Budget Review October 2022–23 Index
Dr Emily Gibson
On Budget evening, the Minister for Water, Tanya Plibersek,
announced that the Australian Government was delivering
more than $2 billion for the Water for Australia plan. This
implements the Australian Labor Party’s (ALP) plan
to future-proof Australia’s water resources and includes establishing a
National Water Commission, broadening the National Water Grid investment policy,
and a 5-point plan to safeguard the Murray-Darling Basin. The 5-point plan
includes:
- delivering
on the water recovery targets in the Basin Plan, including the 450 GL of water
for enhanced environmental outcomes
- increasing
compliance, and improving metering and monitoring
- restoring
transparency, integrity and confidence in water markets and water management
- increasing
First Nations ownership and involvement in decision-making
- updating
the science underpinning the Basin Plan.
The Budget measure Water for Australia Plan provides
$2.6 million over 2 years to the Murray-Darling Basin Authority (MDBA),
Department of Climate Change, Energy, the Environment and Water (DCCEEW) and Department
of Treasury to deliver ‘the Government’s commitments to national and First
Nations water reform’ (Budget measures:
budget paper no. 2: October 2022–23, p. 79). This includes $2.1 million
for expert legal support and $0.5 million for initial scoping work to establish
a National Water Commission (NWC). A NWC was established
in accordance with the Intergovernmental Agreement on the National Water
Initiative in 2004 to assist in the implementation of the National
Water Initiative (NWI), but was abolished by the Abbott Government in 2015.
The Productivity Commission’s National water reform
2020 inquiry report, which provides advice on national water reform, including
renewal of the NWI, found that ‘governance arrangements established for the
[NWI] have been significantly eroded’ and recommended ‘a strengthened
governance architecture’ (p. 13). The Plan
to future-proof Australia’s water resources (p. 2) indicates the NWC will:
- lead
cross-portfolio and cross-jurisdiction work to make sure Australia has secure
and sustainable access to water
- support
the renewal of the NWI and conduct ongoing reviews
- work
with jurisdictions to implement water-related priorities included in
Infrastructure Australia’s Infrastructure Priority List
- ensure
First Nations knowledge and perspectives are taken into account.
The Government is also returning
responsibility for delivery of the $40.0 million Aboriginal
Water Entitlements Program to DCCEEW. The program was announced
in 2018 but was yet to be delivered when it was transferred from the former
Department of Agriculture, Water and the Environment to the National Indigenous
Australians Agency in October
2021.
Delivering the Murray-Darling Basin
Plan
The Murray-Darling Basin, which
covers 14% of Australia’s landmass, is Australia’s most important water
catchment. The Basin provides water for 2.3 million people, including the city
of Adelaide, and supports thousands of farms and over
30,000 wetlands, 16 of which are internationally
recognised under the Ramsar Convention.
The Basin Plan 2012, a
legislative instrument under the Water Act 2007,
provides for the integrated management of Basin water resources, with the aim
of bringing the Basin back to a healthy and sustainable state. The Basin Plan
establishes the volume of water that can be extracted from the Basin (the
‘environmentally sustainable level of take’) and the volume of water required
to be recovered by 30 June 2024. Following amendments to the Basin Plan
under the Sustainable Diversion Limit Adjustment Mechanism, the
overall target for water recovery is 2,075 gigalitres per year (GL/y) plus
450 GL/y to support enhanced environmental outcomes by 2024.
However, progress has stalled. While 2,107.4 GL/y has
been contracted for recovery towards the ‘Bridging the Gap’ target, allocation
across water resource plan areas means that 31.1 GL/y of local water
recovery (mostly in the northern Basin) and 14.9 GL/y of shared water
recovery (mostly in the southern Basin) remains outstanding. The Water
for the Environment Special Account (WESA) was established in 2013, with
funding of $1.775 billion, to fund efficiency and constraint measures that
would contribute to enhanced environmental outcomes. The Second review
of the WESA, released in August 2022, found that only 2.6 GL/y of
the required 450 GL/y has been recovered, and that full recovery through
efficiency measures would likely cost between $3.4 billion and $10.8 billion
(p. 8).
A Five-point plan
The 2022–23 Budget includes several measures that implement the
ALP’s commitment to safeguard
the Murray-Darling Basin.
The Budget measure Murray Darling Basin – Delivering on Water
Commitments includes an undisclosed sum (‘not for publication’ due to
commercial sensitivities) in 2022–23 to ‘provide initial funding towards
meeting environmental water targets under the Murray-Darling Basin Plan’ (Budget
paper no.2, p. 65). The DCCEEW Budget factsheet on the Water
for Australia plan (p. 2) echoes the October 2022 MDB
Ministerial Council Communique:
As a matter of priority, the Commonwealth will work with
relevant communities and Basin states on options to bridge the remaining gap in
water recovery, including through strategic purchase, and to carefully consider
opportunities to achieve the additional 450 GL.
To date 1,231.2 GL/y
of water has been recovered towards the ‘Bridging the Gap’ target through
water purchases by the Commonwealth Government (referred to as ‘buybacks’). In
2015 the Water
Act was amended to set a cap of 1,500 GL on the volume of water
that could be recovered through buybacks until the first review of the Basin
Plan is completed. However, there are exceptions to the cap, including for water
purchased under the WESA.
NSW
and Victoria, and key stakeholder groups such as the National Farmers
Federation and National Irrigators’ Council, reportedly oppose further buybacks,
citing negative effects on regional communities and increasing costs for
remaining farmers. However, the Minister for Water indicated
in early October that she believes ‘voluntary buybacks in a strategic way
can be very beneficial’.
The Minister has clarified that the funding allocated in the
budget is not only for buybacks and that the Government expects
to get value for money in any water purchases.
The Budget measure Murray-Darling Basin – Compliance and Science
provides $51.9 million over 5 years ($46.3 million over the forward estimates)
to the MDBA, DCCEEW and Department of Treasury (Budget paper no. 2, p.
66) to:
- improve
trust in the management of water resources through improvements to the metering
and monitoring of water use and increasing regulatory compliance ($29 million
over 5 years). Of this, $18 million (over 3 years from 2023–24) will be
provided by the Department of Treasury to the Basin States and ACT through
National Partnership payments to ‘improve the automated measurement of water
use and the subsequent transmission of data to regulators’ (Federal financial
relations: budget paper no. 3: 2022–23, p. 75).
- update
the science for water management ahead of the statutory Basin Plan Review in
2026 ($22.9 million over 4 years). The ALP’s Five-point
plan indicates this will (among other things) include data on climate
change, evaporation and inflows; knowledge about floodplain harvesting; and
evidence about the effectiveness of efficiency measures.
The Budget measure Murray-Darling Basin – Water Market Reform
provides an unspecified sum (‘not for publication’ due to commercial sensitivities)
over 5 years (with an ongoing component) to the Australian Competition and
Consumer Commission (ACCC), Bureau of Meteorology and DCCEEW to implement the recommendations
of the recently released Water market
reform roadmap (Budget paper no. 2, p. 66).
The ACCC’s Murray-Darling
Basin water markets inquiry, which concluded in March 2021, recommended ‘a
package of reforms which aim to restore confidence in water markets across the
Basin, and to improve their operation and efficiency so that they work better
for market participants and deliver enhanced benefits for the Australian
economy’ (Final
report, p. 2).
The Morrison Government subsequently appointed
an independent Principal Adviser to develop a water market reform roadmap.
The Water
market reform: final roadmap report (September 2022) sets out a ‘phased,
practical and cost-effective plan’ for water market reform in response to
the ACCC’s water market inquiry. The Final roadmap report makes 23
recommendations, including dividing water market functions among the proposed
new National Water Commission (in the interim DCCEEW), ACCC, Inspector-General
of Water Compliance, and Bureau of Meteorology (p. 16).
In October 2022, the Australian Government and the MDB
Ministerial Council agreed in principle to implement
all of the roadmap’s recommendations. A media
release from the Minister for Water states:
The Australian Government will introduce legislation and a
mandatory code of conduct to deliver integrity safeguards, and lift conduct
standards, comparable with other markets ... Under the Government’s reforms,
market conduct will be regulated by the ACCC, building on their expertise and
experience with water markets.
A cost benefit analysis found the roadmap’s recommendations
could be implemented at lower cost, albeit with lower benefit, than proceeding
with the full set of ACCC recommendations (Final roadmap
report, p. 143).
The Government has also extended the end date for several
programs (Budget paper no. 2, p. 79) relating to the Murray-Darling
Basin:
- On-farm
Emergency Water Infrastructure Rebate Scheme is extended to 30 June 2024; launched
in 2018, the program allows eligible primary producers to claim up to 25% of
the cost of eligible critical infrastructure up to a maximum of $25,000. Budget
paper no. 3 indicates $30.5 million has been allocated to Basin states
for delivery of this program (p. 77).
- the
2022–23 March Budget measure Water – Supporting the Murray Darling Basin
is extended to 30 June 2025; the measure supported community-driven
infrastructure projects, delivery of environmental water in the Edward-Wakool
region, compliance and the delivery of the water market reform roadmap (Budget measures:
budget paper no. 2: March 2022–23, p. 58).
- the
Goyder Water Research Institute program (Healthy
Coorong Healthy Basin) is extended to 30 June 2026; in early October
2022, the Minister for Water announced
an additional $8 million over 4 years for the institute.
- Sustainable
Rural Water Use and Infrastructure Program is extended to 30 June
2025; the program provides funding for irrigation infrastructure projects,
water purchase measures and supply measures. Budget paper no. 3
indicates $1.5 billion has been allocated to Basin states for delivery of
this program (p. 81).
The October 2022–23 Budget included savings of $97 million
(timeframe unclear) from the reversal of the 2022–23 March Budget measure Water
– Supporting the Murray-Darling Basin, including uncommitted funding from
the Healthy Rivers – Healthy Communities program (Budget paper no.2,
p. 62).
National Water Grid Authority
The National
Water Grid Authority (NWGA) was established
in October 2019 to ‘develop a national framework to identify priority water
infrastructure initiatives’. The authority is now part of DCCEEW, having initially
been established as a Secondary
Australian Government Body within the then Department of Infrastructure,
Transport, Cities and Regional Development. The authority coordinates ‘a
national approach to water infrastructure planning and development, and shaping
national water infrastructure policy and investment’.
The authority administers the National Water Grid
Infrastructure Fund in accordance with the National Water Grid
Investment Framework. In her Budget media
release, Minister Plibersek announced changes to the Investment Framework
to allow for a broader range of projects to be funded, including essential town
water supplies in regional and remote communities.
The Budget measure National Water Grid – Delivering Commitments
provides $278.1 million over 5 years ($226.1 million over the
forward estimates) ‘to expand investment in nationally significant,
transformational water infrastructure projects’ (Budget paper no. 2, p.
67).
Changes to major water
infrastructure projects
The October 2022–23 Budget includes savings of $4.6 billion
over 12 years (Budget paper no. 2, p. 63) by:
- not
proceeding with $5.4 billion funding for the Hells Gate Dam project
- deferring
funding for Dungowan Dam and Pipeline, Emu Swamp Dam and Pipeline, Hughenden
Irrigation Scheme and Wyangala Dam Wall Raising projects; these projects may be
reconsidered once business cases have been completed
- returning
unallocated and uncontracted funding within the National Water Grid Fund.
Some of the cancelled and deferred projects have
been criticised for not providing value for money and for their potential
negative impacts on the environment, including on the Great Barrier Reef.
The October 2022–23 Budget does, however, set aside $1.0 billion
over 8 years from 2026–27 for the National Water Grid Fund (Budget paper
no. 2, p. 64).
There has been mixed reaction to these changes, with some
irrigators expressing concern and environment groups such as the NSW
Nature Conservation Council welcoming the pause on projects.
Budget paper no. 2 indicates that the cost of the
Budget measures Water for Australian Plan (including the extension of
programs) and Murray Darling Basin – Delivering on Water Commitments will
be partially offset by redirecting funding from within the Climate Change,
Energy, the Environment and Water portfolio (p. 65 and p. 79), while the Budget
measure National Water Grid – Delivering Commitments will be partially
met from existing resourcing of the Department of Infrastructure, Transport,
Regional Development, Communications and the Arts (p. 67). Savings from the
Budget measure Government Spending Audit – National Water Grid Fund – Responsible
Investment will be partially redirected to fund other government priorities
(p. 64).
Comment
The water recovery targets under the Basin Plan are required
to be delivered by 30 June 2024; any deficiencies will be assessed in
accordance with the reconciliation process provided in the Water Act.
The continuing, seemingly intractable, differences of
opinion between stakeholders, including the Basin States, remain
a risk that threatens full delivery of the Plan. It remains to be seen
whether these targets can be met on time, and whether bringing forward the
review of the Basin Plan (currently scheduled for 2026) would prompt sufficient
cooperation to achieve the outcomes required to underpin the healthy,
productive, and sustainable use of the Basin’s water resources for the benefit
of all Australians.
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