Water Amendment (Water for the Environment Special Account) Bill 2012
Some submitters and witnesses expressed general support for the Water
Amendment (Water for the Environment Special Account) Bill 2012 (the Special
Account bill). For example, the South Australian government submitted that the Special
Account bill was an 'important step in restoring the health of the
while the River Lakes and Coorong Action Group welcomed:
...the creation of a bill that supports responsive management
of the basin system and at the same time aims to provide funding for the
acquisition of an additional 450 gigalitres of water.
However, some issues regarding the Special Account bill were also raised
during the course of the inquiry, including:
transparency and consultation, in the absence of the final Murray-Darling
Basin Plan and other key documents;
- whether and how the object of the new part 2AA might be achieved;
the purposes for which payments can be made from the Water for
the Environment Special Account (the Special Account).
These issues are discussed in turn below.
Key issues regarding the bill
Transparency and consultation
In similarity with the Adjustment Mechanism bill, some submitters and
witnesses argued that it was difficult to support the Special Account bill before
a range of key documents relating to the legislation have been finalised. In
particular, the committee heard that the Special Account bill should not be
considered in isolation from the final Murray-Darling Basin Plan, the water
recovery strategy, the environmental watering plan and any intergovernmental agreements
underpinning the Basin Plan.
The NSW Irrigators' Council (NSWIC) suggested that consideration of the bill
be deferred 'until such time as the current Draft Basin Plan is able to be
considered by the Senate, stakeholders and the public'.
Ms Stefanie Schulte from the NSWIC told the committee:
In the absence of a finalised basin plan, as a legislative
background for these bills it remains extremely difficult for us to evaluate in
full the proposed amendments and provide detailed comments to the committee. We
continue to reserve the right to endorse the bills; however, until such time as
details of the final basin plan are made available along with the assumptions
and features underlying the adjustment mechanism, we are unable to provide an
endorsement to the committee.
Similarly, the National Irrigators' Council stated that:
While the National Irrigators Council is supportive of the
principle of additional funding for on-farm works, it is impossible for the NIC
to provide an endorsement of the proposed Bill until we have seen the final
Basin Plan, the water recovery strategy document, the Intergovernmental
Agreement, the regulatory impact statement and other key documents.
In response to these concerns about considering the Special Account bill
in the absence of certain key documents, the Department of Sustainability,
Environment, Water, Population and Communities (SEWPAC) acknowledged that the bill:
...is a facilitative bill. It is part of a broader suite of
policy instruments including the respective basin plan, including the SDL
adjustment mechanism bill and, ultimately, also including implementation
agreements which are proposed between the basin jurisdictions and the
Commonwealth government. So it is, if you like, one part of the jigsaw puzzle.
It does not stand by itself or self-actuate by itself without all of those other
mechanisms interacting in an integrated way.
Object of part 2AA
Proposed subsection 86AA(3) of the Special Account bill provides that
the object of the part 2AA of the Water Act would be achieved by:
(a) easing or removing constraints on the capacity to deliver environmental
water to the environmental assets of the Murray-Darling Basin; and
increasing the volume of the Basin water resources that is available for
environmental use by up to 450 gigalitres (GL).
Many organisations raised issues relating to whether and how the object
of proposed part 2AA might be achieved, and in particular:
- the list of examples in proposed subsection 86AA(2);
the potential impacts of removing constraints as outlined in
the use of the words 'up to' in paragraph 86AA(3)(b); and
- whether the bill would achieve the object of increasing the
volume of Basin water resources available for environmental use by up to 450GL.
These issues are discussed in the following sections.
List of examples in proposed
As outlined in Chapter 1, proposed subsection 86AA(2) sets out a
list of examples of how environmental water assets in the Murray-Darling Basin
may be protected or restored. Several submitters queried this list;
some suggested these examples would be more appropriately contained in the
Basin Plan rather than in the legislation.
Environment Victoria supported the list of examples but noted that it
appeared 'to be limited to the Murray system'. Environment Victoria suggested
the clause be amended to include the northern basin.
The River Lakes and Coorong Action Group welcomed recognition of the:
...importance of the key environmental benefits of reducing
levels of salinity in the Coorong, Lake Alexandrina and Lake Albert;
maintaining the Murray mouth; the critical need to flush accumulated salts from
the whole system; increasing barrage flows to the Coorong to support critical
fish migrations; and environmental watering of flood plains throughout the
Similarly, The Wilderness Society (TWS) observed in relation to proposed
It is no fluke to me that the area that is highlighted there
is the estuary of the river. The health of the river's estuary is pretty much a
sign of the health of an entire river system. If we focus on the estuary and
the health of this area we can generally say that, if we have a healthy
estuary, we have a relatively healthy river.
In relation to the removal of constraints, the explanatory memorandum
The Murray Darling Basin Authority (the Authority) has
identified a suite of constraints throughout the Basin which could be addressed
to maximise the environmental benefits from implementation of the Basin Plan.
The Bill provides funding to allow the constraints removal to
facilitate delivery of the additional environmental water recovery and achieve
improved environmental outcomes from those water holdings. This could be done
through a range of project including acquisition of flood easements, provision
of access works (for example, bridges, culverts), changed watering regimes and
increased outlet capacity on major dams and storages.
However, concern was expressed during the inquiry that the removal of
constraints could impact adversely on communities in the Murray-Darling Basin,
for example, through flooding of infrastructure and assets.
The National Irrigators' Council submitted that:
There are concerns that the potential third party impacts
caused by removing or relaxing physical and regulatory constraints are not well
understood and have not been adequately addressed in the Bill. Third party
impacts include but are not limited to the flooding of private property, homes
Mr Mark McKenzie from the Murray Valley Winegrowers told the committee
...we have communities that were built on flood plains over the
last 150 years. Whether we like it or not, they are there, and the cost of
mitigating collateral damage to them through generating floods down the system
is going to be very significant.
The National Farmers' Federation (NFF) also cautioned:
...if relaxation of constraints can lead to a better
environmental outcome without the social and economic harm, I think people
would say that that is a positive way to look at it. But...they require careful
examination as to the potential risks which go with relaxation of constraints
as well as the potential benefits.
Other witnesses, however, did not share this concern. The Australian
Conservation Foundation (ACF) pointed out that:
...when the Murray-Darling Basin Authority released their
relaxed constraints model...they explicitly relaxed the constraints only to the
point that kept flood levels below the minor flood warnings in all of the river
reaches they tested. So the constraints that this modelling has assumed to remove
would not result in any triggering of even minor flood warning levels,
according the basin authority.
Similarly, Ms Rachel Walmsley of ANEDO observed that:
I do not think it would be the authority's intent that the
release of environmental water would be massive flood events. It would be a
controlled, periodic release at certain times.
In response to this issue, the MDBA told the committee:
The authority, in developing its proposals to increase
environmental watering, will be making sure that that it works with
stakeholders to look at where those potential issues are and, if needed, it
will put in place restrictions so that that sort of thing does not happen.
The MDBA further noted that:
... there are rules in place to manage those events and make sure
that inadvertent flooding of private property does not happen.
The committee also notes that the explanatory memorandum states:
Constraints projects will only be implemented after community
consultation, negotiation and detailed proposal design.
Use of the words 'up to' in
Proposed paragraph 86AA(3)(b) of the Special Account bill states that
the object of this part would be achieved by 'increasing the volume of the
Basin water resources that is available for environmental use by up to
The South Australian government submitted that the bill is:
...important to ensure that the funding committed by the
Commonwealth Government to recover the additional 450GL and address constraints
to environmental water delivery is protected by legislation.
The use of the words 'up to' in this paragraph caused some concern
during the course of the inquiry. Several organisations felt that the use of
this wording meant that the Special Account bill does not require or guarantee
that an additional 450GL will be returned to the river system.
For this reason, it was suggested that proposed subsection 86AA(3) should be strengthened.
For example, ANEDO suggested that this paragraph be amended to state that the
object of part 2AA is achieved by 'increasing the volume of Basin water
resources that is available for environmental use by a minimum of 450
When questioned about the use of the words 'up to', SEWPAC told the
The reason is that the bill makes a commitment to money. It
provides a special appropriation and a fund to provide a framework with a given
amount of money to recover water. The actual water recovery obviously depends
on the vagaries of the future, including future prices and so forth. It is a
commitment to money which we expect to progressively translate to water over
time as the projects are committed and come into actuality.
Increasing the volume of water for
During the course of the inquiry, there was some debate about whether
the Special Account bill would actually achieve an increase in the volume of
Basin water available for environmental use by up to 450GL, as set out in
proposed paragraph 86AA(3)(b).
For example, the ACF was sceptical as to whether an extra 450GL could be
recovered through water-saving infrastructure.
In contrast, the Victorian Farmers' Federation (VFF) thought it was possible to
find 450GL through environmental works and measures.
In terms of finding the extra water, the department informed the
committee about feasibility studies examining ways to find water from
efficiency works and measures (that is, achieving equivalent environmental
outcomes by using less water). The department explained:
There are feasibility studies underway that the Commonwealth
is funding, in each of the jurisdictions, looking at candidate prospective
projects of all different sorts around the basin that have the potential to be
offset projects, essentially, to reduce the need for environmental water. But
there is quite a substantial process being developed for how the full suite of
proposals of that sort would come forward and go through an assessment process
and the ones which meet the terms of the adjustment mechanism to see this
through to reality.
In this context, there was also conjecture as to whether an extra 450GL
was enough and whether a total reduction in extractions of 3200GL was
The South Australian government submitted that:
Science analysis based on modelling by the Murray-Darling
Basin Authority shows that the return of 3200GL is required to achieve a
healthy river system.
It was acknowledged that the Special Account bill and a recovery target
of 3200GL was an improvement on the original plan of 2750GL.
For example, the River Lakes and Coorong Action Group opined:
The extra 450 gigalitres offers some small comfort, and maybe
the plan will be a basis on which we can move forward...every incremental amount
of water that can be returned to the river—when we have a pretty clear
indication from the best available science that we are not going to get enough
water—is going to be a positive.
However, several organisations argued that 3200GL was still not
At the same time, the committee heard evidence that there was a great deal of
scientific uncertainty around the exact volume of water required for a healthy
In light of these scientific uncertainties, several organisations argued there
was a need for an ongoing system of review and monitoring, including public
Others cautioned about focussing on the volume of water and suggested
that the emphasis should be on the actual outcomes. The River Lakes and Coorong
Action Group claimed:
...it should be more about measuring the health of the river system
as a whole and less about focusing on numbers which may in fact not mean
anything in reality.
The VFF held a similar view:
Everyone talks about a volume—2,750 or 3,200. I do not think
that this is about a volume. It has never been about a volume. This should be
about environmental outcomes. It is not about the volume of water; it is about
getting the environmental outcomes.
In this regard, the committee notes that in his second reading speech
the minister listed various outcomes intended to result from the Special
- salinity in the Coorong and Lower Lakes being further reduced so
that it does not exceed levels which are lethal to insects, fish and plants
that form important parts of the food chain;
- water levels in the Lower Lakes being kept above 0.4 metres for
95 per cent of the time, helping to maintain flows to the Coorong, to prevent
acidification, and to prevent acid drainage and riverbank collapse below Lock
- the maximum average daily salinity in the Coorong south lagoon
being less than 100 grams per litre for 98 per cent of years and less than 120
grams per litre at all times in the model period;
- the maximum average daily salinity in the Coorong north lagoon
being less than 50 grams per litre for 98 per cent of years;
- maintaining the Murray Mouth at greater depths, reducing the risk
of dredging being needed to keep the mouth open;
- two million tonnes of salt being exported from the basin each
year as a long-term average;
- barrage flows to the Coorong being increased, supporting more years
where critical fish migrations can occur for estuarine fish,
- opportunities to actively water an additional 35,000 hectares of
flood plain in South Australia, New South Wales and Victoria, improving the
health of forests and fish and bird habitat, improving the connection to the
river, and replenishing groundwater; and
- enhanced in-stream outcomes and improved connections with
low-level flood plain and habitats adjacent to rivers in the Southern Basin,
which can be achieved.
The committee also notes that some witnesses called for these outcomes to
be specified in the Special Account bill itself.
Purpose of the Water for the Environment
In relation to the purpose of the Special Account, as set out in
proposed section 86AD, the key issues raised during the course of the inquiry
related to the use of funds from the Special Account to:
- increase the capacity of dams and storage; 
- purchase water access rights ("buybacks");
- address social and economic impacts.
These are discussed below.
Increasing the capacity of dams and
Proposed paragraph 86AD(2)(a)(iv) of the Special Account bill would
enable payments to be made for projects which further the objects of the part
...increasing the capacity of dams and storages to deliver
environmental water to the environmental assets of the Murray-Darling Basin.
Several organisations opposed this clause.
For example, the ACF submitted that:
This provision should be restricted to projects which
increase the outlet capacity of existing dams and storages where this is
required in order to effectively water environmental assets.
However, the committee notes that proposed subsection 86AD(4) provides a
limit on paragraph 86(2)(a) and that any such payments must be in relation to a
project whose aim is to further the objects of part 2AA as set out in 86AA(1); that
...to enhance the environmental outcomes that can be achieved
by the Basin Plan, as in force from time to time, by:
(a) protecting and restoring the environmental assets of the
Murray-Darling Basin; and
(b) protecting biodiversity dependent on the Basin water
so as to give effect to relevant international agreements.
Buybacks under proposed paragraph
Proposed paragraph 86AD(2)(b) of the Special Account bill would provide
that funds from the Special Account may be used to purchase water access rights
in relation to Basin water resources ("buybacks").
Several organisations opposed the idea of further buybacks.
Many of these suggested that this clause be removed or deleted, or at the very
least, limited in some way. For example, the National Irrigators' Council argued
that buybacks should be a "last resort". Mr Tom Chesson, Chief
Executive Officer of the National Irrigators' Council, told the committee that
the bill should be amended to 'limit the amount of buybacks' and in particular
...stipulate how much water could be purchased out through
large-scale tenders and buyback.
Similarly, Murray Irrigation felt that paragraph 86AD(2)(b) should be
Murray Irrigation does not support further Commonwealth
buyback of water entitlements believing that any transfer of entitlement must
be directly related to an efficiency, infrastructure or reconfiguration
Mr Matt Linnegar, Chief Executive Officer of the NFF, told the committee
that a limit should be placed on any future buybacks 'in light of the social
and economic consequences that would follow'.
These organisations expressed a preference for funds in the Special
Account to be spent on upgrading infrastructure and other efficiency measures.
For example, the Murray Valley Winegrowers told the committee there needed to
be more strategic thinking :
...we would much prefer to have a look at investing the money
in capital works, environmental works and measures, that can save money without
eroding that economic base for our industries—and that is why the focus is on
infrastructure, not buyback.
The NFF was of:
...the very strong view that such water recovery cannot and
should not come from increasing water acquisition. This can only be to the
detriment to the social and economic outcomes in the Basin.
As a result, the NFF argued that the clause should be amended to:
...link the acquisition of any water entitlements to delivering
an outcome only against the recovery of water entitlements from off river water
infrastructure and efficiency projects.
In contrast, others felt buybacks to be the most efficient and
cost-effective way of recovering water.
For example, ANEDO claimed:
...research indicates that buying water access rights is the
most cost‑effective means of returning water to the environment.
In response to questions about buybacks, the department stated:
Essentially this clause is there because there is a consensus
among basin jurisdictions...that in addition to the actual infrastructure
investment on‑farm, which traditionally has involved the spending of the
cost of the infrastructure in return for half of the water recovery, these
projects under this program would do that; there would be an investment in
infrastructure in return for half of the water saving but it would have an
associated linked purchase at the farm level for the remainder of the water
saving. So it is not just an infrastructure program; it is a linked purchase program
that is effectively tied at the farm gate...This would mean that the farmer
would get the return on the infrastructure and additional water saving, which
would then be sold at market price. That has the effect of bringing the average
recovery cost below the numbers that you talked about before...It is not imagined
in that particular provision of the bill that there would be a standard water
buyback associated with that 450 gigalitres.
In response to questioning as to whether 450GL could be found through buybacks,
the department advised the committee that subsection 86AD(4) limited paragraph
86AD(2)(b) in that:
The project or purchase has to be related to an adjustment.
That adjustment has to take place under the SDL adjustment mechanism and that
only permits water to be recovered in a socioeconomically neutral way.
Social and economic impacts
The issue of balancing environmental with social and economic impacts
was raised in relation to the Special Account bill, both in the context of buybacks
and constraints removal.
Several suggestions were made as to how social and economic issues
should be dealt with. For example, ADIC recommended that the Special Account bill
be amended to include a provision requiring all programs to be subjected to a
socio-economic impact assessment as part of the approvals process.
The National Irrigators' Council recommended that proposed subsection
86AD(4) be amended to provide that the over-riding objective should be to
recover water in a way which does not have adverse social and economic impacts
for local communities.
Ms Stefanie Schulte, Economic Policy Analyst for the NSWIC, told the
If the intention of the bills is to achieve greater
environmental outcomes subject to social and economic neutrality, as is suggested
in both of the explanatory memorandums, then the bill should in our opinion
reflect this explicitly.
With respect to addressing adverse social or economic impacts, the
committee notes that paragraph 86AD(2)(c)(ii) of the Special Account bill would
enable funds from the Special Account to be spent to make payments:
...to address any detrimental social or economic impact on the
wellbeing of any community in the Murray-Darling Basin that is associated with
a project or purchase referred to in paragraph (a) or (b) or subparagraph
(c)(i) so as to offset any such impact...
However, some organisations felt that proposed paragraph 86AD(2)(c)(ii)
was too broad, and were concerned that the minister might use most or all of
the money in the Special Account bill to address social and economic issues.
For example, Environment Victoria submitted that paragraph
...open ended and could result in the majority of the funds
in the Special Account being used for a range of purposes other than the acquisition
of water for the environment.
Indeed, ANEDO claimed that this paragraph:
...does not further these objects insofar as it is entirely
concerned with socio-economic, as opposed to environmental, outcomes. Rather,
it is likely to undermine the Objects of Part 2AA by directing funding away
from projects or purchases that would otherwise increase delivery of
environmental water to Basin assets.
In response to concerns about social and economic impacts, and the
extent to which funds from the Special Account might be used to address these,
the department informed the committee that:
Paragraph 86AD(2)(c)...is the paragraph which references
these payments to furthering the objectives of the part, and the part in turn
references the adjustment mechanism provisions of the plan. There is an
interconnection such that the special account funds can only be expended if it
is to achieve the outcomes of the adjustment provisions of the plan. The
adjustment mechanism bill is the bill that requires the plan to set out the
criteria for those adjustments.
The committee also notes that the explanatory memorandum states:
The Government is committed to building on the Basin Plan to
achieve environmental outcomes beyond those delivered by a 2,750GL reduction
while maintaining or improving economic and social outcomes.
The Bill establishes the Account to set aside these funds to
enable water to be recovered and constraints to be removed without negatively
impacting on the wellbeing of communities in the Basin. That water will be
recovered in a way that meets the requirements of the Basin Plan that there are
no negative social or economic impacts on Basin communities.
Further, the committee notes that the minister, in his second reading
speech, drew attention to the proposed Basin plan which stipulates that
additional water would only be acquired in ways that did not have 'negative
social and economic consequences such as infrastructure'.
The committee welcomes the government's commitment, and the associated
funding, to achieve environmental benefits in the Murray-Darling Basin: the
Special Account bill would provide the Commonwealth with a secure funding
stream to be used to recover up to an additional 450GL of water for environmental
use in the Basin.
The committee recognises, however, that the Murray-Darling Basin Plan
and other related documents are yet to be finalised and made publically
available: it is therefore difficult for stakeholders to fully consider the
implications of the Special Account bill. The committee looks forward to
finalisation of the Basin Plan by the end of 2012 and the certainty its release
will bring to stakeholders.
With regard to recovering an additional 450GL of water, the committee
shares the concerns of submitters who suggested that the words 'up to' should
be removed from paragraph 86AA(3)(b) of the Special Account bill. The committee
therefore recommends that 'up to' is removed from the bill.
The committee recommends that the words 'up to' are removed from paragraph
86AA(3)(b) of the Special Account bill.
The committee also acknowledges the mistrust on behalf of some
stakeholders that the intended outcomes of the Special Account bill, as outlined
by the minister in his second reading speech (see paragraph 3.37), will come to
fruition. To address the issue, the committee recommends that the Special
Account bill is amended to include the intended outcomes outlined by the
The committee recommends that the Special Account bill is amended to
include the intended outcomes listed by the minister in his second reading
Irrespective, the committee believes the Special Account bill provides an
important platform from which to work towards restoring the health of the
Murray-Darling Basin. The committee therefore recommends that the Special
Account bill be passed.
Subject to the preceding recommendations, the committee recommends that
the Special Account bill be passed.
Navigation: Previous Page | Contents | Next Page
Back to top