Chapter 2Sustainable Diversion Limit Adjustment Mechanism projects
Contextual information
2.1This chapter explores issues raised by inquiry participants in relation to Sustainable Diversion Limit Adjustment Mechanism (SDLAM) water saving projects.
2.2The chapter begins by providing explanatory information on:
the 605GL of projects which aim to offset the original 2750GL Bridging the Gap target (this 605GL is referred to below as the ‘605GL target’)
progress towards the 605GL target;
the new Basin Plan agreement of Basin Water Ministers; and
what the Water Amendment (Restoring Our Rivers) Bill 2023 (‘the bill’) proposes to achieve.
2.3The second part of the chapter outlines the key issues raised by submitters, which relate to:
allowing new SDLAM projects to be proposed;
extending the deadline for SDLAM projects;
project accountability; and
constraints relaxation.
What are supply projects and what is the 605GL?
2.4The Water Act 2007 (the Water Act) and associated Basin Plan aim to provide a sustainable river system and improve water management in the Murray‑Darling Basin for all water users by addressing historic over‑extraction of water. The Basin Plan sets limits on how much water can be extracted from the system overall as well from particular surface water and ground water areas. Both the Water Act and the Basin Plan establish various obligations on basin governments.
2.5There are two water recovery targets under the Basin Plan. The first represents the difference between historical overuse (‘baseline diversion limits’ (BDL)) and the agreed sustainable level of extraction (‘sustainable diversion limits’ (SDL)) and is called the ‘Bridging the Gap’ target. The Australian Government has been working for some time to recover this volume of water by upgrading water infrastructure and purchasing water access entitlements.
2.6The original Bridging the Gap target, agreed in 2012, was 2750GL.[2] In 2017, basin governments decided that some of this balance (605GL) could be offset using the SDLAM via 36 water saving projects in the southern basin (known as ‘supply and constraints measures projects’). The SDLAM allows for the basin-wide diversion limit (10 873GL) to be increased or decreased by no more than five per cent (approximately 543GL) - as a result, 62GL must be obtained through efficiency measures (discussed below) in order for the full 605GL to be realised.
2.7There are various other targets which form part of the 2750GL target. For example, in 2018, basin governments agreed that the water recovery target in the northern basin could be reduced by 70GL to reflect improved knowledge and science, provided a range of measures to improve environmental outcomes, known as the Northern Basin Toolkit measures, were implemented. These targets, as well as the 450GL additional environmental water target, are depicted in Figure 2.1. The 450GL target is explored in Chapter 3.
Figure 2.1Breakdown of Basin Plan targets
Source: Department of Climate Change, Energy, the Environment and Water, ‘How we recover water in the Murray–Darling Basin’, accessed 18 October 2023.
2.8The 36 supply and constraints projects seek to provide equivalent environmental outcomes with a reduced volume of water, thus reducing the overall amount of water to be recovered. Basin governments agreed that, so long as states completed these 605GL water saving projects, an equivalent amount of water could remain in the consumptive pool. These 36 supply and constraints projects were required to be operational by 30 June 2024 or a more direct form of water recovery may be required.
2.9Projects are being managed (either jointly or individually) by the states of NSW, Victoria, and South Australia. NSW is the lead or co-proponent of 22 projects. Victoria is the lead or co-proponent of 22 projects (not necessarily the same 22 projects).[6] South Australia is the lead or co-proponent of 12 projects.
2.10As at June 2023, 20 projects were currently operational or likely to be operable by 30 June 2024, while 16 were unlikely to be or will not be operable by 30June2024.[7]
Reaching the Bridging the Gap target
2.11As at June 2023, most of the surface water needed to meet the revised Bridging the Gap target of 2075GL had been recovered, just 46GL remained. For groundwater, a further 3.2GL needed to be recovered. More than half of the Bridging the Gap target was recovered before the Basin Plan was introduced in 2012. The full volume recovered is reported at 2107GL which includes nominal over recovery. The revised target of 2075GL derives from the initial 2750GL Bridging the Gap target less the agreed 605GL of SDLAM supply and constraints measures less another 70GL from the Northern Basin Review. In March 2023, an open tender for the remaining 49.2GL took place and was highly successful.
2.12Progress towards the revised Bridging the Gap target is currently exclusive of the 605GL because water recovery achieved towards the 605GL target will only be finally known following the MDBA’s reconciliation of the SDLAM.
2.13While it would appear that the revised Bridging the Gap target of 2075GL has been exceeded, there remains a need to recover 46GL. This is because some areas have over recovered water above their targets while others are yet to achieve their target in full.[11]
2.14In July 2023, the MDBA advised the Commonwealth Water Minister, the HonTanya Plibersek MP, that the Bridging the Gap target would not be met by 30June 2024 due to delays in the implementation of supply and constraints measures projects under the SDLAM.[12] These projects sought to offset 605GL yet a shortfall of approximately 315GL is expected. This is in addition to the 46GL referred to above.
New Basin Plan Agreement and Water Amendment Bill
2.15On 22 August 2023, a new Basin Plan agreement was reached between the Commonwealth and Basin Water Ministers except for Victoria. These parties agreed to implement the Basin Plan in full but with extended timeframes, greater flexibility, and more funding for the states.[13] This bill gives legislative effect to that agreement in relation to the 605GL as follows:
extending the deadline for states to deliver SDLAM projects from 30June2024 to 31December 2026;
allowing basin states to bring forward new projects provided they can be operational by no later than 31 December 2026. The Basin Officials Committee must notify the MDBA of any new projects on or before 30June2025;
requiring states to withdraw any notified project (including new projects) by 30 June 2026 if it will not be operational by 31 December 2026;
extending the deadline for the MDBA to conduct its reconciliation of SDLAM project outcomes from 30 June 2024 to 31 December 2026;
extending the final deadline for the Commonwealth to provide SDLAM funding to basin states; and
requiring additional assurances from basin states for delivery of projects before the Commonwealth can extend funding.
2.16To support this flexibility, the bill also seeks to repeal the 1500GL limit on buybacks.[14] The 1500GL cap on water purchases, which is examined in more detail in Chapter 3, does not apply to water recovery under the WESA.
2.17Department of Climate Change, Energy, the Environment and Water (DCCEEW) explained that there are a group of projects which necessitated the extension deadline:
The bill also provides an extension to the end of December 2026 for delivery on the supply project. Those extensions were requested and agreed by basin states so that those projects that can be finished by the end of December 2026 have an opportunity to be finished. That's not all of the projects that are registered under the plan at the moment, but it is a number of projects that will deliver approximately 85GL—that's 85GL that we will not need to purchase—while allowing that two-year extension for those viable projects that can be delivered to be delivered in the time frame.
2.18Furthermore, should the bill pass, the extended deadlines related to supply and efficiency measures would apply to all basin states (regardless of Victoria’s refusal to sign up).
2.19An undisclosed sum, ‘which cannot be publicly released due to commercial sensitivities’, was secured in October 2022 and May 2023 to deliver the Basin Plan.[17]
2.20As noted in the previous chapter, on 18 October 2023, the House of Representatives passed several amendments to the bill, one of which relates to documenting progress towards water recovery targets. The amendment requires the Secretary of the DCCEEW to prepare an annual report (for the five financial years 2023–24 to 2027–28) on the activities undertaken for the purpose of making progress towards:
increasing the volume of the basin water resources that is available forenvironmental use by 450GL;
the Commonwealth’s water recovery target in relation to SDL resource units; and
projects that relate to adjustments of long-term average SDLs.
Key issues raised by submitters
2.21This section outlines the key issues raised by submitters in relation to SDLAM water saving projects. These concerns relate to:
Allowing new SDLAM projects to be proposed.
Extending the deadline for SDLAM projects.
Project accountability.
Constraints relaxation.
Allowing new SDLAM projects to be proposed
2.22The inquiry received conflicting views on whether new SDLAM projects should be allowed to be proposed.
2.23On one side, the NSW Government and irrigators were supportive of allowing states to propose new SDLAM projects.[18]
2.24The NSW Government submitted that it supported ‘the opportunity for states to bring forward new SDLAM projects and we will be putting forward projects for the Australian Government to consider’.
2.25Conversely, environmental organisations were of the view that no new SDLAM projects should be allowed.[20] For example, the Wilderness Society argued that substituting projects for environmental water is unproven and risky and allowing additional projects to be considered could cause further delays. Similarly, Environmental Justice Australia was concerned that allowing basin states to enter contracts for new projects until 31 December 2027 would divert resources and funds away from completing current SDLAM projects.
2.26Some environmental organisations argued for the removal of the ‘SDLAM experiment’ altogether.[23]
2.27Mr Beasley, Commissioner for the River Murray in South Australia, noted that evidence that supply measures actually represent 605GL ‘is hard to come by’, recommending that an independent scientific review of the 605GL supply measure adjustment part of the Basin Plan should be commenced immediately.[24]
2.28Likewise, the joint submission from Professors Sarah Wheeler, Quentin Grafton, John Quiggin and Jeff Connor contended that ‘SDL supply projects have been unsuccessful in providing environmental benefits or increased stream flows’, warning that ‘[c]ontinuing failure to meet plan water recovery objectives can be expected from ongoing primary reliance on supply and infrastructure mechanisms.’[25]
2.29Professor Wheeler and colleagues suggested removal of at least all the SDLAM projects that have been found to be non-performing.[26]
Extending the deadline for SDLAM projects
2.30The committee received a range of evidence regarding extending the deadline for SDLAM projects. On one hand, the NSW and Victorian Governments, farmers, and councils dependent on irrigation were supportive of the extension of time for SDLAM projects.[27]
2.31The NSW Government advised that it will be putting forward projects for the Australian Government to consider based on the proposals that stakeholders in NSW had presented in good faith. Meanwhile, the Victorian Government observed that it had ‘long advocated for more time to deliver on our commitments, and more basin projects to be funded’, and that delays were caused by factors outside the state’s control such as bushfires, floods, and the pandemic.
2.32Cotton Australia highlighted the benefits of SDLAM projects, arguing they ‘leverage additional environmental gains, over and above a just “add water approach”’.[30] However, Cotton Australia suggested that ‘realistic completion dates’ be sought from the MDBA and that additional time to implement SDLAM projects past the proposed 2.5 year extension would be needed.[31] Likewise, Leeton Shire Council stated that ‘a two-year extension is unrealistic’ and recommended ‘at least 4 years to allow sufficient time for the science to be reviewed...and the feasibility of alternative SDLAM projects to be properly investigated, planned and delivered’.
2.33Alternatively, the Victorian Government proposed amending the Basin Plan to allow Ministerial discretion over which projects would be considered at reconciliation, to prevent unintended outcomes where good projects are withdrawn.
2.34On the other hand, submissions from the ACT Government and environmental groups were opposed to extending the timeframe for projects,[34] noting that states had already had almost a decade for implementation.[35] Some suggested that SDLAM projects should be extended only on a case-by-case basis,[36] while others called for more rapid implementation of projects by the states,[37] or suggested that SDLAM extensions go no further than December 2026.[38]
2.35Lifeblood Alliance, an environmental advocacy organisation, argued for an immediate discontinuation of unviable projects:
...some of the projects are never going to deliver, no matter how much time is given to them. There needs to be an immediate cull of the projects which are completely failing. It's interesting to look back over history. There were supposed to be gateway processes, timelines, reviews and all of that, and none of it is actually happening. Projects continue to limp along without any clear direction on their fate.
2.36The committee heard various concerns regarding projects such as Menindee Lakes and Yanco, and suggestions that these projects should have been withdrawn some time ago:
...a number of the projects that have not proceeded, particularly those to date in NSW in places like Menindee Lakes and Yanco, were so poorly conceived and planned to begin with it is hard to see how anything could be salvaged from them. I do think the government and the Senate could usefully look at cutting losses and focusing on more meaningful interventions.
If we tried to talk about a pumpkin sized lemon, [Menindee] would be it. This needs to be directed to the NSW government regarding how they want to proceed with that, but it doesn't make any sense from an economic perspective or an environmental perspective. Certainly, from the objects required of the act, that should never have been there, but that's for the NSW government to make final determinations on regarding what it's going to do in that space—and, of course, the MDBA in terms of its accreditation.
For Menindee, I've seen estimated volumes of 'savings' of between 180 and 100—figures all over the place; it's anyone's guess. That's a significant chunk of water over what would be 14 years. So we are saying, absolutely, take, particularly, that project—there's another one, the Yanco project—off the books immediately. It's time to be accountable.
2.37DCCEEW confirmed that the Menindee Project is one of the projects that will not be delivered by the end of 2026. The inquiry heard that the Commonwealth had committed an initial $1.9 million to NSW for the Menindee supply and constraint project and to date had paid $8.4 million for scoping and assessment work.
Improving project accountability
2.38Some basin states, legal experts, environmental groups, and irrigators gave evidence calling for greater accountability of states to implement their SDLAM projects.[44]
2.39The ACT Government submitted that the bill ‘risks perpetuating long-standing issues with the SDLAM that continue to erode public confidence in the administration...and the effectiveness of the Plan’. The ACT Government suggested that the deadline extension and increased flexibility should be coupled with greater accountability measures to provide assurance that an improved outcome will be achieved.[45]
2.40Environmental Justice Australia highlighted the risk of future non-compliance with deadlines and some of the challenges of working in a multijurisdictional space:
There are clearly a lot of missing deadlines…there is a very real prospect that…the can gets kicked down the road on a number of fronts. We don't see a great deal of improvement in the situation, in terms of implementation of this bill and outcomes for the environment in particular, when the next series of the proposed statutory deadlines are put in place... The other thing...is putting in place, in statutory form, mechanisms to ensure that there are stepping stones and mechanisms to progressively achieve what is intended to be achieved: statutory milestones, indicators and measures that have to be undertaken and implemented in a time-bound fashion...
[O]ne of the challenges that’s always been in place here is that we’re dealing with the federal system, where we’re trying to get the Commonwealth, in the national interest, to undertake and achieve certain things in support of our international obligations, bringing the states along with it...somewhat reluctantly in some instances. I think that there's been far too great a deference to the states, especially the recalcitrant ones—I would put Victoria and NSW, in particular, in that boat. In my view there is probably a need, in order to make this happen, for either the prospect or the actuality of the Commonwealth being more prepared to step in.
2.41Other submitters called for penalties to be introduced for states who fail to deliver their projects on time.[47] For example, the Law Council of Australia argued that mechanisms to avoid recurrence of yet further non-compliances with timeframes should be strong, and that the consequences of failure to meet the extended timeframes should be matched with appropriate penalties, such as reduced entitlement.[48]
2.42DCCEEW advised that there is already a framework in the legislation to deal with a possible shortfall in the 605GL target by states reducing entitlements:
…which from some perspectives may be a more effective way to proceed given you're better able to plan to deal with the potential socioeconomic impacts of reducing entitlements and water entitlement holders can be more closely engaged upfront and market impacts can be managed a bit more proactively.
2.43Some industry submitters called for the government to release an efficiency and supply projects roadmap to December 2026 to provide certainty[50] and improve oversight, and for the roadmap to have ‘an express intent of delivering the full 605GL of supply measures by the new extended timeframe’.
2.44This was echoed by the Australian Conservation Foundation, who suggested that a roadmap to the 450GL should be implemented and use quarterly milestones and reporting, with auditing to be undertaken by the Inspector‑General of Water Compliance (IGWC) or the Productivity Commission.[53]
2.45Similarly, the ACT Government argued for establishing an audit body to carry out a program of work which would be led by the IGWC, and for this program to cover environmental water, river flows, water recovery as well as performance audits of SDLAM project delivery.
2.46The ACT Government also suggested amending the Water Act to explicitly expand the IGWC’s audit powers to provide oversight and monitoring of SDLAM project implementation. Furthermore, the ACT Government suggested legislating for an inquiry to be led by the IGWC into the implementation of the SDLAM in 2027.
2.47The submission from the IGWC called for a review of SDLAM supply projects to be established to improve transparency, similar to the review of the WESA:
In tandem with the proposed changes to notifications in the Bill, it may be appropriate to add a new periodic statutory reporting obligation in relation to supply measures at a project-level to support transparency and accountability... [R]eporting provisions must specify the responsible party (in this case the [Commonwealth Department of Climate Change, Energy, the Environment and Water], the specific obligation(s) and also be time-bound.
2.48The IGWC submission also suggested amending the bill to drive improvements around the depth and quality of public reporting on SDLAM supply projects, and their milestones and progress towards delivery of intended outcomes.
Method to determine SDL adjustment
2.49Some submitters were concerned that the bill proposes to change the process for determining SDL adjustments.
2.50The South Australian Government explained that, presently, the MDBA and Basin Officials Committee (BOC) are required to agree to any change in the applicable method for making SDL adjustment determinations. However, the bill ‘would allow the MDBA to unilaterally change the applicable method’. The South Australian Government argued that ‘given the contentiousness in the original methodology applied...it [is] a key risk to remove the requirement to obtain BOC's agreement to a change in method. This is an important safeguard to ensure that best available science is applied’.
2.51Likewise, the NSW Government argued that there should be recognition that the existing BOC decision-making processes ‘ensures multi-jurisdictional scrutiny of MDBA decision-making tools and recommendations’ and that 'retaining BOC decision-making over how any changes to this methodology are incorporated is an important part of joint government processes’. The NSWGovernment pointed out that the bill’s proposal in this regard is not required to implement the 22 August 2023 agreement:
...the Amendment Bill proposes a change in the methodology for assessing SDLAM outcomes which is not required for implementation of the Agreement with the Australian Water Minister and removes the decision-making role of the Basin Officials Committee.
2.52The ACT Government was also concerned that the bill would ‘allow the Authority to unilaterally decide to select an alternative assessment method for the assessment of additional Supply Measures and the final SDL Reconciliation’. The ACT Government suggested that requiring a review of the method and publishing the results of the review could mitigate concerns:
Noting the contention of the supply measures and the legitimacy of contributions towards water recovery, the amendment...could address anticipated public debate by requiring the selection of an alternative method to be subject to independent scientific peer review and the methodology published on the Authority’s website.
2.53Similarly, Mr Beasley queried the rationale behind the proposal to give the MDBA unilateral approval power over any amendment to a method, suggesting that ‘all aspects of the Supply Measure SDL adjustment should be the subject...of an independent scientific review’.
2.54On 18 October 2023, the House of Representatives passed an amendment to the bill to allow the IGWC to be able to undertake an audit of the MDBA’s SDL calculations in its capacity as an independent entity. This is in addition to the IGWC or the MDBA having the capacity to appoint an independent auditor to undertake such an audit. The amendment bolsters the audit powers of the IGWC to ensure accountability and transparency of water accounting methods related to the SDLAM reconciliation process and the 450GL target.
Constraints relaxation
Background information
2.55There can be constraints to delivering environmental water to high value floodplain forests and wetlands across the basin. Constraints can include physical restrictions such as low-lying bridges, crossings, or private land as well as operational restrictions such as river rules or operating practices.
2.56In 2013, the MDBA released a Constraints Management Strategy that identified constraints across key areas in the basin (in NSW, Victoria, and South Australia). Constraints projects form part of the package that was submitted by states through the SDLAM process.
2.57In July 2023, the MDBA advised Minister Plibersek that four constraints projects will not be operable by the original deadline of 30 June 2024.
2.58State governments are currently conducting community consultation on constraints relaxation initiatives and the Australian Government is working with states to identify and fund short term ‘no regrets’ projects.
2.59The bill seeks to improve the approach for delivering constraints relaxation projects across the southern basin. The bill requires the MDBA to prepare a constraints relaxation implementation roadmap by 31 December 2024. Additionally, the bill extends the time for states to deliver constraints projects until 31 December 2026.
2.60DCCEEW advised that under the current legislation, constraints investment would stop at the end of June 2024, with no further work able to be carried out. The bill’s amendments would allow the work on constraints to continue and to be funded.
2.61The roadmap is intended to assist the Commonwealth and basin states to identify measures to relax constraints and develop and implement them in a consistent way, as far as practicable. The roadmap aims to seek closer alignment between the basin states on their approaches to stakeholder negotiations, community consultations and consideration of risks to third parties. It is intended that the development of the roadmap will facilitate the acceleration of viable constraints measures that will contribute to the Bridging the Gap target.
2.62The WESA has $200 million allocated to constraints relaxation, most of which has not been spent.
Calls for faster completion of constraints relaxation projects
2.63Several submitters, including the ACT Government, environmental groups and legal experts, urged greater urgency in constraints relaxation.
2.64The ACT Government pointed out that Basin Plan outcomes are dependent on relaxing constraints, yet these projects are still being scoped in 2023. Likewise, the NSW Government acknowledged that ‘[w]ithout constraints measures being implemented, the Australian Government will be unable to effectively use the portfolio of environmental water it has acquired’, as a result, this ‘will undermine the justification for recovering the volumes of water the Australian Government has committed to’.
2.65The ACT Government offered several suggestions to encourage faster implementation of constraints measures, including mandating:
the MDBA to provide an annual report on activities defined in the roadmap;
the CEWH to use Held Environmental Water (HEW) to inundate private land through amendments to the Water Act;
the MDBA to deliver HEW above existing operating constraints and prepare a schedule to implement the roadmap; and
the amendment of the liability of river operations to deliver the schedule that may result in flooding by the CEWH.
2.66The NSW Government submitted that it is ‘committed to bring forward no‑regrets opportunities for acceleration of [constraints] project elements that can be delivered with community support’ but that it will need more time beyond 31December 2026. The NSW Government explained that ‘[u]ltimately what can be delivered by NSW on the Murray depends on the progression of projects by Victoria and common target flows. NSW remains committed to ongoing collaboration with Victoria to set a pathway forward’.
2.67Several environmental organisations expressed support for the Productivity Commission’s suggestion (in its interim report released 30October2023) to separate constraints from supply measures. For example, Lifeblood Alliance stated that:
...the recent report of the Productivity Commission...makes some really sensible suggestions in this space: that constraints projects should be separated out from supply measures, put in a different category, given different time lines and given different options for continuing them so that we get the benefit of the constraints without having to wait for all of the mess of the other supply projects.
2.68Meanwhile, Environmental Justice Australia pointed out that the Commonwealth has access to and uses its acquisition powers for other types of infrastructure which could be considered in the context of constraints removal:
I'll give the proposition of constraints relaxation, which we've heard about this morning. I agree with other commentators…it's an integral mechanism to actually achieving greater water outcomes and using them effectively. If the states are not prepared—my state, Victoria, has not been prepared—to step in and to organise or acquire rights over land in order to achieve constraints relaxation, then there's no reason why the Commonwealth or Commonwealth agencies can't do that. For example, the Commonwealth acquisition powers seem to me, on the face of it, readily established to do this; it's about taking urgent measures for public purposes. They're used for infrastructure projects all the time, and the Commonwealth steps in for those purposes. If they want to build an airport, they'll compulsorily acquire interests in land all the time. This is infrastructure. It's just environmental infrastructure, but it's for a public purpose…
Will the constraints roadmap impede rather than assist progress?
2.69With regard to the constraints roadmap proposed by the bill, EnvironmentalJustice Australia argued that a roadmap alone ‘is insufficient to ensure that these measures will be delivered on time’, while the NSW Government expressed concern that delivery of the roadmap could impede the delivery of constraints themselves, and that ‘the roadmap does not appear to address longer-term delivery which is arguably where this work could provide the most benefit’.
2.70Environmental Justice Australia noted that the 2019 South Australian Murray‑Darling Basin Royal Commission had observed that constraints removal would likely become compulsory acquisition in the national interest and require an appropriate compensation scheme. Considering this, Environmental Justice Australia suggested the Federal Government:
...create a framework that would empower it to appoint an independent panel to oversee negotiation processes with landowners to secure necessary easements to deliver these projects, if the progress of basin states continues to stall. In the event that those negotiations are unsuccessful, we submit that the Commonwealth should oversee the compulsory acquisition of land.
2.71The South Australian Government submission observed that some basin states do not allow the CEWH to water areas or conduct managed inundation of land until full landholder consent has been obtained, arguing that this ‘is nonsensical in many ways, not least of all because rivers are natural features that cannot be entirely controlled’. As a result, the South Australian Government argued for amendments to the Water Act to introduce a compulsory scheme to grant water access without third party liability.
Additional concerns regarding constraints relaxation
2.72Industry submitters questioned the feasibility of the constraints measures deadline extension and how changes to the constraints approach might impact the expected outcomes of the Basin Plan. For example, the NFF raised concerns that the bill expected constraints to be dealt with inside two years, arguing that this effectively consigns the residual 605GL target to ‘the dustbin of buybacks’, while the National Irrigators’ Council called for an ‘analysis of the adjustment on expected environmental outcomes of the Basin Plan that a revised constraints program will have’.
Productivity Commission Interim Report findings
2.73On 30 October 2023, the Productivity Commission (the Commission) released its interim report assessing the effectiveness of the implementation of the Basin Plan and WRPs for the 5-year period ending 19 December 2023.
2.74The report observed that the new Basin Plan agreement ‘will not be enough to implement the Basin Plan in full’.
2.75The Commission explained that, even with more time to deliver projects, the 605GL offset is still unlikely to be achieved. This is because:
some key projects are not viable;
implementation costs have increased;
most constraints removal projects are at least 5–10 years from delivery; and
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.
2.76The Commission identified that ‘accountability for implementing projects is weak and there are no real consequences for basin states failing to deliver’. Despite evidence that some projects are no longer viable, none have been formally withdrawn or amended. The Commission was concerned at the lack of transparency around which supply projects will continue to receive funding, arguing that the Australian Government should make public its reasons for continuing to fund projects. The Commission recommended that the Australian Government withdraw relevant supply projects after three months has elapsed for the Basin Officials Committee to amend or withdraw the project.
2.77Regarding constraints measures, the Commission suggested that these should be withdrawn from the supply package as they have restricted the ability of governments to adjust projects where needed in response to concerns. The Commission suggested that the WESA also be used to fund some constraints easing.
2.78The Commission argued that the Australian Government should not delay making good on the likely shortfall from the 605GL offset and that purchasing water is the most cost-effective way to recover water. That said, the Commission cautioned that purchasing large volumes in a short period risks market disruption and impacting communities.
2.79The Commission supported the bill’s proposal to allow water purchases to contribute to the 450GL target as water purchases reduce the cost of recovery and improve the chances of meeting the target. However, as constraints projects are still several years away, the Commission suggested basin governments use the 2026 Basin Plan review to assess how best to deliver the outcomes the 450GL is designed to meet and for now focus on achieving the Bridging the Gap target.
2.80The Commission argued that the Australian Government must take greater responsibility for implementing the Basin Plan by:
progressing constraints easing measures separately from the 2750GL target;
reporting by 30 June 2024 and thereafter annually to Parliament on the cost‑effectiveness and feasibility of existing and new supply projects;
developing a new approach to water recovery that includes staged voluntary water purchases to address the expected shortfall rather than waiting for reconciliation to occur;
providing communities with adjustment assistance based on evidence about what programs work and the regional economic context;
implementing a monitoring program to assess the impact of water recovery on communities to allow targeted structural assistance; and
establishing an entity that operates at arms-length from governments to undertake water recovery and implement some supply projects.
2.81The Commission also recommended that the water recovery program be coupled with the monitoring program to assess the broader community impacts of water recovery in the basin and help target and design effective structural adjustment assistance.
Committee view and recommendations
Publish an implementation schedule for existing SDLAM projects
2.82The committee received a range of evidence on whether new SDLAM projects should be allowed to be proposed and whether the deadline for the implementation of projects should be extended.
2.83The 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.
2.84The 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.
2.85To 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 31December 2026.
2.86The 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
2.87The 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.
2.88The 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 three months has elapsed. The committee suggests that this arrangement be formalised in legislation.
2.89The 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
2.90The 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.
2.91The 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
2.92The 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
2.93The 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.
2.94The committee recommends that constraints removal projects be separated from supply projects and pursued under a different program.
Next chapter
2.95The following chapter examines concerns raised by submitters in relation to buybacks.