Chapter 1


On 4 July 2019, the Senate referred the Murray-Darling Basin Commission of Inquiry Bill 2019 (Bill) to the Environment and Communications Legislation Committee (committee) for inquiry and report by 19 September 2019.1
The Bill was originally introduced as a private senator's bill by Senator Hanson-Young in the 45th Parliament and was re-introduced in the 46th Parliament on 4 July 2019.2
The Bill would establish the Murray-Darling Basin Commission of Inquiry (Commission of Inquiry) with the powers of a Royal Commission.3

Conduct of the inquiry

In accordance with its usual practice, the committee advertised the inquiry on its website and wrote to relevant individuals and organisations inviting submissions by 26 July 2019. The committee continued to accept submissions after this date.
The committee received 20 submissions. These submissions are listed at Appendix 1 and are available on the committee's website at:
The committee agreed to finalise its inquiry without holding a public hearing.
The committee thanks all of the individuals and organisations that contributed to the inquiry.

Scope and structure of the report

This report comprises two chapters. The remaining sections of this chapter outline the contextual background to the Bill and what would be the key functions of the Commission of Inquiry. Chapter 2 examines the key issues raised in submissions in relation to the Bill. The committee's overall findings and recommendations are provided at the end of Chapter 2.

Background to the Bill

The Murray-Darling Basin (Basin) is the largest and most complex river system in Australia, covering one million square kilometres throughout Queensland, New South Wales (NSW), Victoria, South Australia (SA) and the Australian Capital Territory (collectively, the Basin States).4
In 2012, the Basin States and the Commonwealth agreed a $13 billion reform for managing the Basin as a whole connected system (Basin Plan).5 The Productivity Commission (PC) recently described this Plan as:
…part of a comprehensive effort by the Australian and Basin State Governments to reset the balance between environmental and consumptive use of water across the Basin and to establish a long-term sustainable water management system.6

Four Corners program (2017)—Pumped

In 2017 the Australian Broadcasting Corporation's Four Corners program alleged that certain NSW cotton farmers were unlawfully extracting water from the Barwon-Darling river system (part of the Basin in north-western NSW). The program reported that the extraction was occurring with impunity and that state rules were aiding the harvesting of environmental water.7
Following the broadcast, the Australian Government and some Basin State governments commenced their own investigations into the allegations.

Australian Government response

The Australian Government requested the Murray-Darling Basin Authority (MDBA), the independent statutory agency that manages the Basin's water resources, to provide a Basin-wide strategic review into compliance with statebased regulations governing water use in the Basin.8
The MDBA's report—The Murray-Darling Basin Water Compliance Review—was published on 25 November 2017. It found:
There are significant variations between the Basin states in the degree to which there is a culture of compliance, the level of resourcing, the extent of transparency, the comprehensiveness and clarity of the policy framework and the kinds of challenges posed by compliance.9
The MDBA reported its findings to the Murray-Darling Basin Ministerial Council (Ministerial Council), which asked the Authority to develop the Murray-Darling Basin Compliance Compact (Compliance Compact). This Compact was agreed by the Australian and Basin State governments in December 2018.10
At the Ministerial Council's last meeting—4 August 2019—the Hon David Littleproud MP, Minister for Water Resources, proposed that an inspector-general be appointed to oversee integrity in the Basin. The Ministerial Council unanimously agreed.11
Minister Littleproud described the inspector-general as:
…a tough, but fair cop to oversee all state and federal agencies delivering the Basin Plan… They will make sure all agencies live up to their responsibilities and can investigate allegations of water theft… The good will taken to create this position reassures me that this new role will help to rebuild trust between the states… It will also give basin communities greater confidence the plan is being rolled out fairly.12

Basin State governments' responses

Mr Ken Matthews conducted an independent investigation on behalf of the NSW Government. His interim report found that 'water-related compliance and enforcement arrangements in NSW have been ineffectual and require significant and urgent improvement'.13
The NSW Government responded to Mr Matthews' finding by committing to a comprehensive set of reforms (the Water Management Compliance Improvement Package) that included the Natural Resources Access Regulator.14
In Queensland, Mr Tim Waldron was appointed to chair an independent expert panel which audited non-urban water measurement and compliance. The panel found:
Governance arrangements associated with water measurement and compliance of non-urban water use in Queensland lacked robustness, completeness and transparency. A number of weaknesses and gaps were identified which created ambiguities and inconsistencies across different types of water entitlements and water user groups.15
The Queensland Government accepted, or accepted in principle, the majority of the expert panel's 15 recommendations, by implementing the Rural Water Management Program.16
The then Victorian Minister for Water, the Hon Lisa Neville MP, called for an independent public inquiry and an earlier meeting of the Ministerial Council, to address the allegations of water misappropriation in New South Wales:
The independent Public Inquiry would have the ability to compel witnesses to give evidence, with recommendations considered by the Murray-Darling Basin Ministerial Council, and then put before [the Council of Australian Governments]. This will be the best process to understand any broader implications for downstream communities, irrigators and the environment, including in Victoria and South Australia.17
Former Premier the Hon Jay Weatherill MP and the Hon Ian Hunter MLC, then Minister for Water, announced that the SA Government would be seeking a Royal Commission into 'widespread allegations upstream irrigators are stealing water from the Murray Darling River system'. When the Australian Government declined this request, Premier Weatherill commented: 'the only step left for me to take is to establish a state-based royal commission'.18

SA Murray-Darling Basin Royal Commission

On 23 January 2018, His Excellency the Hon Hieu Van Le, Governor of SA, established the Murray-Darling Basin Royal Commission (SA Royal Commission). The SA Royal Commission was tasked with investigating the operations and effectiveness of the Basin system.19
On 31 January 2019, the SA Royal Commission released its report, containing what Commissioner Bret Walker SC had previously described as 'adverse assessments of many governmental decisions and processes'.20
In particular, the SA Royal Commission considered that key aspects of the Basin Plan have not been enacted or implemented in accordance with the objects and purposes of the Water Act 2007.21
The MDBA strongly rejected these conclusions, which the Chief Executive, Mr Phillip Glyde, attributed to a difference in opinion about the policy intent of the Basin Plan.22
The MDBA also rejected the key recommendations of the SA Royal Commission, which the Authority argued effectively propose abandoning the Basin Plan:
The MDBA considers this would be a reckless act – setting back progress towards a healthy and sustainable Basin, and causing substantial uncertainty for Basin communities.23
Mr Glyde emphasised that the Basin Plan is only partially implemented and is supported by Australian and Basin State governments.24
The SA Royal Commission was established by the Royal Commissions Act 1917 (SA). This Act gives a Commission significant powers, including the power to summons 'the attendance of all such persons as they think fit to call before them' and 'the production of any books, papers, documents or records'.25
Commissioner Walker considered that the SA legislation, together with the Service and Execution of Process Act 1992, gave the SA Royal Commission the power to serve compulsory process outside of SA to obtain evidence for its inquiry.26
Initially, Commonwealth agencies resisted summonses issued by the SA Royal Commission. These summonses were later withdrawn by Commissioner Walker.27 Subsequently, the MDBA, former Department of Agriculture and Water Resources and the Commonwealth Scientific and Industrial Research organisation each provided written submissions and additional material to the Commission.28

Productivity Commission

Under the Water Act, the PC is required to undertake five-yearly assessments of the effectiveness of the implementation of the Basin Plan and state-based water resource plans.29
In the first assessment—published on 25 January 2019—the PC made numerous findings on progress to date and made recommendations to further achieve the outcomes of the Basin Plan. Some recommendations aim to improve governance, planning, and management of Basin water resources.30
In particular, the PC found that a complex suite of institutional and governance arrangements for water management in the Basin has created two major 'shortcomings':
It is not clear who is responsible for leading implementation of the Basin Plan and there has been a lack of strategic leadership. There is uncertainty about who should respond to issues as they arise; and
The MDBA has conflicting roles which compromise its ability to effectively perform the collaborative service delivery functions (as the agent of governments) and to be an independent and credible regulator.31
Accordingly, the PC recommended that:
Basin State governments demonstrate greater strategic leadership, take joint responsibility and direct implementation of the Basin Plan; and
Australian and Basin State governments restructure the MDBA to separate its service delivery and regulatory functions into two institutions.32
The Australian Government has not yet responded to the PC inquiry.33

Four Corners program (2019)—Cash Splash

In July 2019 Four Corners broadcast its investigation into government funding for water infrastructure projects in exchange for the return to government of privately held water entitlements. The program described the funding programs as 'a colossal waste of taxpayers' money'.34
Minister Littleproud countered: 'the Coalition is proud to invest in water efficiency projects because they return water to the river system whilst protecting rural jobs and communities'. He quantified water recovery to date at 2100 gigalitres and rejected any suggestion that the projects are not properly scrutinised:
Water efficiency works are subject to risk-targeted spot audits by the federal Department of Agriculture, which has also had Deloitte carry out a separate audit… Delivery partners also check infrastructure works…
I have made unprecedented investments in compliance – $35 million for river water level sensors and satellite monitoring, $25 million for water metering in the northern basin, $5 million for river level video cameras and I’ve also created the first Northern Basin Commissioner.35
The President of the National Farmers' Federation, Ms Fiona Simson, also objected to the Four Corners' program, saying that 'Cash Splash' misrepresented what was actually occurring in the Basin.36

Key functions of the Commission of Inquiry

The Explanatory Memorandum to the Bill identifies the outcomes of the SA Royal Commission and the allegations aired by Four Corners as some of the reasons for the introduction of the Bill into the Parliament:
This [Bill] is in response to the findings of the South Australian Royal Commission, which was limited in its scope by the lack of co-operation from other Basin States and the Commonwealth. There have also been allegations of fraud and misconduct, and repeated warnings from scientists that the Murray-Darling Basin Plan does not meet environmental requirements.37
The Bill would require the Commission of Inquiry to inquire into and advise the Parliament about the following matters:
any misconduct relating to, or affecting, the management of the Basin water resources;
the legislative and administrative framework for implementing, managing and enforcing the Basin Plan;
the impact that the implementation, management and enforcement of the Basin Plan has had on the environment, agriculture and communities that rely on the Basin water resources;
the suitability and effectiveness of the existing legislative and administrative framework for the management of the Basin water resources, including any adverse effects that framework has had on the management of the Basin water resources (whether or not those effects are the result of misconduct);
the allocation of funds by the Commonwealth and the Basin States to implement the Basin Plan, and the impact of funded projects (including water buybacks and efficiency measures) in facilitating environmental watering in the Murray-Darling Basin;
the likely impact of climate change to the Basin water resources, and any appropriate measures to take to adapt those resources in light of that impact;
any matter reasonably incidental to a matter mentioned in the above paragraphs.38
The Commission of Inquiry would be required to report its findings and recommendations to the President of the Senate and the Speaker of the House of Representatives within 12 months. Copies of the report would then be laid before the Parliament as soon as practicable and require a government response to be tabled within six months.39

Reports of other committees

When examining a bill or draft bill, the committee takes into account any relevant comments published by the Standing Committee for the Scrutiny of Bills (Scrutiny Committee).40 The Scrutiny Committee assesses legislative proposals against a set of accountability standards that focus on the effect of proposed legislation on individual rights, liberties and obligations, and on parliamentary propriety.
The Scrutiny Committee examined the Bill in its Scrutiny Digest 2 of 2019. That committee noted that the Royal Commissions Act 1902, which provides for the powers that would be granted to the Commission of Inquiry, contains significant coercive powers that are not ordinarily available to other agencies of government:
The committee generally expects that where a bill seeks to confer coercive powers on bodies, the explanatory materials should address the principles set out in chapters 7–10 of the Guide to Framing Commonwealth Offences. In this instance, the explanatory materials do not address the need for the proposed Commission to have each of these significant coercive powers.41
The committee also takes into account any relevant comments published by the Parliamentary Joint Committee on Human Rights (Human Rights Committee). The Human Rights Committee's main function is to examine all bills and legislative instruments for compatibility with human rights, and to report its findings to both Houses of Parliament.
The Human Rights Committee examined the Bill in its Human rights scrutiny report, Report 2 of 2019. That committee expressed human rights concerns with the Bill that would result from application of the Royal Commissions Act 1902 to the Commission of Inquiry.42 These concerns focussed on the coercive powers granted by the Royal Commissions Act 1902 which engage multiple human rights such as the right to privacy, the right not to incriminate oneself, the right to liberty, and the right to freedom of expression and the right to freedom of assembly.
The Scrutiny Committee and the Human Rights Committee have reiterated their views in the 46th Parliament and are awaiting responses to those comments.43

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