Bills Digest no. 20 2015–16
PDF version [655KB]
WARNING: 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 Bill.
Bill McCormick and Sophie Power
Science, Technology, Environment and Resources Section
8 September 2015
Contents
Purpose
of the Bill
Structure of the Bill
Background
Committee consideration
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions
Date introduced: 28
May 2015
House: House of
Representatives
Portfolio: Environment
Commencement: The substantive provisions commence on proclamation or six months after
Royal Assent, whichever occurs first.
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent, they
become Acts, which can be found at the ComLaw
website.
The purpose of the Water Amendment Bill 2015 (the Bill) is
to amend:
- the
Water Act 2007
(Cth)[1]
to impose a statutory limit of 1,500 gigalitres (GL) on Commonwealth surface
water[2]
purchases (buybacks) across the Murray-Darling Basin and
- the
Murray-Darling Basin
Plan 2012 (Basin Plan)[3]
to provide increased flexibility in the recovery of 450 GL of water through
efficiency measures funded under the Water for the Environment Special Account,
and in particular by allowing off-farm efficiency projects to qualify as
efficiency measures.
The Bills contains one schedule with two parts:
- Part
1 amends the Water Act to impose a statutory limit of 1,500 GL on
Commonwealth purchases of surface water across the Murray-Darling Basin and
- Part
2 amends the Basin Plan to provide increased flexibility in the recovery of 450
GL of water through efficiency measures funded under the Water for the
Environment Special Account.[4]
The Murray-Darling Basin is the catchment for Australia's
largest river system, comprising the Murray and Darling rivers and their
tributaries. Ranked fifteenth in the world in terms of length (3,780 km) and
twentieth for area (covering 1,056,000 km2) it extends across 14 per
cent of Australia's landmass.[5]
Over the years there has been an over-allocation of water entitlements in many
areas of the Murray-Darling Basin (MDB). Water resources have not been able to
meet the water needed for environmental flows and human requirements.[6]
In 2007 the Commonwealth intervened to address over-allocation and established
the Murray-Darling Basin Authority (MDBA).
The Water Act established the Murray-Darling Basin
Authority (MDBA), a statutory authority that, with the Basin state and
territory governments, manages the Murray-Darling Basin’s water resources. As
required under the Water Act, the MDBA has prepared a Basin Plan, which
was adopted in November 2012, to provide for the integrated management of the
Murray-Darling Basin’s water resources in a sustainable manner.[7]
A key element of the Water Act and the achievement
of the objectives of the Basin Plan is the requirement to establish sustainable
diversion limits (SDLs) across the Basin based on environmental water
requirements. SDLs are described in the Water Act as the maximum
long-term annual average quantities of water that can be taken on a sustainable
basis from the Basin or a part of the Basin.[8]
The amount of water that can be diverted in each catchment, as set by the state
water resource plans, must not exceed the SDL set in the Basin Plan. The Basin‑wide
long-term average surface water SDL is 10,873 GL per year, which represents a
reduction of 2,750 GL a year from the 2009 baseline diversion level (known as the
‘gap’).[9]
One of the methods to help to achieve this reduction (or ‘bridge the gap’) is by
securing water entitlements (‘buybacks’) for environmental use.[10]
Government commitments
In November 2012, then Leader of the Opposition, Tony
Abbott, made a commitment in a letter to the NSW Irrigators’ Council that ‘if
elected, the Coalition will amend the Water Recovery Strategy to apply a cap on
buybacks of 1500 GL’.[11]
The Water Recovery Strategy for the Murray-Darling Basin was published in June
2014 and confirmed that there would be a 1,500 GL limit or ‘cap’ on surface
water buybacks.[12]
On 10 March 2015 the Government further announced that it
would also honour this promise by legislating to cap buybacks in the
Murray-Darling Basin at 1,500 GL.[13]
This Bill implements that commitment. In his second reading speech, the
Parliamentary Secretary to the Minister for the Environment explained that the
‘remaining water recovery task is focused on infrastructure upgrades,
efficiency projects and environmental works and measures’.[14]
Independent review of the Water
Act
An independent review of the Water Act was
conducted in 2014, with the final report published in November 2014. In
relation to the issue of a cap on water buybacks, the report notes that:
A number of submissions raised the commitment made by the
Australian Government in the 2014–15 budget to limit water purchases to 1,500
GL and suggested that this limit should be legislated in the Act. Other
submissions indicated a concern that the 1,500 GL cap could impede the
Australian Government’s ability to bridge the gap. The Panel notes that it is a
decision for the Australian Government as to whether this commitment should be
legislated.[15]
The Department of the Environment website indicates that
the Government is still considering its response to the recommendations of the
review.[16]
Further legislation to amend the Water Act in accordance with the
government response to the review is on the list of legislation proposed for
introduction in the 2015 Spring parliamentary sittings.[17]
SDL Adjustment Stocktake
More recently, in August 2015, the MDBA released an SDL
Adjustment Stocktake Report in relation to SDL measures.[18]
The report examined the potential effectiveness of measures being considered by
the Basin state governments towards adjusting the Sustainable Diversion Limit.
This includes reporting on progress in developing potential supply, efficiency
and constraints measures; and the prospects of any additional proposals that
could add to the supply contribution.[19]
On the release of the report, the Minister for the
Environment stated that the report ‘showed projects were on track to deliver
the environmental outcomes outlined under the Basin Plan’ and that ‘over 500
gigalitres less water is needed to meet the environmental targets in the Plan
and that states are on track to deliver the required projects’.[20]
As such, the Government suggested there is a reduced need for water recovery
under the Basin Plan. The Government also reiterated its commitment to focus
water recovery on infrastructure efficiencies rather than water buybacks.[21]
The Department of the Environment has suggested the Stocktake
Report provides ‘assurance that the Basin Plan gap can be bridged without
reaching the 1500 gigalitre limit’.[22]
As a result of the stocktake indicating that over 500 GL less environmental
water will be needed to meet the target of the Basin Plan, the South Australian
and Victorian governments have decided to join with the NSW and Queensland
governments in agreeing to the cap on buybacks.[23]
Senate Environment and
Communications Legislation Committee
On 18 June 2015 the provisions of the Bill were referred to
the Senate Standing Committee on Environment and Communications for inquiry and
report by 8 September 2015. Details of the inquiry are here.[24]
At the time of writing, the Committee had not yet reported.
Senate Standing Committee for the
Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills
had no comment on the Bill.[25]
The key policy issue in relation to this Bill is the introduction
of a 1,500 GL cap on water buybacks under the Water Act.
Mark Butler, Shadow Minister for the Environment, Climate
Change and Water, reportedly said in April 2015 that the ALP couldn’t commit to
the buyback cap until the views of the various state governments were known.[26]
However he was later reported as saying that the cap:
...would be opposed if it compromised the “overarching
objective” of ensuring the basin plan was achieved.[27]
After the release of the stocktake report referred to
above, a spokesperson for Mr Butler reportedly said that the Opposition will be
reconsidering its position in light of the support for the cap by all the Basin
States.[28]
Senator Lee Rhiannon, Greens Spokesperson for Water and the
Murray-Darling Basin, has reportedly criticised the government for putting the
Basin Plan at risk by moving away from water buybacks and towards the ‘less
reliable and more costly program of infrastructure investment’.[29]
In response to the release of the SDL Adjustment Stocktake Report (outlined
above), Senator Rhiannon expressed concern that the government might use this
to ‘justify winding up plans for retrieving water to ensure river health across
the Murray-Darling Basin’.[30]
In his comments in the 2013 Senate Committee report on the
Management of the Murray-Darling Basin, Independent Senator Nick Xenophon raised
concerns that water buybacks could distort the water market and recommended
that:
In absence of any available evidence, the MDBA
conduct urgent modelling on the impact the market-based buyback approach will
have on those who have not accessed funds under the Federal Government’s $5.8
billion Sustainable Rural Water Use and Infrastructure Program and other
similar programs.[31]
In April 2015, Independent Senator John Madigan reportedly
said that he supported the principle of the buyback cap but wanted to see the
details of the legislation.[32]
The National Farmers Federation (NFF), NSW Farmers and the
Victorian Farmers Federation (VFF) were among the farmer groups that welcomed
the commitment by the Government to amend legislation to implement a water buyback
cap.
The NFF described a legislated cap on buybacks as ‘of the
utmost importance to irrigation communities’. The NFF Water Taskforce Chair,
Lee Gordon said:
Water buybacks hurt the rural and regional communities that
rely on irrigated agriculture. As such, a legislated cap is an important signal
from the Government to these communities that it values their views,
understands the impacts, and is prepared to stand up and do something about it.
The NFF will be seeking support from the Labor Party and
crossbench to achieve legislative change. Supporting the changes would
demonstrate their commitment to a Basin Plan that is capable of achieving good
environmental outcomes, while also taking steps to reduce the social and
economic impacts of the Plan on affected communities.[33]
In its submission to the Senate inquiry into the Bill, the
NFF was also concerned about the socio-economic impacts of the Basin Plan and
argued that water policy had to be considered in the context of the declining
terms of trade for farmers.[34]
The NFF emphasised the need for the Government ‘to adopt a long-term focus on
adaptation rather than short-term crisis management through water buy backs.’[35]
The NFF relied on studies such as the one by Arche Consulting, which was
commissioned by the Department of the Environment and the Murray-Darling Basin
Authority in 2011. That study concluded, among other things, that:
Investment in infrastructure projects results in water
savings being retained on farm, and contributing to direct employment in
agriculture. There are also flow-on impacts in the local economy from the
retained agricultural production.[36]
The VFF outlined the reasons for its preference for
infrastructure investment rather than water buybacks:
Recovering water through infrastructure investment instead of
buybacks also has positive impacts on the supply chain. Where farmers are able
to maintain their productivity this helps to protect on-farm employment and
jobs in milk factories, wineries, fruit and nut processing plants as well as
sustaining jobs in transport and marketing. Keeping jobs in small and medium
sized towns is critical to the economic and social survival of regional
communities. These long term benefits are also supported by a short term boost
to local economies as contractors are employed to construct the infrastructure
projects.[37]
The VFF did not want the 1,500 GL cap to be
a target but rather suggested it should be a ceiling with water buybacks only
being used as a last resort. It also opposed the Commonwealth government
recovering 100 per cent of the water savings derived from on-farm efficiency
measures funded by the Water for the Environment Special Account to recover an
additional 450 GL of environmental water. This was because it was concerned
that the calculations of water savings may not be accurate, potentially leaving
participating farmers worse off if the new infrastructure does not deliver the
expected level of efficiency.[38]
The New South Wales Irrigators Council
stated that it was crucial that the Bill has bipartisan support and irrigators
and communities are provided certainty by limiting the amount of environmental water
recovered via direct purchase.[39]
The Council was concerned that the additional 450 GL was established as an
absolute target under the Water Act and recommended that Water Act
be amended to make the target ‘up to’ 450 GL. The Council suggested this would:
... provide the Federal Government with flexibility to only
recover additional 'up water' if enhanced environmental outcomes can be
achieved, without unmitigated 3rd party impacts, including further damage to
the economic and social fabric of Basin communities.[40]
In arguing for the cap on buybacks, the
Australian Dairy Industry Council cited its commissioned 2012 research that
found buybacks cost around $2,000 per megalitre (ML) but were associated with
reduced economic activity of $4,300 per ML. In contrast, farm upgrades, which
cost $3,700 per ML for the share of water savings which go to the environment,
when used to increase production generated an additional $9,800 per ML of
economic activity.[41]
Murray Irrigation supports the cap but
states that, even where water recovery for the environment is through
infrastructure projects, there are negative impacts on irrigation districts
where the cost of operation and maintenance of the system remains even after
the sale of the water to the Commonwealth, resulting in higher effective price
per megalitre for the remaining customers.[42]
Contrary to many other farming
organisations, the Sunraysia Branch of the VFF is opposed to a cap on water
buybacks because it believes water buybacks are the most efficient means of
water recovery and the cap will compromise an effective Basin Plan without
improving outcomes for irrigators or their communities:
If the buy-back cap is successfully passed, less water will
be bought back than was originally envisaged by the plan, and it is a strong
possibility that insufficient water will be recovered to run an effective plan.
Water recovery money will be diverted to off farm infrastructure programs which
are problematic and which yield less water per dollar spent than buybacks.[43]
However the Branch also opposed strategic
buyback, which it submitted has:
1) created
a two-tier water market and prevented irrigators in pumped districts from
obtaining the premium available from selling to the Commonwealth
2) artificially
reduced the pool of potential tenderers and inflated the price per mega litre
taxpayers have to pay, thereby reducing the amount of water able to bought back
within the budget.[44]
The Alexandrina Council is concerned that
the cap will make the task of recovering environmental water more difficult and
expensive. The Council suggested that the Bill’s provisions might also affect
the achievement of the Basin Plan’s end-of-system environmental objectives and
targets which are critical to the economic, social and environmental wellbeing
of the Alexandrina community.[45]
The Murray Lower Darling Rivers Indigenous
Nations (MLDRIN) does not support the Bill in its current form because it
‘impacts on our rights, interests and cultural obligations to enjoy and care
for our Country’.[46]
MLDRIN says that the cap will cause a significant increase in the cost of water
recovery, making the Basin Plan implementation more expensive and difficult. It
was especially concerned about the impacts of the infrastructure investment and
efficiency upgrades on Aboriginal cultural heritage and important cultural
landscapes:
Our members have noted a number of instances of direct
impacts on cultural heritage sites as a result of irrigation infrastructure
upgrades and developments, including disturbance of burial sites. The large and
dense historical Indigenous populations of the Central Murray region in particular,
mean that there is a high concentration of heritage sites, often located in close
proximity to water-courses. Construction, excavation and earth-moving activities
undertaken as part of infrastructure upgrades are highly likely to impact on cultural
heritage sites. Experience with the development of environmental works and measures
in NSW, for example in the Koondrook/Perricoota forest, has demonstrated the significant
time delays and increased costs associated with management of cultural heritage.
The key questions we pose here are: has this potential impact
been accounted for in the Bridging the [G]ap program? Have the potential time
delays and increased costs associated with cultural heritage surveys and
unanticipated site discoveries been factored in to business-cases for
infrastructure upgrades? Has there been consideration of the resource and capacity
requirements of local Cultural Heritage Officers in dealing with these issues?[47]
In commenting on the buyback cap, Australian
Conservation Foundation (ACF) spokesman Jonathan La Nauze reportedly said that
reductions in water buyback ‘slowed down the pace of water delivery’ and the
river needed more water sooner rather than later to undo decades of damage.[48] He said that:
The Federal Government’s preference to recover water by
subsidising irrigation upgrades makes the task of returning the promised 3,200
billion litres difficult, but if we don’t get this volume of water back in the
rivers, environmental jewels like the Coorong will be in trouble.
Capping the amount that can be bought from willing sellers
leaves too much to be found through expensive Government subsidies and the
government has no plan for how or where it will find this water.[49]
The joint submission of the ACF, Environment Victoria and
Environmental Justice Australia noted that ‘water purchase from willing sellers
has been repeatedly identified as the most cost-effective and efficient means
of environmental water recovery’.[50]
The joint submission further said that the cap on buybacks has the ‘potential
to severely compromise the government’s ability to “bridge the gap” to the SDLs’.[51]
These bodies were concerned that the cap will be in the Water Act itself,
so that honouring the cap will take legal precedence over honouring the SDLs in
the Basin Plan:
...since the Commonwealth is 100% responsible for achieving the
SDLs under the current Basin Plan, if it finds it can’t meet them via
infrastructure upgrades or efficiency measures because, for example, they get
prohibitively expensive, or they simply do not deliver the amount of water
required, it will not be able to use buy backs to bridge the gap. The cap could
therefore prevent the SDLs from being achieved.[52]
However, in relation to this concern, the Department of
the Environment emphasised that the amendments in the Bill would not override
the Basin Plan, and in particular that the ‘legislated 1500 gigalitre limit
deals with how the gap will be bridged, not whether the gap will be bridged’.[53]
The ACF, Environment Victoria and Environmental Justice
Australia further questioned whether there is any evidence that there are
enough cost-efficient and effective water efficiency opportunities, on-farm and
off, to provide water savings to recover the 450 GL of additional water for the
environment without buybacks.[54]
The SDL Adjustment stocktake report found that there is considerable risk that
the 450 GL aim will not be met.[55]
The Inland Rivers Network and the River Lakes and Coorong
Action Group were both concerned that the cap on buybacks may prevent the
watering of key environmental assets across the MDB resulting in the
compromising of the Commonwealth’s obligations under the Ramsar Convention and
migratory bird treaties.[56]
The Environmental Defenders Offices (EDOs) of Australia do
not support the cap and suggest that if the Bill is enacted it may give rise to
inconsistencies between the Basin Plan and the Water Act.[57]
While the SDLs in the Basin Plan apply from 1 July 2019, the adjustment
measures that are approved by 30 June 2016 only have to become operational by
30 June 2024. The EDOs of Australia argue that this means that the Commonwealth
will have to hold sufficient held environmental water to meet the SDLs until
all the supply measures are operational by 30 June 2024.[58]
However, the EDOs of Australia point out that:
...the proposed cap (which will remain in place until 2022) may prevent the Commonwealth from purchasing
enough water to reduce Basin-wide diversions by the required amount by
mid-2019. This would result in an inconsistency between the Act and the Plan,
ultimately frustrating the purpose of the latter.[59]
However, the EDOs also pointed to research by the
Productivity Commission and others which indicates that buying water access
licences is the ‘most cost-effective means of returning water to the
environment’.[60]
The EDOs noted that:
Of further significance is the fact that ‘supply measures’
are unproven and costly. For example, of the 27 supply measure projects for
which a business case has been made, the potential SDL adjustment contribution
for 17 is formally classified as ‘unknown’, while the remaining 10 are listed
as contributing ‘potentially more than 20 GL a year.’ In other words, there is
currently no publically available, concrete evidence indicating whether these
projects will succeed and what their contribution will finally be.[61]
The EDOs further noted that licence holders are under no
obligation to sell their entitlement and that the Water Act explicitly
prohibits the compulsory acquisition of water access licences.[62]
The Explanatory Memorandum states that the Bill will have
‘no immediate or direct impact’, explaining that:
This 1500 gigalitre limit proposal legislates an already
announced budget measure. The 450 gigalitre amendments provide greater
flexibility in the recovery of the 450 gigalitres of additional water for the
environment, within existing funding available under the Water for the
Environment Special Account.[63]
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the
Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[64]
Parliamentary Joint Committee on
Human Rights
The Parliamentary Joint Committee on Human Rights had no
comment on the Bill.[65]
1,500 gigalitre limit on water
purchases
As noted earlier in this Digest, the main purpose of this Bill
is to impose a statutory limit of 1,500 GL on Commonwealth surface water
purchases across the Murray-Darling Basin. This is achieved by the amendments in
Part 1 of Schedule 1 of the Bill.
The main substantive amendment is at item 2, which
adds a new Division 5 into Part 2 of the Water Act entitled ‘1,500
gigalitre limit on water purchases’. In particular, new section 85C is
the key provision relating to this limit.
New subsection 85C(1) will provide that the
Commonwealth must not enter into a water purchase contract if
doing so would exceed a limit of 1,500 GL. This limit is calculated by adding:
- the
long-term annual average quantity of water that can be accessed under the water
access entitlement purchased under the contract and
- the
total of the long-term annual average quantities of water that can be accessed
under water access entitlements purchased under water purchase contracts
entered into before that time.
New subsection 85C(3) provides that a contract is a
water purchase contract for the purposes of this section if it
was entered into by or on behalf of the Commonwealth for the purchase of a
water access entitlement[66]
which relates to surface water resources[67]
in the Basin. The contract must have been entered into between
2 February 2008 and 23 November 2012;[68]
or after 24 November 2012[69]
to achieve the Commonwealth’s share of a reduction in the long-term average
sustainable diversion limit for the water resources (or part thereof) of a
water resource plan area.
Definition of long-term annual
average water quantities
In relation to proposed subsection 85C(1), the ACF,
Environment Victoria, Environmental Justice Australia and the EDOs of Australia
were concerned that there is no definition of ‘long-term annual average
quantities of water’ in the Bill or in the Water Act. The submission
from ACF and others explained that the definition might have an impact on:
...the remaining opportunities to purchase water for the
environment in a strategic and cost effective manner. If the definition is
broadened to include water that is currently not considered ‘bought’ it might
mean that the cap has already been reached, or will shortly be reached and that
no further buy backs can occur. [70]
The EDOs of Australia were also critical of using a
long-term annual average and suggested the inclusion of a clear definition of
long-term annual average ‘that provides the best possible outcome for the
environment’.[71]
These organisations suggested that clarification is required, particularly of
the methodology used to calculate the long-term annual average in order to
avoid uncertainty.[72]
However, the Department of the Environment responded to
these concerns with a statement that:
The Water Act already includes the plain English
concept of the long term annual average of water taken or accessed under an
entitlement, for example, see section 22. The Department considers it is
unnecessary to add complexity to the Water Act by introducing a
technical term that has the same meaning.[73]
It is true that the Bill does not introduce a definition
of the term long-term annual average water quantities and this concept does
already appear in other existing sections of the Water Act. However,
this does not mean that the meaning is clear and unambiguous and needs no
further clarification.
Operation of the limit
Section 50 of the Water Act requires the MDBA to
prepare reviews of the Basin Plan every 10 years.[74]
A report of the review must be given to the Minister under subsection 50(5). New
subsection 85C(2) provides that the 1,500 GL limit on surface water
purchases operates until the report on the first ten year review of the Basin
Plan is received by the Minister.
In his second reading speech, the Parliamentary Secretary to
the Minister for the Environment said:
This will provide confidence to the Basin irrigation industry
and communities that the cap will be in place for the term of the Basin Plan,
delivering certainty that is very much needed by the communities of the Basin
and also ensures that the benefits from ongoing investment in
infrastructure-based water recovery are continued and realised.[75]
However, the NSW Irrigators’ Council disagreed that this
provided certainty and recommended that this ‘sunset clause’ in subsection
85C(2) be removed, expressing concern that ‘the cap on surface water purchases
only spans a time period until the review of the Basin Plan’:
... such a sunset clause does not provide the certainty and
assurance to irrigators and Basin communities that this limit will be a hard
cap which will permanently be enshrined into the Water Act 2007 (Cth)
and the Basin Plan ... The risk of a potential reversal to this commitment after
the Basin Plan is reviewed in 2024 is a real risk for irrigators and Basin
communities, in particular since the recent climate predictions that point
towards the onset of an El Nino event.[76]
The joint submission from the ACF, Environment Victoria
and Environmental Justice Australia suggested that the Bill be amended to
ensure that ‘if the cap is reached, the Commonwealth is not relieved of its
obligation to bridge the gap to the SDLs by other means’.[77]
However, in response to this concern the Department of the
Environment expressed confidence that ‘the Commonwealth will be able to fully
bridge the gap without engaging the 1500 gigalitre limit’, noting the recent
Independent Stocktake Report (discussed earlier).[78]
Exceptions: water recovery that is
not included in the limit
New subsection 85C(4) sets out a number of
exceptions so that certain water purchase contracts will not be counted towards
the new 1,500 GL limit. That is, contracts:
- associated
with agreements where the Commonwealth has provided financial assistance for
the rationalisation or reconfiguration of an irrigation network (entered into
after the commencement of the new section 85C) (paragraph 85C(4)(a))
- for
the purchase of a water access entitlement from a Basin State (entered into
after the commencement of the new section 85C) (paragraph 85C(4)(b))
- where
the Commonwealth has provided financial assistance for activities relating to
water infrastructure (the Explanatory Memorandum gives the example of contracts
entered into under the Sustainable Rural Water Use and Infrastructure Program)[79]
(paragraph 85C(4)(c))
- entered
into in accordance with Part 6 of the Water Act[80]—that
is purchases by the Commonwealth
Environmental Water Holder (CEWH).[81]
The Explanatory Memorandum states that these purchases do not count towards the
1,500 GL limit because CEWH water trade is ‘a key tool available to the CEWH to
adjust the Commonwealth environmental water holdings to maximise the
environmental outcomes that can be achieved from within its existing water
portfolio’[82]
(paragraph 85C(4)(d)) and
- for
water access entitlements purchased using the Water for the Environment Special
Account, which is established under Part 2AA of the Water Act.[83]
According to the Explanatory Memorandum, the Commonwealth will not recover
additional water under this Part through open market water purchases. Instead,
water access rights may only be obtained in conjunction with projects to
improve water use efficiency or alternative arrangements proposed by a Basin
State.[84]
(paragraph 85C(4)(e))
The joint submission from the ACF, Environment Victoria
and Environmental Justice Australia notes paragraph 85C(4)(a) will
only apply from the commencement of the new section and that ‘this means that
all buyback associated with rationalisation and reconfiguration before
the commencement’ will count towards the cap. They question how much water this
would involve and whether it is included in the figures of water purchased to
date provided by the Department of the Environment. They are similarly
concerned that, under new paragraph 85C(4)(b), an entitlement bought
from a state government after commencement will not contribute to the
cap. They query whether the Commonwealth has bought any entitlements from Basin
states in the past that will contribute towards the cap.[85]
The NSW Irrigators’ Council is concerned that paragraph
85C(4)(b) could enable further recovery of water beyond the 1,500 GL cap
through pressure on the Basin States to purchase water on behalf of the
Commonwealth. The Council suggests that Basin States ‘might be tempted to
either create further licences ... or might enter the permanent entitlement
market to recover water to offset any shortfalls’.[86]
However, the Explanatory Memorandum states that paragraph
85C(4)(b) will ‘provide flexibility to the Commonwealth in working with the
states to consolidate water holdings to meet Basin Plan requirements to bridge
the gap to SDLs’ and that ‘purchases by the Commonwealth from States are
excluded from the 1500 GL cap because these are not open market
transactions’.[87]
Validity of contracts
New section 85D provides that a contravention of
85C does not affect the validity of a contract. This provision is designed to provide
sellers of water access entitlements who have contracted with the Commonwealth
in good faith with certainty that the validity of those contracts cannot be
challenged in the event that there has been a breach of the cap.[88]
The Explanatory Memorandum notes:
... the Department [of the Environment] will be accountable for
compliance with the cap through the Public Governance, Performance and
Accountability Act 2013 and the Public Service Act 1999. It is
appropriate that the Department, rather than sellers of water access
entitlements, should be accountable for compliance with the cap.[89]
Adjusting SDLs and off-farm water
efficiency
Part 2 of Schedule 1 of the Bill contains an
amendment to the Basin Plan 2012. The Basin Plan is a legislative instrument
made under the Water Act.[90]
As noted in the Background section of this Digest, the Basin
Plan sets long-term average SDLs that reflect an environmentally sustainable
level of water use (or 'take'). An environmentally sustainable level of take
(ESLT) is the amount of water that can be taken for town water supplies,
industry, agriculture and other human or 'consumptive' uses, while ensuring
there is enough water to achieve healthy river and groundwater systems. The
Basin Plan sets a sustainable diversion limit for each catchment and aquifer in
the Basin, as well as an overall limit for the Basin as a whole. The SDLs are
like a ‘cap’ on water use. They regulate the amount of water that can be used
for consumptive purposes in the Basin.[91]
Chapter 7 of the Basin Plan provides a mechanism for the
MDBA to propose adjustments to the long-term average sustainable diversion
limit (SDLs) under section 23A of the Water Act. Division 4 of Part 2 of
Chapter 7 of the Basin Plan sets out the steps the MDBA must take to determine
the amounts of adjustments to SDLs.[92]
In particular, section 7.17 of the Basin Plan contains criteria which the MDBA
needs to be satisfied before a determination can be made of the amounts of
adjustments to SDLs. The criteria include at paragraph 7.17(2)(b):
The efficiency contributions to the proposed adjustments
achieve neutral or improved socio-economic outcomes compared with the outcomes
under benchmark conditions of development as evidenced by:
(i) the participation of
consumptive water users in projects that recover water through works to improve
irrigation water use efficiency on their farms; or
(ii) alternative
arrangements proposed by a Basin State, assessed by that State as achieving
water recovery with neutral or improved socio-economic outcomes.
Part 2 of Schedule 1 proposes to amend the Basin Plan
2012 to insert a new subparagraph 7.17(2)(b)(ia), which adds the
criteria of ‘the participation of consumptive water users in projects that
recover water through works to improve water use efficiency off-farm’. The
Explanatory Memorandum explains that this amendment:
...will operate in conjunction with Part 2AA of the Water
Act 2007 to afford greater flexibility in the recovery of 450 gigalitres
of water for the environment through efficiency measures funded under the Water
for the Environment Special Account.[93]
The Explanatory Memorandum gives some examples of
‘off-farm’ efficiency projects that would qualify as efficiency measures under
this amendment, such as:
- reshaping
and lining water delivery channels to reduce water losses through infiltration
- replacement
of water delivery channels with gravity pipeline systems and
- installation
of improved irrigation management system and associated telemetry.[94]
Subclause 3(2) in the Bill provides that the
amendment of the Basin Plan under the Bill does not prevent the MDBA from
preparing an amendment of the Basin Plan, as so amended, under section 23B or
45 of the Water Act.
Issues
In his second reading speech, the Parliamentary Secretary
to the Minister for the Environment stated that this amendment ‘provides for
the participation of consumptive water users in projects that recovery water
through works to improve water use efficiency off-farm’ and that ‘there is
strong support within industry for further investment in such measures’.[95]
Several submissions to the Senate inquiry into the Bill were
supportive of this aspect of the Bill. For example, the joint submission from
the ACF, Environment Victoria and Environmental Justice Australia supported
increasing the flexibility of measures allowed to be funded under the Water for
the Environment Special Account. However these organisations were concerned that
this amendment ‘is driven by awareness that the focus on SDL adjustment
mechanisms will absorb cost-efficient water efficiency investment opportunities
and make them increasingly difficult to realise within the current budget’.[96]
No explanation is given in the Explanatory Memorandum as
to why the government has chosen to use this Bill to amend the Basin Plan directly,
rather than using existing statutory processes in the Water Act for
amending the Basin Plan.[97]
However, the Department of the Environment’s submission states that ‘direct
amendment to the Basin Plan is appropriate in this instance for three reasons’:
...the amendment relates directly to the Department’s role
under the Water Act in administering the Water for the Environment
Special Account through the delivery of efficiency measures programmes; the
timely roll out of these efficiency measures programmes will enhance the prospects
of meeting the additional water recovery expectations of Basin State
governments under the Sustainable Diversion Limit Adjustment Mechanism; and the
opportunity for further off-farm efficiencies, combined with an integrated
approach to off and on-farm water efficiency initiatives promises better social
and economic outcomes than may otherwise be the case.[98]
Alternatively, for minor, non-substantive amendments of
the Basin Plan, section 49 of the Water Act provides for regulations to
be made allowing the MDBA to make a specified kind of minor, or non-substantive,
amendment of the Basin Plan under a process in the regulations. However, at the
time of writing, no regulations appear to have been made to allow the MDBA to
make such minor, non-substantive amendments. This issue was identified in the Report
of the Independent Review of the Water Act 2007, which recommended that
regulations be made to provide a simplified process for making minor or
non-substantive amendments of the Basin Plan, consistent with section 49 of the
Water Act.[99]
Members, Senators and Parliamentary staff can obtain
further information from the Parliamentary Library on (02) 6277 2500.
[1]. Water Act 2007 (Cth),
accessed 15 June 2015.
[2]. Water
draining into wetlands, rivers and streams (from rainfall) is known as surface
water. Source: Murray-Darling Basin Authority (MDBA), ‘Surface
water in the Basin’, MDBA website, accessed 3 September 2015.
[3]. Murray-Darling Basin Plan
2012 (Basin Plan 2012), accessed 15 June 2015.
[4]. Basin
Plan 2012, accessed 20 August 2015.
[5]. MDBA,
‘Surface
water in the Basin’, op. cit.
[6]. B
McCormick, ‘Murray-Darling
Basin water issues’, Briefing Book: key issues for the 43rd
Parliament, Parliamentary Library, Canberra, 12 October 2010.
[7]. Water
Act, subsection 19(3). See also section 20 which sets out the purpose of
the Basin Plan. For further information on the development of the Basin Plan,
see MDBA, ‘Development
of the Basin Plan’, MDBA website, accessed 20 August 2015.
[8]. Water
Act, subsection 22(1), table item 6.
[9]. Department
of the Environment, Submission
to Senate Standing Committee on Environment and Communications, Inquiry into
the Water Amendment Bill 2015, p. 2, accessed 20 August 2015. Note that
there is flexibility for the size of this gap to be reduced under the SDL
Adjustment Mechanism, which will be determined in 2016: Basin Plan, Chapter 7.
See also Murray-Darling Basin Ministerial Council, The
sustainable diversion limit adjustment mechanism, joint government
communications booklet, Murray-Darling Basin Ministerial Council, November
2014, accessed 20 August 2015.
[10]. Department
of the Environment, Water
recovery strategy for the Murray-Darling Basin, report, Department of
the Environment, June 2014, p. 5, accessed 4 September 2015.
[11]. T
Abbott (Leader of the Opposition), ‘Letter
to A Gregson (Chief Executive Officer of the NSW Irrigators’ Council)’, NSW
Irrigator’s Council website, 29 November 2012, accessed 20 August 2015.
[12]. Department
of the Environment, Water Recovery Strategy, op. cit., p. 18.
[13]. G
Hunt (Minister for the Environment), B Joyce (Minister for Agriculture), B Baldwin
(Parliamentary Secretary to the Minister for the Environment), ‘Coalition
to legislate water buyback cap’, joint media release, 10 March 2015,
accessed 20 August 2015.
[14]. B
Baldwin, ‘Second
reading speech: Water Amendment Bill 2015’, House of Representatives, Debates,
28 May 2015, p. 4982, accessed 4 September 2015.
[15]. E
Moran et al, Report
of the Independent Review of the Water Act 2007, report prepared for
the Department of the Environment, Department of the Environment,
November 2014, p. 10, accessed 20 August 2015.
[16]. Department
of the Environment, Independent
Review of the Water Act 2007, Department of the Environment website,
accessed 20 August 2015.
[17]. Department
of Prime Minister and Cabinet, Legislation
proposed for introduction in the 2015 Spring Sittings, accessed
20 August 2015.
[18]. W
Martin and G Turner, SDL
adjustment stocktake report, report prepared for the MDBA, August 2015,
accessed 2 September 2015.
[19]. Ibid.
[20]. G
Hunt (Minister for the Environment) and B Baldwin (Parliamentary Secretary to
the Minister for the Environment), Independent
stocktake confirms environmental targets, media release, 27 August
2015.
[21]. Ibid.;
see also S Neales, ‘Water
savings drive shifts from farms’, The Australian, 28 August 2015,
p. 7, accessed 2 September 2015.
[22]. Department
of the Environment, Supplementary
Submission to the Senate Standing Committee on Environment and Communications,
Inquiry into the Water Amendment Bill 2015, p. 2, accessed 2 September
2015.
[23]. C
Bettles, ‘Vic,
SA support buyback cap’, The Australian Dairy Farmer (online
edition), 2 September 2015, accessed 3 September 2015.
[24]. Senate
Standing Committee on Environment and Communications, Water
Amendment Bill 2015 [Provisions], Australian Parliament website,
accessed 7 September 2015.
[25]. Senate
Standing Committee for the Scrutiny of Bills, Alert
digest, 6, 2015, The Senate, Canberra, 17 June 2015, p. 64.
[26]. C
Bettles, ‘Basin
states should speak up: Butler’, farmonline (online edition), 4
April 2015, accessed 17 July 2015.
[27]. P
Starick, ‘Fears
vital extra water for River Murray at risk’, Adelaide Advertiser, 16
April 2015, p. 1, accessed 17 July 2015.
[28]. C
Bettles, ‘Vic,
SA support buyback cap’, op. cit.
[29]. C
Bettles, ‘Buybacks
“undermined reform”’, Queensland Country Life (online edition), 4
June 2014, accessed 17 July 2015.
[30]. L
Rhiannon (Greens Spokesperson for Water and the Murray-Darling Basin), Murray
Darling Basin - Baldwin plan puts river health, communities at risk,
media release, 28 August 2015, accessed 2 September 2015.
[31]. Senate
Rural and Regional Affairs and Transport References Committee, The
management of the Murray-Darling Basin, The Senate, Canberra, 13 March
2013, p. 138, accessed 17 July 2015.
[32]. C
Bettles, ‘Cold
water for MDBA critics’, Queensland Country Life, 16 April 2015, p.
15, accessed 17 July 2015.
[33]. National
Farmers Federation (NFF), Farmers
stress importance of legislating cap on water buybacks, media release,
10 March 2015, accessed 17 July 2015.
[34]. National
Farmers Federation, Submission
to the Senate Standing Committee on Environment and Communications, Inquiry
into the Water Amendment Bill 2015, 31 July 2015, p. 6, accessed 14 August
2015.
[35]. Ibid.,
p. 7.
[36]. Ibid.
[37]. Victorian
Farmers Federation, Submission
to the Senate Standing Committee on Environment and Communications, Inquiry
into the Water Amendment Bill 2015, July 2015, p. 4, accessed 14 August
2015.
[38]. Ibid.,
pp. 7–8.
[39]. New
South Wales Irrigators’ Council, Submission
to the Senate Standing Committee on Environment and Communications, Inquiry
into the Water Amendment Bill 2015, 30 July 2015, p. 4, accessed 17 August
2015.
[40]. Ibid.
[41]. Australian
Dairy Industry Council, Submission
to the Senate Standing Committee on Environment and Communications, Inquiry
into the Water Amendment Bill 2015, 31 July 2015, p. 6, accessed 17 August
2015.
[42]. Murray
Irrigation, Submission
to the Senate Standing Committee on Environment and Communications, Inquiry
into the Water Amendment Bill 2015, July 2015, accessed 18 August 2015.
[43]. Victorian
Farmers Federation Sunraysia Branch, Submission
to the Senate Standing Committee on Environment and Communications, Inquiry
into the Water Amendment Bill 2015, 31 July 2015, p. 3, accessed 18 August
2015.
[44]. Ibid.,
p. 2.
[45]. Alexandrina
Council, Submission to the
Senate Standing Committee on Environment and Communications, Inquiry into
the Water Amendment Bill 2015, 31 July 2015, pp. 2–3,
accessed 18 August 2015.
[46]. Murray
Lower Darling Rivers Indigenous Nations, Submission to the
Senate Standing Committee on Environment and Communications, Inquiry into
the Water Amendment Bill 2015, July 2015, p. 2, accessed 18
August 2015.
[47]. Ibid.,
p. 5.
[48]. T
Shepherd, ‘Water change could send Coorong back to bad times’, Adelaide Advertiser (online edition), 2 June 2014, accessed
17 July 2015.
[49]. J
Meadows, ‘Good
things take time’, Habitat, 43(2), July 2015, p. 8, accessed 13
August 2015.
[50]. Australian
Conservation Foundation, Environment Victoria and Environmental Justice
Australia, Submission
to the Senate Standing Committee on Environment and Communications, Inquiry
into the Water Amendment Bill 2015, 21 July 2015, p. 1, accessed 13 August
2015.
[51]. Ibid.
[52]. Ibid.
[53]. Department
of the Environment, Supplementary
Submission to the Senate Standing Committee on Environment and Communications,
Inquiry into the Water Amendment Bill 2015, p. 1, accessed 2 September
2015.
[54]. Australian
Conservation Foundation, Environment Victoria and Environmental Justice
Australia, op. cit., p. 3.
[55]. W
Martin and G Turner, SDL
Adjustment Stocktake Report, op. cit., p. 2.
[56]. Convention
on Wetlands of International Importance especially as Waterfowl Habitat
(Ramsar Convention), opened for signature 2 February 1974, ATS [1975] No. 48
(entered into force 21 December 1975); Inland Rivers Network, Submission
to the Senate Standing Committee on Environment and Communications, Inquiry
into the Water Amendment Bill 2015, 30 July 2015; River Lakes and Coorong
Action Group Inc, Submission
to the Senate Standing Committee on Environment and Communications, Inquiry
into the Water Amendment Bill 2015, 31 July 2015, all accessed 18 August
2015.
[57]. EDOs
of Australia, Submission
to the Senate Standing Committee on Environment and Communications, Inquiry
into the Water Amendment Bill 2015, 31 July 2015, pp. 1–2, accessed 18
August 2015.
[58]. Ibid.,
p. 2.
[59]. Ibid.,
p. 2.
[60]. Ibid.,
p. 5.
[61]. Ibid.,
p. 2.
[62]. Ibid.,
p. 4. See also Water Act, section 255.
[63]. Explanatory
Memorandum, Water Amendment Bill 2015, p. 3.
[64]. The
Statement of Compatibility with Human Rights can be found at page 4 of the
Explanatory Memorandum to the Bill.
[65]. Parliamentary
Joint Committee on Human Rights, Twenty-third
report of the 44th Parliament, 18 June 2015, p. 2.
[66]. Water
access entitlement is defined in section 4 of the Water Act to mean
a perpetual or ongoing entitlement, by or under a law of a State, to exclusive
access to a share of the water resources of a water resource plan area.
[67]. Note
that surface water, water resource and Basin water
resources are all defined in section 4 of the Water Act.
[68]. The
Explanatory Memorandum does not explain the reason for these dates, other than
they were ‘prior to the commencement of the Basin Plan’ (which commenced on 24
November 2012): Explanatory Memorandum, op. cit., p. 7.
[69]. The
Basin Plan commenced on 24 November 2012.
[70]. Australian
Conservation Foundation, Environment Victoria and Environmental Justice
Australia, Submission to the Senate Standing Committee on Environment and
Communications, Inquiry into the Water Amendment Bill 2015, op. cit., p. 3.
[71]. EDOs
of Australia, Submission
to the Senate Standing Committee on Environment and Communications, Inquiry
into the Water Amendment Bill 2015, op. cit., pp. 3–4.
[72]. Ibid.;
Australian Conservation Foundation, Environment Victoria and Environmental
Justice Australia, op. cit.
[73]. Department
of the Environment, Supplementary
Submission to the Senate Standing Committee on Environment and Communications,
Inquiry into the Water Amendment Bill 2015, op. cit., p. 5.
[74]. Note
that the Minister or all Basin States can request a review in certain
circumstances.
[75]. B
Baldwin (Parliamentary Secretary to the Minister for the Environment), ‘Second
reading speech: Water Amendment Bill 2015’, House of Representatives, Debates,
28 May 2015, p. 4985, accessed 24 August 2015.
[76]. New
South Wales Irrigators’ Council, Submission to the
Senate Standing Committee on Environment and Communications, Inquiry into
the Water Amendment Bill 2015, op. cit., p. 3.
[77]. Australian
Conservation Foundation, Environment Victoria and Environmental Justice
Australia, Submission
to the Senate Standing Committee on Environment and Communications, op.
cit., p. 2.
[78]. Department
of the Environment, Supplementary
Submission to the Senate Standing Committee on Environment and Communications,
Inquiry into the Water Amendment Bill 2015, p. 2, accessed 2 September
2015.
[79]. Explanatory
Memorandum, op. cit., p. 7.
[80]. Part
6 of the Water Act establishes the Commonwealth Environmental Water
Holder (CEWH). Section 105 sets out the CEWH’s functions, which are to manage
the Commonwealth environmental water holdings (as defined in
section 108) and to administer the Environmental Water Holdings Special Account
(established under section 111).
[81]. Further
information about the Commonwealth Environmental Water Holder is available at
Department of the Environment, The
role of the Commonwealth Environmental Water Holder, Department of the
Environment website, accessed 16 June 2015.
[82]. Explanatory
Memorandum, op. cit., p. 8.
[83]. The
Water for the Environment Special Account was established by the Water Amendment (Water
for the Environment Special Account) Act 2013, which inserted a new
Part 2AA into the Water Act. The Account was designed to support the SDL
Adjustment Mechanism. That Act made a special appropriation of $1.77 billion
for a ten-year period from 2014-15 financial year for (1) efficiency measure
projects to deliver 450 GL (billion litres) of additional environmental water.
The additional water can only be recovered in ways that ensure social and
economic outcomes for Basin communities are maintained or improved; (2) easing
or removing constraints on the ability to deliver environmental water to the
environmental assets of the Murray‑Darling Basin. This includes up to $5
million for Basin states to develop business cases for prospective constraints
measure projects. The purposes of the Water for the Environment Special Account
are set out in section 86AD of the Water Act, while the objects of Part
2AA are set out in section 86AA of the Water Act.
[84]. Explanatory
Memorandum, op. cit., p. 8.
[85]. Australian
Conservation Foundation, Environment Victoria and Environmental Justice
Australia, Submission
to the Senate Standing Committee on Environment and Communications, op. cit.,
p. 4.
[86]. New
South Wales Irrigators’ Council, Submission
to the Senate Standing Committee on Environment and Communications, Inquiry
into the Water Amendment Bill 2015, op. cit., p. 5.
[87]. Explanatory
Memorandum, op. cit., p. 7.
[88]. Explanatory
Memorandum, op. cit., p. 8.
[89]. Ibid.
[90]. Water
Act, section 33. Note section 20 of the Water Act sets out the
purpose of the Basin Plan.
[91]. MDBA,
‘Sustainable
diversion limits’, MDBA website, accessed 15 June 2015.
[92]. Murray-Darling Basin Plan
2012 (Basin Plan 2012), accessed 15 June 2015.
[93]. Explanatory
Memorandum, op. cit., p. 8.
[94]. Explanatory
Memorandum, op. cit., p. 9.
[95]. B
Baldwin (Parliamentary Secretary to the Minister for the Environment), ‘Second
reading speech: Water Amendment Bill 2015’, House of Representatives, Debates,
28 May 2015, p. 4985, accessed 24 August 2015.
[96]. Australian
Conservation Foundation, Environment Victoria and Environmental Justice
Australia, Submission
to the Senate Standing Committee on Environment and Communications, op. cit.,
p. 2.
[97]. Sections
45 to 49 of the Water Act provide a statutory process for amendments to
the Basin Plan, whereby the MDBA prepares an amendment for adoption by the
Minister. The proposed amendment is prepared in consultation with Basin States
and is also released for public comment.
[98]. Department
of the Environment, Submission
to the Senate Standing Committee on Environment and Communications, Inquiry
into the Water Amendment Bill 2015, op. cit., p. 6.
[99]. Independent
Review of the Water Act, op. cit., p. 29.
For copyright reasons some linked items are only available to members of Parliament.
© Commonwealth of Australia
Creative Commons
With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.
In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.
To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.
Inquiries regarding the licence and any use of the publication are welcome to webmanager@aph.gov.au.
Disclaimer: Bills Digests are prepared to support the work of the Australian Parliament. They are produced under time and resource constraints and aim to be available in time for debate in the Chambers. The views expressed in Bills Digests do not reflect an official position of the Australian Parliamentary Library, nor do they constitute professional legal opinion. Bills Digests reflect the relevant legislation as introduced and do not canvass subsequent amendments or developments. Other sources should be consulted to determine the official status of the Bill.
Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library‘s Central Entry Point for referral.