murray-Darling Basin Plan. The committee fully supports measures to improve accountability in the delivery of First Nations outcomes, and looks forward to the Government’s response.

In addition, the committee considers there is an opportunity to consider further options to improve First Nations representation in Basin Plan management.

Recommendation 12

The committee recommends that the Australian Government consider, as a matter of priority, measures to hardwire First Nations representation in Basin Plan management and decision-making.

‍The committee recommends the Water Act 2007 be amended to strengthen the language regarding the role of First Nations spiritual, cultural and economic perspectives in the management of the basin water resources.

Given the critical timeframes being addressed by various parts of the bill, the committee considers that the bill should not be delayed to fully address Recommendations 12 and 13 as significant consultation is required. However, the committee emphasises the importance of progressing these recommendations in a timely manner to address the concerns raised in this inquiry. These recommendations should be prioritised ahead of other scheduled reviews such as the Basin Plan review in 2026.

Climate change impacts

The committee notes that despite the requirement for the best available scientific knowledge, the Water Act and Basin Plan do not recognise climate change and its impacts. In the committee’s view this is a fundamental omission.

The committee heard evidence about the significant impacts of changing climate in the Murray-Darling Basin, creating challenges for both water availability and environmental sustainability within the basin.

The weight of scientific evidence clearly demonstrates that the Murray-Darling Basin will become hotter and drier, resulting in reduced mean annual water inflows. The committee accepts this scientific basis.

In this regard, the committee notes the conclusion of the MDBA’s 2020 review of the Basin Plan that the impacts of climate change pose the greatest risk to achieving the Basin Plan’s desired social, economic and environmental outcomes.

The committee supports the interim recommendations of the Productivity Commission’s report in its implementation review of the Basin Plan. These include measures that will encourage greater transparency about how climate change objectives are being measured and assessed, and how data and research is being used to make decisions about water management in the basin.

The committee looks forward to the outcomes of the Commission’s process, including its consultation on whether the Water Act should be amended to ensure climate change science is appropriately considered when amending, reviewing and implementing the Basin Plan.

The committee agrees that there is a material risk that without taking these impacts into account, that objectives of the Water Act and Basin Plan will be compromised.

There is general consensus among inquiry participants about the need for basin management to take into account the impact of climate change, including up to date climate change projections and science. Some submitters recommended urgent amendments to the bill to recognise and acknowledge the impact of climate change.

However, given the need to address critical timeframes for other aspects of the bill, the committee considers that the bill should not be delayed, given there are established processes already underway to best consider how climate change science can be embedded in the Basin Plan.

The committee acknowledges the work being led by the MDBA in this regard, including preparations for the 2026 Basin Plan review where climate change will be a key focus area.

The committee recommends that, following the MDBA’s 2026 review, the Australian Government embed the impacts of climate change in the Water Act and Basin Plan.

The bill should be passed with amendments

The committee acknowledges that there are wide-ranging and strongly held views about the management and stewardship of the Murray-Darling Basin. Understandably, these diverging views flow to the reforms proposed by the bill including its potential impacts on industry, including irrigators, farmers and processors, the environment, and the communities that live and reside in the basin including First Nations.

The committee recognises the concerns of irrigators, farmers and processors, while also recognising that the future of those industries is reliant on a healthy river.

Nevertheless, there is broad support for the Basin Plan’s overall trajectory, and its objectives to bring the basin back to a healthier and more sustainable level, while continuing to support agricultural industries and basin communities for the benefit of Australia as a whole.

The committee heard evidence throughout the inquiry about the effectiveness of SLDAM projects, the options to achieve the remaining water targets, and the need for greater accountability and transparency measures to guard against further delays and non-compliance in implementing the Basin Plan. The committee considers that many of these issues are effectively addressed as part of this bill.

The inquiry also canvassed several important issues that extend beyond the immediate scope of the bill, including the need to provide for First Nations’ values and interests and to take into account the impacts of climate change science. The committee has made a number of related recommendations in this report, however does not consider that these should delay the passage of the bill given the looming deadlines that require urgent legislative resolution.

The committee heard strong calls that the passage of the bill should not be delayed, given the necessity to implement time critical aspects of the Basin Plan by the end of 2023. Without the passage of the bill, the ability to implement the Basin Plan in full will be compromised.

The committee recommends that the Senate pass the bill with amendments.