Chapter 2
Background
Introduction
2.1
This chapter provides background and history of the Murray-Darling
Basin, (MDB) the legislative frameworks that underpin water management in the
basin, and the development, implementation and evolution of the Murray-Darling
Basin Plan ('the Plan').
Background and history of the basin
2.2
The Murray–Darling Basin’s streams and rivers sit in a shallow basin,
which is very old, very flat, contains large stores of salt, and with respect
to groundwater is very nearly blind in that it has no outlet to the sea.[1]
2.3
The MDB catchment covers an area of 1.06 million km2 or 14
per cent of the Australian land area through Queensland, New South Wales, the
Australian Capital Territory, Victoria and South Australia. The basin provides
'essential water for its 2.1 million residents including supplying another 1.3
million people outside the basin.'[2]
2.4
The economies of many regional centres rely on the basin, which produces
one-third of all Australia's food from 20 per cent of Australia's farming land.
The basin also has a significant historic and natural tourism industry.[3]
Table 2.1. Major land use activities in the MDB region by area[4]
|
Land use activity
|
Area (km2)
|
Total area (%)
|
|
Grazing
|
727,800
|
69
|
|
Dryland agriculture
|
133,300
|
13
|
|
Conservation and natural
environments
|
107,600
|
10
|
|
Forestry
|
34,000
|
3
|
|
Irrigated agriculture
|
24,700
|
2
|
|
Urban
|
14,300
|
1
|
|
Water
|
12,400
|
1
|
|
Other intensive uses
|
1,200
|
<1
|
|
Mining
|
300
|
<1
|
|
Total
|
1,055,600
|
100
|
2.5
Prior to European settlement, the basin was home to numerous Indigenous
groups, and some of their descendants continue to have a strong connection with
the rivers and land within the basin.
2.6
European settlement of the basin commenced in the early 1800s with
farming—both stock and agricultural production—enhanced by trade on the rivers,
irrigation schemes and the Snowy Mountains Hydro-electric Scheme.
2.7
The basin and its rivers are significant in that they provide
substantial support to the Australian economy and have major cultural, social,
ecological and environmental significance to the nation.
Water management in the basin
2.8
Water management across the basin is a complex endeavour. Historically,
water management was controlled by the individual basin states. This has
evolved over the past decade, with the Commonwealth taking a more active role
in promoting and leading a basin-wide management and reform of water resources.
2.9
Following concerns about increasing levels of surface and ground water
extraction from the basin during the 1980s-90s, water regulation and water use
reform became a national issue.
2.10
In 1994, the Council of Australian Governments (COAG) agreed to a water
reform framework in recognition that management of Australia's water resources
was a national issue that would require cooperation between the Commonwealth
and basin states. A fundamental change with this agreement was the separation
of entitlements to water from land titles and the separation of the functions
of water delivery from regulation while still making provision for
environmental water.
2.11
Following the agreement in 1995, a basin-wide cap was agreed limiting
the volume of surface water to be diverted for consumptive use to 1993-94
levels.[5]
2.12
In 2004, the National Water Initiative (NWI) was agreed to by COAG to
further improve Australia's water efficiency. From this, the
Commonwealth–funded National Water Commission (NWC) was established to 'monitor
and audit water reform policy implementation and management'.
2.13
The establishment of the NWI also saw the commencement of a commitment
to recover 500 gigalitres (GL) of water for the environment, including making
available $500 million of investment to enable this water recovery to occur.[6]
This was the first time that water had been allocated solely for environmental
purposes.
2.14
The commission was later abolished in 2014 as part of the Abbott
Government budget measures.[7]
A full chronology of key events in water management policy was provided by the
Department of the Environment. This table is reproduced at Appendix 3.
Water Act 2007[8]
2.15
In early 2007, in response to the millennium drought, the Howard
Government announced that $10 billion over ten years would be provided for the National
Plan for Water Security.[9]
As part of the commitment to this package, the basin states agreed to refer
their powers to the Commonwealth.
2.16
Subsequently, the Water Act 2007 was enacted establishing the
Murray–Darling Basin Authority (MDBA) and providing for development of the
Basin Plan ("the Plan"). Central to the Plan is the establishment of
sustainable diversion limits (SDLs)—limits on the volumes of water available
for consumptive water use to ensure there are sufficient water resources
available to maintain key environmental assets.[10]
2.17
The Water Act 2007 provides the legislative framework for major
water management reforms. It marks the first time that the Commonwealth has had
a dominant role in water management, as decisions were previously made by
states and decisions on cross-jurisdictional issues required agreement from all
states. The Act enables a basin-wide approach to setting sustainable limits on
water that can be taken from surface and groundwater systems and sustainably
managing water resources in the national interest.
2.18
The Act legislated for:
-
the establishment of the Murray-Darling Basin Authority (MDBA) to
manage basin water resources;
-
the requirement for the MDBA to develop a national basin plan;
-
the establishment of the Commonwealth Environmental Water Holder
(CEWH) to manage Commonwealth environmental water and the restoration of
environmental assets in the basin;
-
the Australian Competition and Consumer Commission (ACCC) to
develop and enforce water charge and water market rules; and
-
the Bureau of Meteorology to have additional water information
functions.[11]
2.19
The objects of the Act were to:
- enable the
Commonwealth, in conjunction with the basin states, to manage basin water
resources;
- give
effect to international agreements relevant to the use and management of basin
water resources;
- promote
the use and management of basin water resources 'in a way that optimises
economic, social and environmental outcomes';
- without
limiting the previous two points,
-
ensure the return to environmentally sustainable levels of extraction
for water resources that are over allocated or overused;
-
protect, restore and provide for the ecological values and ecosystem
services of the basin; and
-
subject to the above two points, 'maximise the net economic returns to
the Australian community from the use and management' of basin water resources;
- improve
water security for all uses of basin water resources;
- ensure
the management of basin water resources is in accordance with the broader
management of natural resources in the basin;
- achieve
'efficient and cost effective water management and administrative practices'
for basin water resources; and
- provide
for the 'collection, collation, analysis and dissemination' of information on
Australia's water resources and the use and management of water in Australia.[12]
2.20
The Act was amended in 2008 by the Water Amendment Act following
the 2008 Intergovernmental Agreement on the Murray-Daring Reform which
set out the arrangements for implementing the 2007 Memorandum of Understanding
between the Commonwealth and the basin states on the principles for
co-operative management of the basin resources. This amendment subsumed the
role and functions of the Murray-Darling Basin Commission into the MDBA, made
some consequential changes to governance arrangements of MDBA, expanded the
role of basin state governments in the development of the Plan, provided for
the Plan to include 'arrangements for meeting critical human water needs' and
broadened the role of the ACCC with regard to water charge and market rules.[13]
2.21
Two further amendments were brought forward in 2015. The Water Amendment
Bill 2015 [Provisions][14]
which proposed to:
-
amend the Water Act 2007 to impose a duty on
the Commonwealth not to exceed the 1500GL limit on surface water purchases in
the Murray-Darling Basin at the time of entering into a water purchase
contract; and
-
amend the Murray-Darling Basin Plan 2012 to provide
increased flexibility in the recovery of 450GL of water through efficiency
measures funded under the Water for the Environment Special Account.
2.22
Followed by the Water Amendment (Review
Implementation and Other Measures) Bill 2015 that proposes to amend the Water
Act 2007 in relation to: reviews and reporting requirements for the Plan;
accreditation of first generation state water resource plans with further
accreditations linked to Plan review outcomes; incorporation of Indigenous expertise
and knowledge in the governance of the basin’s water resources; trading by the
CEWH; and the redundancy of the Murray-Darling Basin Water Rights Information
Service; and technical and consequential amendments.
2.23
This amendment makes the legislative changes
required to implement the government’s response to the Report of the
Independent Review of the Water Act 2007 (the Water Act Review). The
provisions of the bill are still before the Senate.
Roles and responsibilities
2.24
Water management is now carried out by a variety of Commonwealth and state
agencies that work collaboratively to manage the basin's water resources. The
MDBA's submission to the inquiry included a table that detailed the roles and
responsibilities for water reform in the basin.[15]
This table is reproduced at Appendix 4. They are:
-
the Minister for Water;
-
the Department of Agriculture and Water Resources (DAWR);[16]
-
the Murray-Darling Basin Authority;
-
the Commonwealth Environmental Water Holder (CEWH); and
-
the basin states.
2.25
As such, DAWR now provides policy advice and program implementation, and
is responsible for the water recovery strategy and national partnership agreement
for implementing the Plan.
2.26
The MDBA's key role is to oversee the implementation of the Plan at the
basin scale and liaise with the basin states. The MDBA also carries out some
river operations functions, particularly in the southern basin, on behalf of
state governments. The MDBA's governance structure is outlined in Figure 2.1
below.
2.27
The CEWH manages environmental water held by the Commonwealth.
2.28
The basin states have various responsibilities, including owning water,
allocating it to entitlement holders, holding and delivering environmental
water, and implementing the Plan in their own jurisdictions. This includes
projects under the SDL adjustment mechanism and the constraints management
strategy.[17]
Figure 2.1 Governance of the Murray-Darling Basin Authority[18]
2.29
The MDBA also supports a number of subcommittees that provide support
and guidance; the Basin Officials Committee and the Basin Community Committee
and the Northern Basin Advisory Committee.
2.30
The MDBA also manages the Basin Plan Implementation Committee (BPIC)
that was established by the basin governments and the MDBA under the MDBP 2012
Implementation Agreement to help implement the Plan.
2.31
The BPIC overseas Working groups have been established to undertake
tasks at the request of BPIC and to provide advice on particular aspects of
Plan implementation.
2.32
These working groups are the:
-
Water Resource Plan Working Group
-
Environmental Watering Working Group
-
Water Trade Working Group
-
Monitoring and Evaluation Working Group.
The Murray-Darling Basin Plan
2.33
The Plan is the key instrument that implements the Water Act 2007.
The Act requires the MDBA to develop the Plan and manage its implementation.
2.34
The Plan has two core requirements that differ from previous water
management arrangements:
-
sustainable limits on water extractions for all basin water
resources; and
-
whole-of-basin management to ensure a basin-wide approach to
managing water resources.[19]
Need for the Plan
2.35
The MDBA's submission reasoned the need for the Plan is to ensure a
sustainable basin that delivers social, economic and environmental outcomes.
The aim of the Plan is to ensure a balance between these three competing demands
to ensure triple bottom line outcomes are met, including:
...to support productive industries, farmers and towns into the
future, while leaving sufficient water in the basin’s river system to ensure a
healthy environment for the benefit of basin communities.[20]
2.36
The MDBA noted that the development, use and management of water in the
past century have changed the pattern of flows in the rivers and had unintended
consequences for the environment:
Rivers in the southern basin once flowed more strongly in winter
and spring; now their flows peak in summer and autumn to match the demands of
irrigators. Changes to seasonal peaks can affect breeding and feeding
opportunities for most of the water-dependent native animals in the basin, and
seasonality of flooding is important for most flood-dependent vegetation. While
very large floods can still occur, small to medium floods are commonly
constrained, typically by in-stream dams in the more regulated south, or
captured in large on-farm storages in the less regulated north. The reduction
in smaller flood events adversely affects the basin environment, as these
smaller floods are important in ensuring that the basin’s environment is
resilient and able to survive through drought years.[21]
2.37
Gradual changes to water use and management have meant that some land
and water resources in the basin are periodically under stress. The basin plan
was developed to address these issues and to ensure that the environment could
support productive, sustainable industries and communities.
Development of the Plan
2.38
The development of the Plan involved extensive consultation with
governments, communities and industry.[22]
Almost 12 000 submissions were received during the initial consultation period.[23]
The MDBA conducted extensive community consultation as the Plan was developed,
and incorporated feedback received into the various drafts of the Plan.[24]
2.39
Developed through several phases, the Plan commenced with the Guide to
the proposed Basin Plan, released in October 2010. The Proposed Basin Plan was
released in November 2011 and a revised draft released in May 2012. The
ministerial council then provided comments to MDBA, and an Altered Proposed
Basin Plan was released in August 2012. Further feedback was provided including
by the then Commonwealth Minister, the Hon Tony Burke MP, and the Final Basin
Plan was presented to Parliament on 26 November 2012.
Key features of the Plan
2.40
In addition to managing the basin as a single system, rather than as separate
state-based systems, the Plan involves:
-
implementing limits on surface and groundwater extraction, known
as sustainable diversion limits (SDLs);
-
coordinated environmental watering arrangements and water quality
targets to optimise environmental outcomes;
-
increased certainty for water users and entitlement holders
through more transparent water resource planning;
-
implementing reforms for a more flexible water market; and
-
implementing a one-off adjustment process to improve economic and
environmental outcomes (through the SDL adjustment mechanism and the northern
basin review).[25]
2.41
The Plan includes a set extraction limit, which means that 2750GL of
water has to be taken from consumptive use and made available to the
environment each year.[26]
2.42
The Plan also involves a seven-year transition period to enable time for
adjustment across the basin, opportunities to review and improve the Plan
during the implementation phase (including the SDL adjustment mechanism, a
constraints management strategy, the Northern Basin review, and three
groundwater extraction reviews).[27]
Implementation and ongoing work
2.43
The committee notes that the Plan is three years into a seven-year
implementation period ending in 2019[28]
and that the MDBA has completed preparatory work that includes the Plan's first
environmental watering strategy, three sets of annual watering priorities, a
constraints management strategy and a monitoring and evaluation strategy in
this time.[29]
2.44
The committee also notes that as at 30 June 2015, 1951GL of the 2750GL
per year recovery amount (due by 2019) has been recovered or contracted out by
the Commonwealth and state governments for environmental use.[30]
This amount equates to approximately 71 per cent of the required water
environmental recovery.
2.45
As per the Water Amendment Bill 2015, the committee understands
that Commonwealth water recovery purchases have now been capped at 1500GL and
that any future environmental recovery volumes will primarily be achieved
through infrastructure projects.[31]
2.46
The Department of Environment states in its submission that the current
focus of Commonwealth programmes is on supporting irrigators to 'improve the
operation of off-farm delivery systems and helping irrigators improve the
efficiency of their water use on-farm.'[32]
Off-farm programmes, the Department notes, are aimed at reducing loss of water
from seepage, evaporation and other losses, and rationalising irrigation
schemes, whereas on-farm programmes aim to modernise infrastructure in order to
increase productivity and adjust to reduced water availability.
2.47
In addition to ensuring environmental outcomes,[33]
the MDBA says it continues to monitor the social and economic effects of the Plan
on basin communities and industries, noting that the Plan is just one of many
factors that can impact on communities and industries, and that its effects can
be both positive and negative in different areas.[34]
2.48
New water trading rules came into effect in 2014 to improve the
operation and transparency of the water market. They remove barriers to trade
and give water traders better access to market information. The MDBA indicated
that an increasing number of people are participating in the water market.[35]
2.49
The SDL adjustment mechanism was included in the Plan at the request of
state governments, and gives 'an opportunity to increase the water extraction
limits in the Basin Plan if states could develop projects that can achieve
equivalent environmental outcomes to the Basin Plan with less water'.[36]
These are called supply measures and would lead to a reduction in the recovery
target (i.e. amount removed from consumptive use). SDLs apply to both surface
water and ground water. Early assessment of supply measures has indicated that
the SDLs could be increased by up to 500GL.[37]
2.50
A constraints management strategy was also included in the Plan at the
request of governments. Constraints are 'river rules, practices and structures
that govern the volume and/or timing of regulated water delivery through the
river system.'[38]
The Plan is said to be capable of being delivered without any constraints, however
addressing constraints can improve the effectiveness of environmental flows.
The MDBA is involved in undertaking preliminary work on constraints in some
areas.[39]
2.51
A review of the Northern Basin was built into the Plan to assess and
amend, if required, the extraction limits for the Northern Basin, with a
particular focus on the Condamine-Balonne and Barwon-Darling systems. This work
is being conducted by the MDBA in concert with federal, state and local
entities and is due to conclude in 2016.[40]
2.52
State governments also requested the Plan include reviews of sustainable
groundwater extraction limits in three areas in NSW and Victoria. This work is
ongoing and may lead to an amendment to the Plan in 2016.[41]
2.53
Furthermore, all basin states are developing water resource plans for
accreditation by the Commonwealth, outlining their water management plans from
2019 to 2029.
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