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Executive summary and issues for consideration

The Murray-Darling Basin is Australia's largest and most complex river system. The Basin is critical to the Australian agricultural sector and the economy more broadly, home to over 40 different Aboriginal Nations, and contains internationally significant wetlands and unique Australian wildlife. A large number of rural, regional and metropolitan communities also depend on the health and effective management of the Basin—indeed, over 2.6 million people reside in the Basin and over three million rely on its catchments for clean drinking water.
The importance of the Basin to so many Australians is matched by the challenges associated with its management. Even at the best of times, water availability is changeable and unpredictable, which makes balancing the often competing demands on water in the system harder still. Equally, demand across the Basin in any given period is highly variable, not least because entirely dissimilar conditions may prevail in different parts of the Basin at any one time.
Working through these challenges requires coordination and cooperation between the Commonwealth, Basin states,1 local communities, and other stakeholders with varying interests in outcomes in the Basin. Achieving consensus on the management of the Basin can therefore be difficult to achieve, and at times even appear out of reach.
The challenges of managing the Basin effectively and efficiently become even more apparent in times of drought. Certainly, the current drought, which in parts of the Basin is the most severe on record, has thrown ongoing controversies about how best to manage this most important social, economic and environmental asset into sharp relief. As at the time of writing, multiple ecological systems in the Basin are under stress (both immediate and long-term), many farmers and irrigators are struggling to sustain their livestock or grow and water their crops, and communities are battling to keep businesses open and manage what are in some instances critically low municipal water supplies. Not surprisingly, in this context many of those who rely on the Murray-Darling Basin's water, and Australians more broadly, are asking whether the river system is being managed fairly and sustainably.

The purpose of the Murray-Darling Basin Plan

The Murray-Darling Basin Plan, agreed to by the Basin states and the Commonwealth and introduced in 2012, was designed as a coordinated response to the challenges of managing water use across the Basin. The Plan is not intended to drought-proof the Basin or return it to pre-development conditions. It does, however, aim to share the available water between communities, the environment, and industry, and keep water extraction to a sustainable level.
The Plan has several key components: it places limits on how much water can be extracted from water sources for consumptive use through sustainable diversion limits (SDLs) and Water Resource Plans (WRPs); sets local and state water recovery targets to bring environmental systems back to a healthier level; allocates water for environmental protection purposes; regulates trade of water across the Basin; and sets out monitoring, evaluation, and compliance activities.
The Basin Plan represents a significant public investment and a reform that has implications for a broad range of environmental, social, cultural and economic interests. As such, it is critical that the Plan is efficiently implemented, robustly monitored and underpinned by an effective compliance regime.
Yet implementation of the Plan remains a complex and challenging process, not least because of the ongoing need for cooperation between six separate governments. As with the management of the Basin generally, questions regarding the implementation of the Basin Plan have become more prominent, and in some respects more pressing, as a result of the current drought. However, the need to get the multi-jurisdictional management and execution of the Basin Plan right was not created because of a lack of rainfall, and will remain long after the drought breaks.
This is the central concern of this committee: how governments, communities and other stakeholders can work together to ensure the Basin Plan is managed and executed in a way that best secures the health and sustainability of the river system now and into the future, through rain and drought, and properly balances the social, economic and environmental demands on the Basin's water resources.
The committee recognises that there have been a significant number of previous inquiries into the Basin Plan since it was introduced in 2012. It is not this committee's intention to revisit all of the issues covered in previous reviews. Instead, the committee aims to identify ways in which to improve efficiency, transparency, consistency, collaboration, and accountability across the various roles, responsibilities, and interactions of the Commonwealth and state agencies in implementing and enforcing the Plan. In particular, the committee is interested in understanding the effects, positive or negative or otherwise, of the different approaches of the states to water management in the Basin; areas of uncertainty or potential conflict in respect of responsibilities; and any complications in respect of Basin-wide or cross-jurisdictional oversight.
The committee welcomes written submissions that address these concerns. For guidance, potential submitters are encouraged to consider the committee's terms of reference. In addition, this issues paper sets out some of the key issues relevant to the committee's terms of reference, which are summarised below.

The preparation of this issues paper

To assist the committee in the preparation of this issues paper, the committee invited submissions addressing the committee's terms of reference from parties with direct roles and responsibilities under the Basin Plan. Submissions, which have been published on the committee's website, were received from:
the Murray Darling Basin Authority (MDBA);
the Department of Agriculture;
the Commonwealth Environmental Water Holder (CEWH);
the Bureau of Meteorology; and
the New South Wales, Victorian, Queensland and South Australian governments.
A public hearing was also held in Canberra on 18 October 2019, at which the committee heard from representatives of relevant Commonwealth agencies.
Drawing upon written submissions and the evidence received at the public hearing, the issues paper considers a number of areas relevant to the management and execution of the Basin Plan, as set out below.

Summary of issues outlined in this paper

Effectiveness of SDLAM projects

SDLs represent the maximum long-term average quantities of water that can be sustainably taken from the Basin as a whole as well as from each water resource area (SDL resource unit). The Basin Plan also allows for SDLs to be adjusted up or down by a maximum of five per cent in the Southern Basin through the SDL Adjustment Mechanism (SDLAM), which is a suite of Commonwealth-funded projects. Some SDLAM projects enable water to be delivered more efficiently for the environment, meaning more water remains in the system for consumptive use, whereas others seek to improve efficiency in water use practices.
The MDBA designed an assessment framework with Basin states for SDLAM projects, and uses it to calculate new water recovery targets. However, there are concerns that there is no reliable way of knowing how much water SDLAM projects will have saved. Further, SDLAM projects are not being assessed against their intended outcomes until 2024, meaning that a significant amount of time will have passed without certainty of effectiveness. Some observers have also questioned whether SDLAM projects are a cost-effective means of water recovery relative to other approaches, including buybacks.

Developing and implementing WRPs

WRPs are being developed by Basin states to outline how they will comply with SDLs on surface and groundwater resources. WRPs will also address compliance with water trade rules, protection of environmental water, water quality and salinity objectives, Indigenous values and water uses, measuring and monitoring, arrangements for extreme weather events, and residual risks.
As discussed in chapter 2, despite an original deadline (since extended) of 30 June 2019, most WRPs remain outstanding. Each of the Basin states is following its own processes in developing WRPs and thereby meeting their respective obligations under the Basin Plan. The committee is interested in understanding these different processes, and the implications of the various approaches to the broader management and execution of the Plan.

SDL compliance

A new water accounting and compliance framework based on SDLs commenced on 1 July 2019. Once WRPs are accredited, SDL monitoring and compliance will occur via an annual register of take collated by the MDBA. Basin states' actual take is subtracted from the annual permitted take each year, and in order to remain compliant, cumulative debt must not be equal to or greater than 20 per cent of the SDL. It is unclear whether any delay in WRPs will affect SDL accountability or compliance. Up to 30 June 2028, if Basin states identify that SDLs have been exceeded by 15 per cent or more, the state must investigate the cause for the relevant SDL resource unit. However, each jurisdiction varies in its investigative arrangements and capabilities and it is unclear what states are required to do with the results of their investigations.
The first report assessing SDL compliance is due to be published in early 2021. The MDBA is required to work with Basin states to ensure potential breaches of SDLs are investigated, and appropriate action is taken if water use grows over time and does not remain within the limit.

WRP compliance

States are expected to conduct monitoring and compliance activities for their WRPs, and to take appropriate action where there is non-compliance under state law. Basin states are required to self-report annually on compliance with any ongoing obligations in their WRPs to the MDBA, and to report on the efficiency and effectiveness of WRPs every five years. The MDBA's compliance role is to monitor and enforce compliance of all regulated entities with accredited WRPs. If there is non-compliance with obligations imposed under Commonwealth law, the MDBA is responsible for taking appropriate action. The MDBA is also required to report on the efficiency and effectiveness of WRPs every five years. As WRPs differ between areas, the MDBA intends to establish an approach for monitoring and compliance on a plan-by-plan basis in consultation with each state as WRPs come into effect in each state.
The Productivity Commission's five year review found there is uncertainty around how WRPs will be implemented alongside existing state water management arrangements. It raised concerns that the ongoing reporting obligations of Basin states lack a clear focus as there is currently limited information about what Basin states need to self-report on annually to demonstrate WRP compliance. The MDBA is developing a WRP compliance framework which will include information on the annual self-reporting process, as well as guidance on its annual audit program and spot audits. However, there remains some uncertainty as to how the reporting and compliance regime will actually operate once WRPs are accredited, and the committee would welcome further evidence on these matters.

Water recovery

The Basin Plan sets out local water recovery targets for each catchment along with additional shared water recovery targets at the state and territory level. Future water recovery targets depend on reliable water accounting and data, yet concerns have been raised about the adequacy of water accounting across the Basin.
In August 2019, the government announced that it would establish an Inspector-General of Murray–Darling Basin Water Resources.2 It is intended that the Inspector-General will provide independent oversight and assessment of the performance and effectiveness of the Commonwealth, state, and territory based agencies. However, some observers have expressed concerns that there is no way to tell with sufficient confidence exactly how much water is available across the Basin at any one time due to deficiencies in water accounting systems and water tracking technology. Among other things, this could impact the ability of the Inspector-General to effectively carry out oversight and monitoring.

Environmental water

The Basin Plan aims to reset the balance between environmental and consumptive uses of Basin water resources and deliver additional water to the environment (environmental watering). Annual and long-term environmental watering priorities are established at a Basin scale by the MDBA and at a catchment and asset level by Basin states. Environmental water holdings are managed by Commonwealth and state environmental water holders, who plan, coordinate and deliver environmental water with the help of delivery partners that include local river operators and river managers, coordination committees and Traditional Owner groups.
As set out in chapter 3, some observers have raised concerns that environmental water delivery is not as precise as needed and there is a lack of transparency in how environmental outcomes are measured. Given the recent drought conditions across the Basin, and calls from some stakeholders for environmental water to be released to assist farmers, there have also been questions about the independence of environmental water holders and the protection of environmental water during drought.

Water trade

Water trading was introduced in the 1980s to enable flexibility to trade across connected systems and state borders. Around $2 billion worth of water is now traded per year through the water market. Trading has increased Australia's agricultural production, helped farmers and communities to survive severe drought, and provides a mechanism for recovering water for the environment.
A number of concerns have been raised about water trade in the Murray-Darling Basin, such as concerns regarding the availability, consistency and quality of water market information, including price data, trade-type data and tradeable water right holdings; the consistency of market rules and regulations across jurisdictions; and the impact of different market participants on the efficiency and transparency of the market.
The committee is mindful that the above matters, along with a broader range of concerns regarding the Murray-Darling Basin water market, are currently the subject of an inquiry by the Australian Competition and Consumer Commission (ACCC). While the committee does not intend to duplicate the work of the ACCC, it nonetheless welcomes evidence on these matters to the extent they are relevant to the management and execution of the Basin Plan. As such, this issues paper provides a basic overview of water trade in the basin.

Adequacy of information

There may be scope to improve the reliability, breadth, and accessibility of information regarding the volume, location, and use of water across the Basin.
While Basin states have an understanding of water at individual property levels, the information is only collated on an annual basis and it is usually retrospective. Meanwhile, the MDBA provides fortnightly information on the total amount of water in storages across the Basin.
The Bureau of Meteorology (BoM) has responsibility under the Water Act for comprehensively understanding the water resource. It has powers to request information from Basin states on a regular basis, but does not have powers to compel agencies to collect particular data or specify the level of data quality. The BoM provides a range of information about the Basin through its Water Storage app, which provides information on the overall volume of water in the Basin, its cities and systems. The BoM also provides tailored information to users on request and additional information is provided to registered users. However, there may be potential to improve public awareness and uptake of these services, along with ensuring that data is easily interpreted.
While stakeholders can access a range of information from several sources, there may nonetheless remain a need for a single source of information on the Basin to assist transparency, compliance, and monitoring efforts. The committee welcomes any evidence on the availability and accessibility of such information, and recommendations on how that availability and accessibility might be improved, if it in fact needs to be.

Compliance

The Basin States and the Commonwealth have recently made a number of commitments to improve compliance processes in relation to the Plan. These compliance reforms are set out in the Murray-Darling Basin Compliance Compact (December 2018). The Compact commits governments to priorities and implementation work plans, improving transparency and accountability, metering and measurement, protecting and managing environmental water, and finalising water resource plans.
As noted above, in August 2019, the government announced that it was creating a new position of Inspector-General of Murray-Darling Basin Water Resources, to improve transparency and accountability and build community confidence in relation to the Basin Plan. Mr Mick Keelty AO was appointed Interim Inspector-General of Murray-Darling Basin Water Resources on 1 October 2019, and it is expected that legislation to create the new position will be considered by the Parliament in 2020.
Notwithstanding the commitments to strengthen compliance processes, questions remain as to whether the above reforms will be sufficient to ensure robust compliance across the Basin. In addition to discussion regarding the adequacy of the above compliance measures, the committee welcomes submissions that address proposals for more expansive changes, including, for example, the possibility of a Basin-wide, uniform sanctions and penalties regime.
Monitoring and evaluating Basin plan implementation
It is critical that Basin Plan implementation is robustly monitored and evaluated to ensure it remains on schedule and fit for purpose. Given the public investment in the Basin Plan, and the implications it has for a broad range of environmental, social, cultural and economic interests, it is essential that stakeholders are made aware of how the Plan is being implemented and whether outcomes are being met.
The MDBA, the CEWH, the Department of Agriculture and Basin states (the parties) have various reporting and evaluation requirements related to Basin plan implementation. There have been a number of recent changes to the monitoring and evaluation processes and frameworks used across the Basin, including a revision of the Basin Plan Evaluation Framework, used to guide five-year reviews; the on-going development of a monitoring, evaluation, reporting and improvement framework, to accompany the evaluation framework; and a current review into the National Partnership Agreements (namely, the National Partnership Agreements on implementing water reform in the Murray-Darling Basin). The committee invites submissions addressing the adequacy and likely efficacy of these changes, and that suggest ways that monitoring and evaluation of the Basin Plan's implementation might be strengthened further still.

Drought, Climate Change and Water for Critical Human Needs

Farmers and communities across many locations in the Murray-Darling Basin are currently experiencing severe drought conditions which are having a range of impacts on the environment and communities.
Water allocations are reduced during times of drought. At the October 2019 Senate Estimates, Mr Phillip Glyde, the CEO of the MDBA explained:
It is important to note that all water entitlement holders are treated the same, regardless of whether the water is for farming or the environment. That means that in times of drought, reductions in allocations are the same for all water users. We know this makes it hard for entitlement holders with no allocations—it is hard to see water in the river, when their crops are suffering. The water is there because entitlement holders have carried their allocation over or stored water from previous years and have made a business decision not to access it until now. This is the water market in operation—it operates like any other free market.3
For communities that are dependent on the River Murray system to meet critical human water needs (CHWN), the Basin Plan and the Murray-Darling Basin Agreement set specific water volumes required to meet CHWN, and establish a tiered approach to water sharing. For other Basin communities (those that are not dependent on water from the River Murray System), the Basin Plan requires that Water Resource Plans (WRPs) describe how CHWN will be met (for each WRP Area) during extreme events.
Over the past decade, several studies have identified changes in the Basin’s climate, and estimated the scale of potential impacts on water availability from climate change. It is projected that climate change will have a range of implications for the Basin that will negatively impact the health of the Basin's environments, its communities and its economy. The MDBA have noted that these changes are likely to make the management of basin water resources more complex and contested.
The Water Act requires that the Basin Plan be based on the best available scientific knowledge, and that it identify risks to the availability of water resources due to the effects of climate change.
The MDBA have noted that the objective of their climate change program is to build understanding of, and capacity to analyse, climate change ahead of the major Basin Plan review in 2026.

Questions for consideration

The questions below are intended to assist submitters by highlighting some areas of interest to the committee. Submitters may wish to simply address those questions of interest to them, and disregard others. However, submitters are not required to respond to any of the questions, if they do not wish to do so, and the committee welcomes all submissions that address the committee's terms of reference.

Adequacy of information

The committee is interested in better understanding the quality of the information available to stakeholders and the public about the Basin Plan. The committee wishes to identify if and where significant information gaps exist, including where data is unreliable and where difficulties in accessing and using available data have been encountered.
The committee welcomes your response on any of the following questions:
What challenges exist in tracking and accounting for water volumes and use across the Basin? What improvements, if any, could be made to improve the scope, accuracy, and accessibility of data?
Is it feasible to introduce a central public source of information for the Murray-Darling Basin?
What additional information or data would assist stakeholders in better understanding and meeting their obligations under the Plan?
Is there sufficient transparency around Sustainable Diversion Limit Adjustment Mechanism projects and water recovery?
Are there opportunities to better coordinate and consolidate information about the Plan and its implementation? How might this be achieved?
How can accuracy, efficiency, and transparency of water trading be improved? What are the potential merits and drawbacks of introducing a single Basin-wide water trading platform and Water Register?
How useful is publicly available information in demonstrating how the Plan is being implemented and monitored, including communications that illustrate if elements of the Plan are not meeting objectives? How might this information be improved?

Complexity of current Basin Plan governance arrangements

The committee is keen to identify opportunities for improving the efficiency and transparency of current management and governance arrangements under the Plan. The committee welcomes your response on any of the following questions:
What are the benefits or limitations of the current management and governance arrangements of the Basin Plan?
Is there sufficient transparency in the management and governance arrangements of the Basin Plan, particularly in the division of roles and responsibilities between Commonwealth and Basin states and their various agencies?
Do jurisdictional differences create unnecessary complexity and inconsistency, or increase potential for compliance breaches? To the extent such complexity is unavoidable, given the history and inter-jurisdictional nature of Basin management, how can this complexity be best managed?
Should the Commonwealth have greater powers to manage the Murray-Darling Basin? What additional powers would help improve the management of the Basin? What would the practical implications of making these changes be?
What are the benefits or drawbacks of a large number of entitlement types? Is there scope to streamline entitlements used across the Basin?

Environmental watering

The committee is interested in understanding how the coordination and delivery of environmental water works on the ground, including planning processes, how data is shared, how effectively state and Commonwealth bodies collaborate on decisions that may impact environmental outcomes, and how the impacts of environmental watering are communicated with stakeholders. The committee welcomes responses on any of the following questions:
There are a number of different plans that guide the delivery of environmental water. Is there any crossover between planning (for the delivery of environmental water) that is carried out by Basin states and the MDBA? Is there opportunity for such planning processes to be streamlined and, if so, how might this occur?
A range of coordination committees meet on an ongoing a basis to plan water delivery and coordinate environmental watering events across different WRP areas and between jurisdictions. How effective are these coordination committees? What changes, if any, could improve environmental water coordination?
Are the outcomes of environmental watering communicated effectively with stakeholders and the broader community? If not, what information needs to be publicly available to improve understanding of environmental watering, and the transparency of environmental watering processes?
There have been concerns raised about the effectiveness of environmental watering including that the outcomes of watering events are not monitored and evaluated adequately, and that there is a lack of transparency in how environmental outcomes are measured. How might these processes be improved?
Is there a need for the Commonwealth Environmental Water Holder to have powers to compel information from other bodies to assist in the delivery and coordination of environmental water?

Water Resource Plans

The committee is interested in exploring the efficiency and effectiveness of current processes to develop and implement WRPs. The committee welcomes your response on any of the following questions:
Is there adequate information available for stakeholders to understand the process of developing, amending, implementing, monitoring and enforcing Water Resource Plans (WRPs)? If not, what information is required?
Is there sufficient clarity around how WRPs will be implemented alongside existing state arrangements?
What complexity is created by jurisdictional differences in developing and enforcing WRPs? How can this complexity be managed?
Is there scope to improve accountability in the delivery and enforcement of WRPs?

Compliance arrangements

The committee is interested in exploring the impact of recent changes to compliance processes through the compliance compact, and welcomes responses on any of the following questions:
What improvements, if any, could be made to facilitate robust monitoring and compliance into the future?
What have the impacts of the compliance processes set through the Compliance Compact been? Have they resulted in better compliance? Are there areas that need further development?
Do the Commonwealth and the states have adequate powers, resources, and information to monitor and enforce compliance? If not, what is missing?
Is it challenging for water entitlement holders to find information about, and understand their compliance obligations? Do entitlement holders have confidence that they know the rules so they can act in accordance with their water licenses?
What are the effects, positive or negative or otherwise, of Basin states having different compliance processes including having different penalties and sanctions for offences, or different metering equipment?
Is it feasible to develop a uniform sanctions and penalties regime? What are the benefits/challenges of having uniform sanctions and penalties across the Basin?
Do the existing licensing and regulation frameworks for water brokers provide sufficient protection for traders?

Structure of this issues paper

The structure of the issues paper is as follows:
Chapter 1: Background and context of the Plan. This chapter provides background and context to the Plan, including a brief history of management of the Basin, governance arrangements, intergovernmental arrangements, and a summary of the key components of the Plan.
Chapter 2: Consumptive water limits and water recovery. This chapter considers Sustainable Diversion Limits Adjustment Mechanism projects (SDLAM), Water Resource Plans (WRPs), the reporting and compliance framework for sustainable diversion limits (SDLs) and WRPs, water recovery targets, monitoring and evaluating water recovery, and the adequacy of currently available information on water in the Basin.
Chapter 3: Environmental water. This chapter explores the roles and responsibilities of key parties in environmental water recovery and the processes used to plan, coordinate, deliver and evaluate environmental watering, including the incorporation of Indigenous values and uses in complementary projects
Chapter 4: Water trade. This chapter provides contextual information on water trading in Australia and explains how water is traded in the Basin and the Basin Plan trading rules, including the MDBA's and the ACCC's compliance roles, and key Productivity Commission's concerns and recommendations.
Chapter 5: Compliance. This chapter considers the compliance functions of Basin states and the MDBA, including the process toward implementing compliance reforms, the potential role for a water audit, and the establishment of an Inspector-General of Murray-Darling water resources.
Chapter 6: Monitoring and evaluating Basin Plan implementation. This chapter outlines the reporting and evaluation frameworks in place to monitor the overall implementation of the Plan, including the division of reporting responsibilities between Basin states, the MDBA, the CEWH and the Department of Agriculture.
Chapter 7: Drought, climate change and water for critical human needs. This chapter examines the impact of drought and climate change on the Murray-Darling Basin, including arrangements to prioritise water for critical human needs and response to extreme events, the developments of water infrastructure and the role of research and data.


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