2.1
Management of the Murray-Darling Basin (basin) is in large measure defined by, and in many ways complicated by, Australia's federal system of government. Constitutional settings in relation to the use of water resources, and the evolution of multijurisdictional agreements and arrangements in relation to the basin over many decades, have given rise to a complex and oftentimes confusing framework for the management of the basin. This framework involves two layers of government, a reliance on Commonwealth and state legislation and policies, as well as multiple interjurisdictional agreements.
2.2
This chapter begins by providing contextual information on the division of powers relating to water between the Commonwealth and the states. The chapter outlines key concerns regarding governance arrangements that were raised during the inquiry, including concerns that current multijurisdictional arrangements are inefficient and confusing for stakeholders, and potentially undermine the accountability of governments with responsibilities under the Basin Plan. This chapter also considers support for constitutional change and concludes with the view and recommendations of the committee.
Division of powers between the Commonwealth and the states
2.3
While the Commonwealth Government has significant legislative influence over water management, it does not have power to regulate all aspects of Australia's water. This is because the Constitution of the Commonwealth of Australia does not explicitly divide powers relating to water between the states and the Commonwealth. Responsibility for water is mentioned in only two sections of the Constitution, sections 98 and 100. Section 98 allows the Federal Parliament to legislate for navigation and shipping as relevant to trade and commerce. Section 100 limits section 98 by stating that the Commonwealth should not create trade laws which abridge a states' right to access water for irrigation and conservation.
2.4
Due to this relative absence of direction, basin governments have had to rely on the High Court of Australia (High Court) to interpret the Constitution and provide guidance on legislative authority relating to water since 1901. Over time, the High Court has handed down judgments which have incrementally given greater power over water to the Commonwealth. Dr Paul Kildea and Professor George Williams suggest that this is 'an inefficient, convoluted, and expensive approach to managing Australia's most precious resource'. Additionally, they note that many aspects of this division of power have yet to be tested in court.
2.5
During the federation debates in 1890, South Australia argued that the proposed Commonwealth of Australia should be given the power to determine rights to the waters of the River Murray, but the idea was resisted by New South Wales (NSW) and Victoria.
2.6
In 2007, the then Prime Minister, Mr John Howard, sought the referral of powers from relevant states to the Commonwealth for water management in the basin, so as to enable the Commonwealth to manage the basin in the national interest. At the time, the states of NSW, South Australia and Queensland agreed to refer their legislative power to the Commonwealth. The Australian Capital Territory also agreed to cooperate fully. Agreement could not be reached, however, with Victoria.
2.7
Mr Howard subsequently announced that the Australian Parliament would legislate water reforms based on existing constitutional powers. At the time, Mr Howard stated that the arrangement was not ideal and that efficiencies associated with the previously proposed referral of powers from the states would not be gained, but that the arrangement would, at least, ensure some consistency throughout the basin.
2.8
In 2008, basin states signed the Intergovernmental Agreement on Murray‑Darling Basin Reform and passed legislation in their respective jurisdictions to provide for a limited referral of constitutional powers. The purpose of the referral was to enable the Commonwealth to amend the Water Act 2007 (Water Act) to transfer the existing powers and functions of the former Murray‑Darling Basin Commission to the new Murray-Darling Basin Authority (MDBA), which would thus establish the MDBA as the sole body responsible for the overarching management of basin water resources. The referral additionally facilitated the expansion of the role of the Australian Competition and Consumer Commission (ACCC), so that its regulatory remit extended to irrigation infrastructure operators and related bodies which fell outside the scope of Commonwealth powers, and enabled the Basin Plan to provide for critical human water needs.
2.9
In 2009, the Senate Standing Committee on Rural and Regional Affairs and Transport considered the merits of a Commonwealth takeover of the basin and recommended:
[T]hat the Commonwealth work towards a full and unconditional referral of powers relevant to the management of the Basin and, in the absence of such full referral, consider pursuing other options to provide for complete federal management.
2.10
In 2010, then Opposition Leader, Mr Tony Abbott, announced the Coalition's support for a Commonwealth takeover of the basin. Mr Abbott proposed this occur via either a referral of power from the states, or from a referendum to change the Constitution in 2013.
2.11
While the Water Act and the Basin Plan are Commonwealth legislation, they both require the cooperation of basin states. Since the Basin Plan's commencement in 2012, aspects of its implementation have been fraught with disagreement, and some states have threatened to withdraw from the agreement. As canvassed by Commissioner Bret Walker SC during South Australia's Murray‑Darling Basin Royal Commission, while any 'withdrawal' from the Basin Plan by a state has no legal effect, practical delivery of the Basin Plan is almost entirely dependent on the states. Should a basin state decide to revoke its referral of any legislative power to the Commonwealth that underpins the Water Act and the Basin Plan, it would be 'a complex constitutional question as to whether all of the Water Act or Basin Plan would continue in force'.
The impact of current arrangements on clarity and accountability
2.12
Several participants of this inquiry argued that multijurisdictional management of the Basin Plan is inhibiting transparency and accountability of basin governments and creating unnecessary and burdensome bureaucracy for stakeholders. For example, Mr Lachlan Marshall, Chair, Speak Up Campaign, advised that, given the number of parties involved, it can be difficult to identify who is responsible for particular aspects of basin management:
I think that part of the reason we are in the mess that we're in today is that there are so many fingers in the pie. I could not count the number of acronyms and positions and people with titles and whatnot that are swarming around with business cards and things. If you asked me who to ring about something, I'd probably tell you the wrong person. It's too top‑heavy—the whole thing is incredibly top-heavy.
2.13
This view was echoed by Ms Sophie Baldwin, Representative, Southern Connected Basin Communities:
It's a complicated system…We don't know who runs this or who runs that. If we've got a problem we have to go through 27 organisations to get an answer or they don't give an answer. They say, 'That's state,' or 'No, that's federal'.
2.14
The NSW Aboriginal Land Council (NSWALC) similarly advised that it is difficult to navigate the maze of institutional arrangements that applied in relation to the management of the basin:
[T]he Murray-Darling Basin is a complex authority of water. So many people are involved in it…it's hard to put all those pieces [together] to see how it all works and how we can get our voice heard through that process.
2.15
The Mayor of Griffith City Council, Councillor John Dal Broi, explained that there are four agencies responsible for implementing the regulatory framework in NSW alone.
2.16
Mr Geoffrey Kendell, Chair, Central Murray Environmental Floodplains Group, Southern Connected Basin Communities, listed some of the organisations involved and pleaded for simplification:
The whole lot of us asked the question, 'Who actually owns the water and who makes the changes?' I've listed some here that come to mind straightaway. We've got the Department of Agriculture, Water and the Environment, the MDBA, the CEWH, BOC, DELWP, NCCMA, Parks Victoria, VEWH, GMW, NSW DPI, NSW DPI Water, the South Australian government, SA Water, the Victorian government, the Queensland government, MINCO, the federal minister for water, the water ministers for Victoria, South Australia, New South Wales and Queensland—and we just go on. We're just duck shuffled around all over the place…
2.17
Likewise, the Executive Director of the Ricegrowers' Association of Australia (RGA), Mr Graeme Kruger, argued that the division of a single river system between multiple governments is causing frustration for stakeholders.
2.18
Mr Kendell argued that the volume of interest the committee had received was indicative of the magnitude of the issue:
[B]ecause all these people are here putting their information forward, there's a problem. If there wasn't a problem you wouldn't have us here, and you wouldn't be sitting out there trying to rectify the problem we've got. Because there are so many of us putting forward submissions to you guys, you understand now where we are and you can see those lists [of agencies] we've got to deal with...
2.19
The Gwydir Valley Irrigators Association suggested that current arrangements have led to a duplication of roles, and argued that 'clarity about roles and responsibilities and who to turn to when there is an issue is needed'. Likewise, Cotton Australia contended there is overlap in responsibilities and 'it is not adequately clear enough who is responsible for what'.
2.20
The complex governance arrangements have likely contributed to public confusion. For example, in December 2019, approximately 1000 protestors from northern and southern basin communities reliant on irrigation conducted a 'Can the Plan' demonstration at Parliament House in Canberra. Conversations between the protestors and the then Federal Minister for Water determined that frustrations were caused by the Murray-Darling Agreement rather than the Basin Plan.
2.21
Then Interim Inspector-General of Murray-Darling Basin Water Resources,
Mr Mick Keelty AO, noted that protestors 'should have been demonstrating in Macquarie Street in Sydney…it's the operationalisation of the Agreement that's the issue'.
2.22
A lack of clarity in relation to the division of responsibilities between jurisdictions can cause additional issues. For example, the committee heard that ambiguity can confuse agency accountability:
One limitation of the current governance arrangements is the tendency to 'pass the baton' when it comes to responsibility for decision-making. Whilst often the passing of responsibility is in accordance with their areas of responsibility, it makes it difficult for stakeholders to raise concerns and seek answers. This is particularly the case when often matters fall across the responsibility of a number of agencies. We have experienced actions undertaken pre-emptively based on one agencies' perception or assumption of what another agency may determine.
2.23
Slattery & Johnson, a research and policy consultancy, specialises in providing advice to communities adversely affected by water reforms, particularly, how to participate more effectively within the governance arrangements. Director, Ms Maryanne Slattery, raised similar concerns with the committee:
In terms of crossing borders, I think it's definitely a challenge, particularly in terms of accountability. You've got so many players and so many levels that no one jurisdiction or one agency, typically, can be held accountable. It's challenging enough trying to deal with multiple agencies at the Commonwealth level…Each agency points the finger at another and deflects the question to another agency, and when you add jurisdictions into that as well it compounds the problem. There's definitely a real issue in the Murray-Darling Basin Plan space, in terms of holding one agency to account.
2.24
Mr Bill Johnson, also a Director of Slattery & Johnson, elaborated:
People often find that [where] there's a matter that crosses the border and, particularly if it's a difficult matter, the bureaucracies and agencies, if they can, will refer it to the other jurisdiction. People find it very frustrating, and we find that happens a lot.
2.25
In a similar vein, the Victorian Farmers Federation argued the introduction of the Water Act created additional bureaucracy and confusion:
[A]ccountabilities have been duplicated and confused…clear functional responsibilities have been replaced by bureaucratic coordination…all too often the Commonwealth blames the states or the states blame the Commonwealth for issues that remain unresolved.
2.26
According to the National Irrigators' Council, persistent disagreement between governments prevents effective and efficient cooperation: 'the need to get common ground from all participants often leads to either something vague or, for something controversial, to a dead stop'.
2.27
Mr Alan Mathers, Chair, Murray Regional Strategy Group, contended that the governance framework is overly complex and should be simplified:
It's a Pandora's box. That's why I would argue the system really is broken; it is overly complex. I don't believe there is an individual who completely understands all the dimensions, all the different organisations and all the different bureaucracies that exist. The whole thing needs simplification…Let's forget about federalising it for a moment; let's just say it was a private corporation—and I've sat on dairy boards and we've merged co-ops and done all that stuff. If it was a private business, would you run it like this? The answer is no. It's a no-brainer; you would not run it like this.
2.28
Likewise, Mr Kendell was supportive of simplifying the current governance arrangements:
[C]an we please just have one organisation we can go to that is responsible for water? When I say responsible for water: responsible for the management and the running of water…Can we have an open and transparent organisation?
2.29
However, the committee heard concerns that introducing further reforms could cause additional destabilisation at a time when communities need certainty and stability.
2.30
The magnitude and complexity of basin governance can be seen in the Table 2.1 below, which lists just some of the agencies, legislation, and agreements involved.
Table 2.1: Key legislation, agreements, and agencies
|
|
|
|
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Commonwealth
|
Water Act
Basin Plan
Water Regulations 2008
Water Market Rules 2009
Water Charge Rules 2010
|
Department of Agriculture, Water and the Environment
Commonwealth Environmental Water Holder
Murray-Darling Basin Authority
Bureau of Meteorology
Commonwealth Scientific and Industrial Research Organisation
Geoscience Australia
Australian Competition and Consumer Commission
Productivity Commission
Inspector-General of Water Compliance
|
|
NSW
|
Water Management Act 2000
Water NSW Act 2014
Water Supply (Critical Needs) Act 2019
Water Management (General) Regulation 2018
Access Licence Dealings Principles Order 2004
|
Department of Planning, Industry and the Environment
Natural Resources Access Regulator
WaterNSW
|
|
Victoria
|
Water Act 1989
Water Industry Act 1994
Murray-Darling Basin Act 1993
Water (Commonwealth Powers) Act 2008
Groundwater (Border Agreement) Act 1985
State Owned Enterprises Act 1992
Catchment and Land Protection Act 1994
Conservation, Forests and Lands Act 1987
|
Department of Environment, Land, Water and Planning
Catchment Management Authorities
Victorian Environmental Water Holder
Environment Protection Authority
Water corporations
|
|
Queensland
|
Water Act 2000
Government Owned Corporations Act 1993
Environmental Protection Act 1994
Water Regulation 2016
|
Department of Natural Resources, Mines and Energy
Department of Regional Development, Manufacturing and Water
Sunwater
|
|
South Australia
|
Landscape South Australia Act 2019
Natural Resources Management Act 2004
|
Department for Environment and Water
SA Water
|
|
ACT
|
Water Resources Act 2007
Water Resources Regulations 2007
|
Environment and Planning Directorate
|
|
Multijurisdictional
|
National Water Initiative
Murray-Darling Basin Plan 2012
Murray-Darling Agreement 2008
Intergovernmental Agreement on Implementing Water Reform in the MDB 2013
|
Border Rivers Commission
|
2.31
The NSW Irrigators' Council told the committee that the office of the Inspector‑
General is intending to create a map of current legislation and regulation for water management, as well as areas of responsibility.
Communities feel over-consulted, under-heard, and disappointed with government responses
2.32
Stakeholder fatigue with water reforms and reviews was evident throughout the inquiry. Several contributors suggested government consultation is either absent or inadequate, or that advice provided through consultation processes is not appropriately acted upon.
2.33
The evidence from Mr Robert Massina, President, RGA, captured the views of many inquiry participants:
[P]oliticising water discussion on a state basis has created ongoing fatigue across our basin. Organisations like the RGA have been subject to endless Basin Plan inquiries, reviews and government consultation processes and have written tens of submissions and attended hundreds of meetings. However, we feel that the feedback often falls on deaf ears. Governments are very slow to move on the findings and recommendations of these reports, even when supported by the vast majority of interest groups.
2.34
Mr Geoff Moar, Chair, Murray Regional Strategy Group, expressed frustration that many stakeholders invested considerable resources into consultation processes which did not produce tangible or desired outcomes. Mr Moar argued this has caused many to doubt the ability of governments to drive improvement.
2.35
The NSW Irrigators' Council argued that governments should place greater emphasis on addressing the findings of reviews:
[T]here have been numerous reviews and inquiries into the management of the Murray-Darling which have produced a breadth of information contained in detailed reports. Of the (at least) 45 inquiries which have been conducted since implementation of the Basin Plan commenced just seven years ago, the greatest problem is not that information is unavailable, but that the information, findings and subsequent recommendations are not appropriately acted upon. Often government responses to these reviews – such as the Productivity Commission – are seen as inadequate and not going far enough to address the issues and recommendations.
2.36
Several stakeholders were frustrated that the recommendations of the Productivity Commission's 2018 five-year review had not been fully implemented. The National Farmers' Federation (NFF) argued that reviews are meaningless if basin governments do not act on the recommendations in a timely manner:
[T]here is little point of a five-yearly review if it takes more than two years to commence implementation, by which time [the recommendations] would be relatively obsolete. We need to see real progress on implementation agreed at Minco [the Murray–Darling Basin Ministerial Council].
2.37
The NFF, like several other inquiry participants, argued that the Productivity Commission recommendations provide the best practical path forward and should be implemented in their entirety.
2.38
While Cotton Australia acknowledged that the number of inquiries reflects the level of distress in the community regarding water management, it cautioned that more inquiries risk further aggravating communities and offering false hope.
2.39
Mr Chris Stillard from NSW Farmers suggested greater connection between government agencies and communities may help to rebuild trust:
Personally, I think it'd be great for the MDBA to be actually situated closer to impact areas so they can explain these things, not sit in Canberra in a bubble…The MDBA is a very big representational area, and they need to get out more and talk to the people.
2.40
The MDBA currently has regional offices in Adelaide, Albury–Wodonga, Canberra, Goondiwindi, Griffith, Mildura, Murray Bridge, and Toowoomba.
Class action in the NSW Supreme Court
2.41
During its inquiry, the committee heard that it can be difficult for litigants to determine which government agencies are responsible when bringing court proceedings and which court is appropriate for particular cases to be heard in.
2.42
For example, in 2019, a group of Murray River irrigators, the Southern Riverina Irrigators Council, lodged a class action against the MDBA in the Supreme Court of NSW claiming they would have received greater water allocations if not for the MDBA's negligent operation of the basin during the 2017 to 2019 water years. The group claimed that the MDBA was:
…reckless and grossly negligent in draining water from the Menindee Lakes in 2016 and discharging water from the basin knowing there would be little or none left for the southern irrigators'.
2.43
Of interest to this committee is the difficulty faced by the irrigators when seeking to determine which agencies the class action should be directed to and whether the MDBA and the Commonwealth were open to litigation. Mr Chris Brooks, the Chair of Southern Riverina Irrigators, told the committee of his organisation's difficulties in finding which entity was responsible for negative impacts in that region:
It was a complex process of working out which body was making the call to flood the Barmah forest or to drain the Menindee Lakes. It was then a process of working out the jurisdiction in which this argument was to be had, and a lot of the work that was then done prior to making the claim was: could we and was it possible to sue the Murray-Darling Basin Authority? That has been the one argument that has been resolved only recently… The defence they filed was that they weren't subject to civil litigation, and the judge hearing the case ruled that they can be sued and they will pay damages if found guilty of gross negligence of the management of water.
2.44
Mr Brooks further informed the committee there was also some difficulty in determining which court the case should be heard in:
I know it was a contentious issue that they debated for some time. I can't, for the life of me, recall exactly why it was in the Supreme Court, but they were comfortable that was the jurisdiction that would suit this argument. I know there have been arguments put up by some of the states. Your state [South Australia] in particular was not wanting to comply with subpoenas because it didn't think that jurisdiction applied, but the judge also ruled that it did apply…I know there were issues with regard to the discovery process of putting this jigsaw together, which was absolutely difficult, to say the least. There has been a lot of resistance by a lot of authorities in different states for different reasons, claiming confidentiality and those types of things that they were arguing in their defence of not wanting to give up the information that we require to justify our claim.
Calls for a national integrity commission and a Commonwealth royal commission
2.45
Some inquiry contributors raised concerns regarding allegations of corruption in basin management and called for the establishment of a national integrity commission as a way to strengthen accountability of governments.
2.46
For example, the Dubbo Environment Group was troubled by the findings of the South Australian Royal Commission, which pointed to what it considered bias towards social and economic outcomes over environmental priorities. The Dubbo Environment Group raised concerns that some of these alleged practices have still not been investigated.
2.47
Ms Melissa Gray, Member, Lifeblood Alliance, highlighted that bias had already been identified by some state integrity commissions:
It's…incredibly critical. We had ICAC look at water management in NSW. While they didn't actually find corruption—they didn't come up with that—they reported a strong bias towards the irrigation industry and a cultural bias.
2.48
Ms Juliet Le Feuvre, Member, Lifeblood Alliance, suggested that the accountability of governments would be strengthened by the introduction of a national integrity commission:
[W]e would like to see the establishment of a national integrity commission to investigate the many and repeated allegations of corruption, undue influence and rorts in Basin Plan implementation. A national integrity commission with powers to compel witnesses would be the appropriate body to investigate the allegations and hold the government, political parties and vested interests to account.
2.49
Dr Anne Jensen, argued that a national integrity commission would assist to rebuild trust in the Basin Plan:
[T]he reality is that we need a strong ICAC that can hold people to account and compel witnesses to restore trust back in the Murray-Darling Basin Plan. There's a significant lack of trust in the Basin Plan by people from all walks of life. Without something strong to hold our politicians to account, I have little faith that there's ever going to be trust in the Basin Plan or our government.
2.50
Additionally, some inquiry participants argued there is a need for a Commonwealth-level royal commission. NSW Farmers told the committee that a royal commission could investigate 'flawed policy and operations…federal water authorities and associated state government activities' and impacts on communities, industry, and the environment. Southern Riverina Irrigators argued that a royal commission is warranted because despite 43 previous inquiries, the Basin Plan is failing to achieve its objectives. While the Dubbo Environment Group argued that a royal commission would help to restore trust in the basin.
Constitution Alteration (Water Resources) 2019
2.51
In addition to its main work inquiring into the multijurisdictional management and execution of the Basin Plan, the committee has been examining a private member's bill—the Constitution Alteration (Water Resources) 2019—which was introduced into the Parliament on 4 July 2019 by Senator Patrick (also Deputy Chair of this committee).
2.52
The bill would put the following question to the Australian people via a referendum process: Whether the Constitution should be amended to give the Australian Parliament the power to make laws in relation to the use and management of water resources that extend beyond the limits of a state.
2.53
The purpose of this referendum is to alter the Constitution to:
[P]ut beyond doubt the power of the Commonwealth to legislate to manage the Murray-Darling Basin river system and the Great Artesian Basin without any reliance on the referral of power from state parliaments, and if necessary override state water management legislation.
2.54
If successful, the bill would provide the Australian Parliament with the power to create a nationally consistent regulatory framework for the use and management of particular water resources. The bill also seeks to ensure that any law of the Commonwealth relating to water resources must not have an overall detrimental effect on the environment.
2.55
In his second reading speech, Senator Patrick argued that this change is necessary because, despite the Water Act and the implementation of the Basin Plan, there are still different water rules in each state, different compliance measures, different governments distributing money for different elements of the Basin Plan, different accountability measures, and 'general opaqueness in the execution and oversight of the Basin Plan caused by its multijurisdictional nature'.
2.56
Senator Patrick contended that because the Murray-Darling river system is a vital resource, it should have a fully national framework that operates in the national interest. Senator Patrick argued that under the current arrangements, it is very difficult to secure agreement between the Commonwealth, state and territory governments 'as parochial interests typically trump the national interest'. Any proposed reform to basin-wide water management, Senator Patrick argued, can effectively be vetoed by states and there are state water ministers who threaten to pull out of the Basin Plan every time a change is proposed.
2.57
While not necessarily speaking in support of the bill or the idea of constitutional change, a number of witnesses emphasised the importance of centralising power, although some expressed scepticism about the achievability of this.
2.58
At the committee's public hearing in November 2020, Mr Bret Walker SC, Commissioner of the Murray-Darling Basin Royal Commission, argued that the intent of the Water Act will fail to be realised without centralised control over the economic, social, and environmental aspects:
I refer to the lack of Commonwealth power comprehensively to manage economic, social, environmental and global treaty obligation aspects of the plan. That can't be overcome without comprehensive referrals of power from the states in question. As I'm sure all the senators appreciate, that has not yet occurred. Whether it will occur is something about which I am both pessimistic and sceptical, I'm afraid to say. It means that we are left relying upon the external affairs power, which perhaps has the perverse effect that it is very largely environmental and global obligations under treaties that govern the nature of Commonwealth power, and that might be regarded as perhaps a less than complete suite of discretions for the Commonwealth parliament to exercise, which is a great pity…My view is that the inability to have an appropriately centralised control of economic, social and environmental aspects means that we are doomed to have the Water Act fail to realise its extremely excellent objectives.
2.59
Mr Walker observed that the structural problems underlying the Basin Plan are unable to be addressed by one parliament and that referrals of power from states are required though unlikely to occur:
The abiding impression I have after nearly two years since the delivery of our report is that all of the structural features, some of which are defects in the Basin Plan and the overall management of the Murray-Darling Basin, remain in place without any improvement. Largely they are historical, deeply rooted and not able to be fixed by any one parliament.
2.60
Mr Richard Beasley SC, who acted as counsel assisting the Murray Darling Basin Royal Commission, supported the referral of powers from states in order to facilitate a national approach to managing the basin:
I've also come to the same view about the Commonwealth being provided or referred powers to take control of the rivers and watercourses of the basin authority. In the last year that he was Prime Minister, Mr Howard gave an excellent speech setting out his plans for a Basin Plan. He said it would all depend on a referral of power from the states to the Commonwealth. Unfortunately, Victoria said no. But Mr Howard was right. This can't be managed unless it's managed by the Commonwealth. The states have too many looking after their own interests, understandably, in some ways. This needs a national approach, a Commonwealth approach.
2.61
Mr Walker's preferred method of managing the basin was that of effective cooperative federalism; however, he acknowledged that there may be merit in expanding Commonwealth power as a way to galvanise action by states:
I want to make it clear that my enthusiasm is for what I might call efficient and open government of the basin, which is so important for now and the future. I do not see any obvious superiority of Commonwealth administration over state administration. That's a general proposition as well as one true of the Murray-Darling. However, I do see an advantage for the Commonwealth having a power that, in the last resort, can be wielded in excise, as Mr Beasley was pointing out, what might be called an interjurisdictional jealousy upstream and downstream that we presently [inaudible]. Let me make it clear: I think cooperative federalism is the key rather than Commonwealth dictatorship. But the threat of Commonwealth dictatorship has in so many areas of Commonwealth legislative power, given section 109 of the Constitution, can work a great and galvanising effect on the true cooperation between states.
2.62
Dr Emma Carmody, Special Counsel, Environmental Defenders Office, also supported this concept:
[A] transboundary system ought to be managed by a single legal instrument…cooperative federalism is an appropriate mechanism to attempt to deliver underneath that overarching instrument.
2.63
Other inquiry participants, while not specifically speaking in support of the bill or calling for a referendum, suggested that constitutional arrangements in relation to water management reflected historical circumstance, rather than any particular ongoing logic. Border Rivers Food and Fibre argued that standard state water legislation and arrangements should have been set up from the beginning. Similarly, Cotton Australia submitted:
[I]f we were back in the later 1890's drafting the Constitution for the new country of Australia, it may have been better to have greater water management powers in the hands of the Commonwealth.
2.64
These views align with the view put forward previously by constitutional experts suggesting the status quo does not reflect or properly meet the needs of the modern era. For example, in their 2010 academic paper on the issue, Dr Paul Kildea and Professor George Williams pointed out that Australia's constitutional arrangements for water were drafted for a completely different era; technological, environmental, and other advancements have since significantly changed the policy landscape.
Opposition to constitutional changes
2.65
Several opponents to constitutional change argued there is a practical need to keep current arrangements, as they allow each state to meet unique local needs. For example, the Queensland Government submitted that hydrogeological differences between the southern and northern basin translate into the need to vary approaches. Consequently, it argued a 'one-size-fits-all' approach would be overly prescriptive and inconsistent with good natural resource management.
2.66
Likewise, Cotton Australia argued there are good reasons why the water management frameworks of each state and territory are different. That is, they have developed over time to reflect diverse and varying hydrological, geographical, social, economic and agricultural conditions.
2.67
The National Irrigators' Council did not support transfer of more water management functions to the Commonwealth for similar reasons:
It is not a position based on thinking that the current arrangements particularly suit irrigators or that they are easy to navigate; it is really about the fact that there are such substantial differences between states in allocation types and river management with expertise (theoretically) and on the ground knowledge in the state administrations.
2.68
The NSW Irrigators' Council argued that the complexity of water management in the basin reflected the complexity of the system itself. The NSW Irrigators' Council argued that to some extent:
[C]omplexity is necessary for managing a shared resource in a multijurisdictional/transboundary system, within a federated and democratic government structure, across a vast array of water users. Many of the areas which are 'complex' could also be viewed as necessary, to allow for uniqueness in water management contexts (geographic, hydrological, and social), due and consultative processes, adaptive management, and flexibility.
2.69
The NSW Irrigators' Council also acknowledged that while 'working through the tiers of government can be agonising and time consuming', the 'current separation of power between the Commonwealth and states creates a system of checks and balances'.
2.70
Some stakeholders were concerned about the practicalities and unintended consequences of constitutional reform. For example, the National Irrigators' Council argued that states would still continue to have responsibility for land (catchment) management even were powers for water transferred to the Commonwealth. The Chief Executive Officer (CEO), Mr Steve Whan, argued that transferring powers would thus create even greater confusion:
[I]t's important to remember that wherever you put the responsibility there's going to be a boundary and there are going to be important things which states keep. Land management is vital to the health of the rivers as well, so if the states retain that then you've still got a boundary there, which is going to mean that there's still going to be confusion in some elements. Approval of access and those sorts of things are all still state based. So I think it's probably a bit of wishful thinking—apologies for want of a better word—to think that you could make it as clean. There are going to be a whole lot of different crossovers which are necessary. You're always going to need to try and get, as best you can, agreement between the states or, at least, cooperation in making things happen. NIC doesn't support handing over powers for water to the Commonwealth, essentially for those practical reasons.
2.71
The Chairman of the National Irrigators Council, Mr Morton, echoed this concern, asking 'where do you stop and where do you start? Water is part of the landscape, and if you refer just one bit then how do you deal with those other bits?'
2.72
Border Rivers Food and Fibre supported the idea of simplification but concluded that standardisation of water arrangements would be impractical:
Efforts to standardise water arrangements would require a total re-writing of every state's legislation and administration arrangements. In a perfect world, this would have been done from the start, but in the real world it is politically impossible….In the Border Rivers we deal with two states who have distinctly different legislation and resulting planning and administration processes. We have worked with both states to try and standardise many rules and regulations to make life simpler and easier for our members and our communities and improvements have been made, but only around the fringes. If the proposal on the table was to do away with state governments altogether, we would probably be in favour, but the reality is, these differences will remain, and water arrangements will also be different for good reasons.
2.73
Other submitters also noted the practical and political impediments to the constitutional change proposed in the bill, including the not inconsiderable barriers to achieving a successful referendum. Mr Benjamin Cronshaw, a private individual, pointed to the need for broad-based, bipartisan support in achieving constitutional change, and noted:
The details of any new Commonwealth water management plans would need to be agreeable to most states and stakeholders involved. Any group who does not have confidence in the new plan (whether urban residents, agriculturalists or environmentalists) could vigorously campaign against the referendum proposal.
2.74
Others argued that significant achievements have been achieved under the existing framework. The Queensland Government submitted that re‑prosecuting the Basin Plan before it has been fully implemented would be premature and potentially undermine the significant investment that basin governments have made to date.
2.75
Cotton Australia argued that it is important to recognise how much has been achieved through the Basin Plan, how quickly it has been achieved, and that the Basin Plan was preceded by at least 15 years of intensive water reform. Cotton Australia argued that now is the time to be patient and focus on easing the burden on communities while giving the environment time to benefit from reforms.
2.76
The NSW Irrigators' Council argued the reform would destabilise already fatigued communities:
The changes proposed [by the bill]…would be monumental and would fundamentally alter the regulatory environment for water management… Operating a farm business when water policy is in such a state of flux makes forward-planning difficult and undermines the confidence of financial institutions. The reform fatigue facing water users and their communities is extensive…it is far from the right time to be making such monumental changes to the policy environment.
2.77
Some participants argued that even were centralisation achieved it would not necessarily overcome present problems or achieve better outcomes:
[T]ransferring additional power for shared water resources to the Commonwealth would not remove parochialism or political point scoring from water management and might in fact create greater challenges by removing some of the need to reach agreement across all basin governments on critical issues.
2.78
Similarly, Mrs Louise Burge from the Murray Regional Strategy Group, argued that 'if we simply concentrate power, we are just replicating the political mess that has driven this in the first place.
2.79
The Queensland Government contended that the Basin Plan 'strikes the right balance between federal coordination and oversight and state responsibility for implementation', and that there is no evidence that expanding Commonwealth powers would contribute to better social, economic or environmental water management outcomes.
2.80
The Queensland Government maintained that states already have existing capacity and powers to manage the basin according to nationally agreed principles:
[E]xisting frameworks are appropriate and sufficient. Basin states and territory governments have a demonstrated capacity to effectively manage cross-border water resources of the Murray-Darling Basin and Great Artesian Basin using existing powers and in line with nationally agreed National Water Initiative principles and legislation.
2.81
Likewise, the Victorian Government was opposed to constitutional changes, starting again, or renegotiating water recovery targets. The Victorian Government insisted that Victoria has a strong regulatory framework, understanding of water availability and climate dependence, and water efficiency and infrastructure, as well as transparent institutions and a robust water entitlement framework.
2.82
The NSW Irrigators' Council expressed the view that changing the Constitution may add complexity and produce perverse outcomes such as precluding states from tailoring management of water resources where needed. Mr Philip Endley, CEO, Murray Irrigation Ltd, raised similar concerns regarding unintended consequences and noted that, 'I suspect it would a good thing, but it's all in the detail of how that really works'.
2.83
The CEO of the MDBA, Mr Phillip Glyde, pointed out that only the states have the resources required to deliver the Basin Plan on the ground:
[T]here's a huge amount of complexity below the level of the Basin Plan…In order to understand that complexity and, more importantly, to administer that complexity on the ground to entitlement holders, you would need the sorts of resources that the states bring to bear, which are vastly greater than what the Commonwealth has.
2.84
In discussing with the committee whether there is a need to simplify current arrangements, Mr Malcolm Thompson, Deputy Secretary, Department of Agriculture, argued that while there are multiple agencies and steps involved, this complexity is necessary to reflect local requirements:
[Y]es, there are multiple steps there—but you could also flip the argument and say it's actually the right number of steps that's required to get us a more enduring set of water resource sharing arrangements.
2.85
Some participants questioned the ability of the Commonwealth to effectively carry out an expanded role. For example, Mrs Jan Beer argued that the Commonwealth should not be given greater powers as it 'has done more than enough damage'. Border Rivers Food & Fibre was also sceptical of the Commonwealth's ability to achieve better outcomes:
[I]t is naïve to think that the Commonwealth needs additional powers. They are not doing a good job with their current powers to require them having more. What this proposal implies is that the Commonwealth would over-ride state interests to get 'better outcomes'. This would mean that one government would have unfettered power to change rules, transfer water and therefore prosperity from one region to another. There is insufficient confidence in the Federal Government to manage the total water resource and would not be supported by our communities.
Alternative proposals for reform
2.86
Some inquiry participants argued that efforts should focus on improving interjurisdictional cooperation and existing mechanisms. For example,
Dr Colin Maxwell Finlayson argued that there should be greater recognition of the basin being a single connected system:
It is a connected basin. The way we operate is we have, to a large extent, disconnected systems operating within it. They are at multiple scales. Between the states is one. Between states and federal would be another one. But even within the states, within the different districts or different reaches of the rivers...I think we need to recognise the first part of that is to get wider recognition and understanding of what a connected system is and why we need to find better cooperative or working together mechanisms. I don't think we have to change the structures; we've got to change the way we work…How we work together I think is one of the biggest issues we have. We're competitive on the whole…I'd recommend that we should be working in a more cooperative model…
2.87
Several contributors to the inquiry argued that the operation of the Murray‑Darling Basin Ministerial Council (MINCO) could be improved. For example, Mrs Shelley Scoullar, Administration Officer, Speak Up Campaign, was concerned that the competitive nature of the council is failing to manage the basin holistically:
I think the reason we can't get any change through MINCO is that the states are so competitive against each other and everyone wants to be the winner and come out looking like a hero for their state when they go to MINCO. We're not looking at it as at a national level, but I don't think that having just the federal level looking after water is going to work either…
2.88
Mrs Louise Burge, Committee Member, Murray Regional Strategy Group, argued that the issue with MINCO was that 'any one person can block really sensible decisions'.
2.89
Indeed, the Commissioner of Productivity Commission, Dr Jane Doolan, told the committee that a key finding and recommendation of the five-year review was for MINCO to take 'accountability for the implementation of the Basin Plan'. Even the MDBA submission recognised that 'critical decisions for Basin Plan implementation require commitment and collaboration in challenging interjurisdictional forums'.
2.90
The MDBA acknowledged that Basin Plan governance is complex, but argued the current arrangements are necessary for effective management. That said, the MDBA agreed arrangements require streamlining and better coordination to improve efficiency and transparency. The MDBA noted the Claydon Review provides a pathway to improvement and advised it was exploring options to implement recommendations 'that optimise the likelihood of water reform outcomes being more effectively and efficiently achieved'.
2.91
Similarly, the Queensland Government argued reform of governance arrangements should be guided by the recommendations of the Productivity Commission and the Claydon Review.
Committee view and recommendations
2.92
The committee received a large body of evidence suggesting that the multijurisdictional aspect of the management and execution of the Basin Plan, and the management of the basin generally, can create complexity, and at times, great frustration for stakeholders and interest groups seeking to navigate multiple bureaucracies operating at different levels of government.
2.93
The committee is strongly of the view that notwithstanding this complexity, the Murray-Darling Basin Plan is the only viable model within which to continue to work to improve the river system and the communities that depend upon it. This view was shared by many, though not all, who gave evidence to the inquiry.
2.94
Evidence was provided by a diverse range of stakeholders throughout the basin, often with very different interests in the Basin Plan and competing views on how water should best be managed and to what purpose. Concerns were variously expressed by local community groups and local government representatives; irrigators, farmers and their various industry and representative bodies; environmentalists and conservation groups; Indigenous representatives; and academics and other subject-matter experts. These are not simply the concerns of a narrow collection of interest groups or a single industry dissatisfied with Basin Plan settings. The committee understands these concerns, which are particularly acute at times of low inflows into the system, but also acknowledges that solutions must be found cooperatively within the existing and evolving Murray-Darling Basin Plan.
2.95
The committee heard from various inquiry participants that it can be difficult to understand who is responsible for different aspects of the basin plan and basin management, and many witnesses appealed for a single organisation responsible for water, accessible by all stakeholders. The committee understands these frustrations. At the same time, the committee recognises the management and execution of the Basin Plan will, by necessity, remain a multijurisdictional and multiagency endeavour, and a significant division of responsibilities in regard to the Basin Plan is unavoidable. In part, this is because historical circumstance and constitutional settings mean the effective management of the Murray-Darling Basin must be a multijurisdictional project. However, the committee also recognises that the multijurisdictional aspect of the Basin Plan provides certain advantages, not least that a division of responsibilities (as currently divided or otherwise) provides for a balance between the need for coordinated action and the need to reflect and meet local requirements in different parts of the basin that are as varied and diverse as the basin itself. The committee also notes that, for all the very valid frustrations expressed during this inquiry, significant and hard fought gains have been made in delivering the Basin Plan to date, and it should be acknowledged that this has occurred in a multijurisdictional setting.
2.96
Moreover, the committee chooses not to make any recommendations requiring major institutional reforms—such as a consolidation or centralisation of responsibilities—at this point in the Basin Plan, particularly in light of evidence underlining the need for certainty and stability in communities after years of major reforms. Potential new reforms would no doubt also require further review and extensive consultation, and the committee is particularly mindful that multiple inquiry participants very clearly expressed their fatigue and in some cases scepticism regarding the frequency of government reviews and the attendant consultation processes in relation to the Basin Plan. This report does not seek to rewrite various constitutional responsibilities or the Murray-Darling Basin Plan.
2.97
There are, nonetheless, gains that could be pursued both through efforts to streamline the division of responsibilities where duplication or inefficiencies might exist, and better communicate that division of responsibilities to stakeholders and the general public.
2.98
Given the abovementioned concerns about the complexity and potential inefficiencies of the multijurisdictional management and execution of the Basin Plan are well-known, the committee considers it is now a matter for the Commonwealth and basin states to undertake to identify and address points of uncertainty or duplication of responsibilities in their various policy, regulatory, legislative and institutional structures. The Commonwealth and basin states should also work together to provide stakeholders with a centrally located, clearly set-out, and collectively-owned map of responsibilities in relation to the Basin Plan and basin management generally. The committee considers these actions could be pursued now through the Murray-Darling Basin Ministerial Council.
2.99
The committee recommends that the Commonwealth and basin states clarify how existing state water sharing plans and operations interact with the Water Resource Plans and related processes that have been introduced by the Basin Plan.
2.100
The committee recommends that the Commonwealth and basin states, through the Murray-Darling Basin Ministerial Council, create, maintain and make easily accessible a detailed, comprehensive, clearly set-out and collectively-owned roadmap of the Murray-Darling basin's governance framework which clarifies decision-making and accountability between levels of governments and agencies for each aspect of the Murray-Darling Basin Plan.
2.101
Several stakeholders were frustrated that the recommendations of the Productivity Commission's 2018 five-year review have still not been fully implemented. The NSW Irrigators' Council submission outlined exactly which of the Productivity Commission's recommendations that it considers have not been adequately finalised or the status of which has not been effectively communicated by basin governments.
2.102
The committee recommends that the Commonwealth and basin states, through the Ministerial Council, provide an update on the implementation of the outstanding Productivity Commission's 2018 recommendations for the implementation of the Murray-Darling Basin Plan, and articulate reasons for delays.
Committee view on the bill
2.103
In this section, the committee provides its views and recommendation in relation to the Constitution Alternation (Water Resources) 2019 ('the bill').
2.104
As explained above, the committee acknowledges the frustration of many stakeholders with some of the complexities and inconsistencies of current multijurisdictional arrangements in relation to the Basin Plan, and in relation to the management of the basin more generally. The committee acknowledges that many of these frustrations have persisted over a long period, and can seem entirely intractable—in this context, pursuit of constitutional change may seem a proportionate and appropriate response.
2.105
However, the committee is not convinced that the multijurisdictional aspect of the management and execution of the Basin Plan is, in itself, an impediment to the delivery of the plan. The fact that these frustrations are often only revealed when inflows are very low is telling. The committee would reject any suggestion that the Commonwealth is inherently better placed than the states to manage the basin, or that the states should be subordinate to the Commonwealth in this respect. On the contrary, the committee agrees with the evidence put by multiple inquiry participants that the states are potentially more attuned to local needs and the requirements of communities and entitlement holders on the ground, even as the Commonwealth provides critical coordination and oversight of the plan. Even in a hypothetical scenario where the Commonwealth solely managed the basin, it would still be required to balance competing interests and have less resources to do so. As such, the committee does not consider that providing the Commonwealth with the power to make laws in relation to the use and management of water resources that extend beyond the limits of a state would address the concerns raised throughout this inquiry.
2.106
The committee also considers it necessary to at least note the practical difficulties of constitutional change, particularly in a policy space where there is little consensus between, or even within, jurisdictions. Constitutional change is famously difficult to achieve in Australia. This in itself is not an argument against the logic of the bill. It does, however, underscore the necessity of establishing a clear and compelling rationale for a change as fundamental as that contemplated by the bill. The committee does not consider that such a rationale was established in the course of this inquiry. If there is a case to be made for constitutional amendment providing the Commonwealth with the power to make laws in relation to the use and management of water resources that extend beyond the limits of a state, it still remains to be made.
2.107
The committee recommends that the bill not be passed.
Next chapter
2.108
The following chapter explores the limitations of scrutiny mechanisms within the basin's multijurisdictional framework.