Bills Digest no. 72 2006–07
Basin Amendment Bill 2006
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Contact Officer & Copyright Details
Basin Amendment Bill
Date introduced: 7 December 2006
House: House of Representatives
Portfolio: Agriculture, Fisheries and Forestry
Commencement: The date of Royal Assent, except for Schedule 1,
which commences on a date to be fixed by Proclamation.
legislative effect to amendments of the Murray-Darling Basin
The Murray Darling Basin
Located in the south-east of Australia, the
Murray-Darling Basin covers 1 061 469 square kilometres,
equivalent to 14 per cent of Australia s total area. The Basin
extends over three-quarters of New South Wales, more than half of
Victoria, significant portions of Queensland and South Australia,
and includes the whole of the Australian Capital Territory (ACT).
Well over half of the Basin is in New South Wales and almost one
quarter is in Queensland. Often referred to as the nation s food
basket , the Basin includes nearly 1.9 million hectares of
irrigated crops and pastures, accounting for 75 per cent of the
total area of irrigated crops and pastures in Australia (2000/01).
The Basin is Australia's most important agricultural region,
accounting for 34 per cent of the nation's gross value of
agricultural production (2003).(1)
The Murray Darling Basin Agreement
There have been various intergovernmental
agreements relating to the water resources of the Murray-Darling
Basin, and particularly the River Murray, dating back to 1914.
The current Murray-Darling Basin Agreement
(the MDB Agreement) was signed in 1992, and given full legal status
by the passing of the Murray-Darling Basin
Act 1993 by all the contracting governments. Queensland
became a signatory in 1996, and the ACT formalised its
participation through a Memorandum of Understanding in 1998. The
MDB Agreement provides the process and substance for the integrated
management of the Murray-Darling Basin. The purpose of the
Agreement (clause 1) is:
to promote and co-ordinate effective planning
and management for the equitable efficient and sustainable use of
the water, land and other environmental resources of the
The MBD Agreement established the
Murray-Darling Basin Ministerial Council; the Murray-Darling Basin
Commission (MDBC), which is the Ministerial Council s executive
arm, and the Community Advisory Committee, which advises the
River Murray Water is the business unit within
the MDBC which operates and manages the River Murray system. River
Murray Water commenced operations on 1 January 1998. The primary
services provided by River Murray Water are:
water storage and delivery
salinity mitigation (operation of salinity
recreation and tourism, and
Further information on the history of the
Murray-Darling Basin Agreement is available on the MDBC internet
The Murray Darling Basin Agreement Amending Agreement 2006
At its meeting on 14 July 2006 the Council of
Australian Governments (COAG) concluded an Amending Agreement to
the 1992 MDB Agreement. This Bill is to give effect to the Amending
Agreement 2006. The main provisions section of this Digest provides
On 25 January 2007 the Prime Minister
announced a $10 billion plan for national water management,
including Commonwealth assuming management of water resources in
the Murray-Darling Basin. This would mean the end of the 1992
Murray-Darling Basin Agreement, with the States and Territories
handing control of the Murray-Darling Basin Commission and its
assets to the Commonwealth. The Commonwealth is also asking the
states to hand over management of the Goulburn River (Victoria) and
Murrumbidgee River (NSW). In his speech announcing the new policy
the Prime Minister stated:
Existing arrangements centring on the MDB
Agreement and MDB Ministerial Council are unwieldy and not capable
of yielding the best possible Basin-wide outcomes. One government
needs to take control and be responsible for water management in
the MDB to ensure key Basin-wide outcomes are
The State and Territory leaders have stated
that they will discuss the Commonwealth s proposals at a meeting on
9 February 2007. The NSW Premier is the only leader thus far to
give his support to the Commonwealth s proposals.(6)
The MDBC had agreed to undertake a review of
the 1992 Murray-Darling Basin Agreement by June 2007,(7)
however, it is uncertain whether this will proceed in view of the
Commonwealth s announced policy.
Significant interest groups involved in water
issues such as the National Farmers Federation, the Australian
Conservation Foundation and the Wentworth Group of Concerned
Scientists do not appear to have specifically commented on the
Amending Agreement 2006.
Management of Australia s water resources has
emerged as a key political issue in the last 12 months and is
likely to be a significant issue in this year s federal election.
In January 2007, prior to the Prime Minister s new policy
announcements, the Leader of the Opposition, Kevin Rudd, called for
a national water summit to discuss water management in
Australia.(8) The State and Territory Premiers supported
this call.(9) The Australian Democrats made a similar
call in the latter half of 2006.(10) There has been no
specific comment on the Amending Agreement 2006. However, the
relevant State and Territory Governments will be required to pass
mirror legislation in order for the Amending Agreement to take
The Explanatory Memorandum states that the
Bill will not have a negative financial impact for the
Commonwealth, as the intention of the Bill is to provide the
Commonwealth with certainty as to the yearly contributions it makes
towards the management of Murray-Darling assets.
Schedule 1 to the Bill amends
the Murray Darling Basin Act
1993 to give legislative effect to changes to the MDB
Agreement introduced by Amending Agreement 2006.
Item 4 of Schedule 1 reproduces the Amending
Agreement 2006 by including a new Schedule 3 in the Murray
Darling Basin Act 1993 The new schedule
adds some key initiatives:
annual annuity contributions
recovery of water business costs from State
allocation of responsibility for River Murray
financial thresholds, and
clarification of Queensland s
Item 13 in Schedule 3 replaces existing clause
67 in the MBD Agreement.
Under existing clause 67, the MDBC was
required to prepare annual estimates of the known and anticipated
expenditure for the next financial year, and forward estimates for
two years after that. The estimates included an amount to be
contributed by each Contracting Government. Supplementary estimates
were also prepared. Each Contracting Government was required to pay
its share of the annual and supplementary estimates (clause
The new clause 67 provides the Commission,
subject to Ministerial Council approval, with the power to charge
an annual annuity contribution to all governments under the
Agreement, with regard to investigations, construction and
administration costs, and major or cyclic maintenance costs.
The annuity contributions will be calculated
based on estimated future capital and maintenance costs of the
Commission s water business for the next 30 years (new subclause
67(3). In his second reading speech Mr Hardgrave stated:
These annuity contributions will reduce
fluctuations which might otherwise occur in governments annual
contributions and also give a better reflection of the long run
costs of providing water business services.(11)
Any unspent moneys from each year s
contribution may be used to reduce the amount payable by
contracting Governments in the subsequent financial year (item 18
of Schedule 3). Proceeds from the sale of any surplus assets are to
be credited against future annuity payments, or distributed amongst
Contracting Governments, having regard to the contribution made by
each Contracting Government to the acquisition of those assets
(item 19 of Schedule 3).
Item 12 of Schedule 3 sets out the new clause
66 in regard to Apportionment of Costs. Under new clause 66, the
Ministerial Council may determine which proportion of the services
provided by the Commission s water business is attributable to each
State or Territory Government, and seek cost recovery accordingly
(subclauses 66(2) and (3)). According to the Explanatory
These amendments will enshrine COAG principles
relating to the costs of water services and eliminate cross
subsidies between the States for water business
Under new subclause 66(4), the Commonwealth
Government will contribute one-quarter of the costs of all
investigations, construction and administration costs, after first
deducting any contribution to those costs made by any State or
Territory. The State Contracting Governments together will
contribute the remaining three-quarters costs. The proportion of
cost-recovery charged to the States and Territories must be
reviewed at least every five years (paragraph 66(2)(b)).
Item 25 of Schedule 3 inserts a new part to
Schedule C of the MDB Agreement, which outlines State/Territory
responsibility for a number of River Murray structures such as
drainage diversion schemes, salt interception schemes and
groundwater interception schemes.
Item 21 in Schedule 3 replaces the existing
clause 80 of the MDB Agreement to allow the Commission to invest
money received in accordance with guidelines established by the
Ministerial Council. This expands the investment options available
to the Commission, which were previously limited to investment in
fixed bank accounts.
Under the MDB Agreement, any expenditure on
works which was estimated to cost more than $2 million was required
to have Ministerial Council approval. This financial threshold has
not been raised since 1992. Item 4 in Schedule 3 amends existing
clauses 50 - 54 to add the words or such other amount determined by
the Ministerial Council from time to time to enable increases in
the $2 million threshold, as necessary.
Queensland s responsibilities
Item 26 in Schedule 3 clarifies Queensland s
responsibilities under the Agreement. Queensland entered the
Agreement in 1996 on the basis that it would only contribute
towards works and measures in which it is directly involved. These
amendments remove ambiguities in the MDB Agreement which could be
interpreted as widening Queensland s liabilities.
Management of the Murray-Darling Basin will
continue to attract a high level of interest, particularly in the
light of the Commonwealth s proposed take-over of the
Murray-Darling Basin Commission, announced on 25 January 2007.
The Amending Agreement 2006 to the 1992 MDB
Agreement will not formally come into force until it is approved by
the Parliaments of NSW, Victoria, Queensland, South Australia and
the ACT. At the end of January 2007, corresponding legislation was
not yet before the NSW, Queensland or ACT parliaments; was
introduced to the South Australian Parliament in December 2006; and
was at second reading stage in the Victorian Parliament.
If implemented, the Commonwealth s proposed
take-over of the Murray-Darling Basin water resource matters will
render the MDB Agreement, including the amendments contained in
this Bill, obsolete.
The National Water Initiative was agreed to
and signed at the 25 June 2004 meeting of COAG. At this meeting,
COAG noted the imperative of increasing the productivity and
efficiency of water use and the health of river and groundwater
systems in Australia.
The Natonal Water Initiative Agreement was
signed by the Commonwealth and all States and Territories, with the
exception of Western Australia and Tasmania which declined to sign
at the time. A copy of the NWI Agreement as signed by First
Ministers is available on the COAG
Part of the National Water Initiative was the
establishment of the $2 billion Australian Government Water Fund.
The Fund comprises three programs - Water Smart Australia; Raising
National Water Standards, and Australian Water Fund Communities,
aimed at improving infrastructure, knowledge and management, and
better practice in the stewardship of water resources.
The National Water Commission was established
in 2004 to drive the National Water Initiative. The Commission was
established within the Prime Minister s portfolio, but will move to
the new Environment and Water portfolio established on 23 January
2007.(14) The National Water Commission administers two
of the three major programs funded by the Australian Government
Water Fund. For further background see Bills Digest no. 72,
In 2002 the MDB Ministerial Council agreed to
the Living Murray First Step program, a joint funded initiative to
return up to 500GL of permanent new water to the River Murray as an
environmental flow. The Living Murray program falls outside the
Murray-Darling Basin Agreement, and is contained in the Living
Murray Intergovernmental Agreement. Further information on the
Living Murray program can be found at the MDBC internet
- Murray Darling Basin Commission,
Murray-Darling Basin e-Resources
2005, available at: http://www.mdbc.gov.au/subs/eResource_book/,
accessed 29 January 2007.
- Murray Darling Basin Agreement, available at:
accessed 17 January 2007.
- Murray Darling Basin Commission internet
accessed 20 December 2006.
- Murray Darling Basin Commission, A brief
history of the Murray-Darling Basin Agreement available at:
accessed 17 January 2007.
- Hon. John Howard MP, Prime Minister, A
National Plan for Water Security, Address to the National Press
Club, Parliament House, Canberra, 25 January 2007.
- States reluctant to hand over Murray-Darling
, ABC News Online, 25 January 2007. Hon. Peter Beattie,
Premier of Queensland, Queensland will carefully consider
Commonwealth water plan , Media Statement, 25 January
- Council of Australian Governments, Meeting 14
June 2006, Communiqu , available at: http://www.coag.gov.au/meetings/140706/docs/coag140706.pdf,
accessed 23 January 2007.
- Kevin Rudd MP, Leader of the Opposition,
press release 22 January 2007, National Water Summit , available
accessed 24 January 2007.
- Premiers back Rudd water Plan , The
Australian, 22 January 2007.
- Australian Democrats Press Release:
accessed 22 January 2006.
- Hon. Gary Hardgrave MP, Minister Assisting
the Prime Minister, Second reading speech: Murray-Darling Basin
Amendment Bill 2006 , House of Representatives, Debates, 7
December 2006, p. 18.
- Hon. Peter McGauran MP, Explanatory
Memorandum: Murray-Darling Basin
Amendment Bill 2006, 7 December 2006.
- Council of Australian Governments, Meeting 25
June 2004, available at: http://www.coag.gov.au/meetings/250604/index.htm,
accessed 24 January 2007.
- Prime Minister, Press Conference 23 January
2007, available at: http://www.pm.gov.au/news/Interviews/Interview2338.html,
accessed 24 January 2007.
- Bill McCormick and Jane Grace, National Water
Commission Bill 2004 , Bills Digest, no. 72, Parliamentary
Library, Canberra, 2004-05. Available at: http://www.aph.gov.au/library/pubs/bd/2004-05/05bd072.pdf.
- Living Murray internet site: http://thelivingmurray.mdbc.gov.au/home;
accessed 17 January 2007
5 February 2007
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