About this insight article

This is the first of McCullough Robertson's six part series on understanding water regulation, which will focus on the complex water regimes across Queensland (QLD) and New South Wales (NSW).

Look out for further insight articles on:

  • water regulations specific to the resources sector;
  • regional water modelling and cumulative impacts;
  • water theft and offences;
  • strategic water sharing options and legal considerations; and
  • contracting models for delivering water infrastructure projects.

Water Regulation Snapshot

Water is integral to everything we do and is necessary for growing the food we eat, generating the electricity we use in our homes and for drinking and other domestic purposes. Water is also essential for the ongoing operation of our industries that are critical to Australia's economic prosperity.

To ensure that water resources are sustainably managed for the benefit of industry, the community and the environment, each State and Territory regulates the use of water through specific legislation.

Commonwealth legislation also governs water use from the Murray Darling Basin, which is a shared resource between QLD, NSW, Victoria and South Australia.

Water legislation in each jurisdiction:

  • requires that potential impacts on surface water and groundwater sources from a development are fully assessed before the development is approved;
  • requires the take of water from the environment to be quantified and licensed accordingly;
  • ensures that development does not proceed without appropriate approvals and licences being in place;
  • imposes penalties for water theft and water meter tampering; and
  • prohibits the pollution of water without controls.

Determining which laws and regulations apply to different types of operations can be challenging. The following overview provides a useful summary of the primary legislation that regulates water resources in NSW and QLD.

If you are operating a development that relies on water from the environment, or if you are considering the acquisition of such a development in the future, then it is vital that the project has access to adequate water supplies going forward and all necessary approvals are held to authorise any impacts on water.

Industry Implications

Resources Sector – access to water is a critical and ever-evolving issue for the mining and resources industry. The scrutiny of impacts from resource projects on water supplies is exacerbated by the increasing demand for Australia's resources, coupled with one of the worst droughts in Australia's history. As State and Federal Governments have tightened water regulation and assessments for the resources sector, it has never been more important for mining companies to carefully consider their current water arrangements (including approvals and access, contingency planning, water-sharing, and dealing with mine affected water etc.) and the solutions legally available to them, against the backdrop of our complex water regulation framework. In the absence of a clear and well-considered water strategy, industry participants are at risk of delays or cut-backs to exploration and production, resulting in significant impacts on mining operations, mining towns and regions, and the Australian economy. There may be opportunities for the mining and resources industry to provide community benefits and improve their water security through projects funded under the recently announced Queensland State Government's Resource Community Infrastructure Fund.

Projects – the water sector is facing unprecedented challenges as climate change, population growth, ageing assets and competing interests increase pressure for limited resources. While a multi-pronged approach is required to address these risks, the upgrading of existing assets and the development of new infrastructure will be a vital part of this strategy. Infrastructure projects of this nature will also be an important part of the economic recovery strategy in response to the ongoing COVID-19 pandemic, and new funding may become available. This applies not only to investment in water supply, but also to sanitation, treatment, quality management, flood protection and drought management. Given the often substantial capital sums involved and the social and economic importance of the projects themselves, it is critical that public and private sector proponents alike select the optimum project delivery and operations strategy to maximise value and reduce the risk of cost overruns and delays.

Local Government – a safe and reliable water supply is a critical issue for Local Governments and their communities. The current drought has again brought this issue into sharp focus. Water supply solutions may involve purchasing or leasing water from other water holders in the catchment, community education and engagement, imposing (and enforcing) restrictions on potable water, or building new infrastructure. Infrastructure and market led approaches to water management have the potential to play a role in economic recovery following COVID-19. It is essential that Local Governments carefully consider their current water rights and obligations, in the context of the water market, robust modelling of their anticipated water demands, drought strategy and compliance strategy.

Food and Agribusiness – our Australian food and agribusiness industry is currently faced with challenges following one of the worst droughts in Australian history. COVID-19 is putting pressure on global food supply chains. The effects of this juxtaposition continue to play out, with many producers, manufacturers, and exporters forced to cut operational costs as a result of unseasonal conditions. If we are to reap the benefits of this increasing demand for Australian produce, it is vital that food and agribusiness industry participants carefully consider their current water arrangements and the solutions available to them. Recent Government announcements for regional jobs and building projects may assist agribusiness in economic recovery and responding to changing global and national demand.

New South Wales

Water NSW is the regulatory authority responsible for the management of water resources in NSW. In NSW, the use of, and interaction with, water is regulated by the Water Management Act 2000 (NSW) (WMA) or the Water Act 1912 (NSW) (Water Act) as follows:

  1. the WMA governs water licensing and approvals in NSW in circumstances where a water sharing plan (WSP) has been enacted for that particular area and the particular water source (including surface water, alluvial and groundwater sources); and
  2. the Water Act continues to apply in those remaining water sources where a WSP has not been enacted or does not extend to the particular types of licences or approvals.

Water sharing plans

WSPs developed under the WMA establish rules for how water is allocated for a period of 10 years (before the WSP is reviewed and revised) and aim to ensure that water is set aside for the environment under the provisions of the WSP, whilst still permitting licence holders who require large amounts of water to carry out their business activities. Irrigators for example require licences for the large volume of water they consume, with irrigation accounting for approximately 80% of all water used in NSW. Prior to commencing any sort of water trade under the WMA, the parties involved should pay close regard to the relevant WSP as it may have restrictions (and even outright prohibitions) on the type of trades available in that water source. These matters will be explored in greater detail in our later article on strategic water trading.

The WMA requires water users in NSW to hold and comply with the conditions of a:

  1. water access licence (WAL) to take water;
  2. water management work approval to construct and use either:

  3. (a) a water supply work (such as a pump, bore or dam); or

    (b) a specified flood work at a specified location, particularly if it alters the natural flow or path of water;

  1. water use approval to use water for a particular purpose at a particular location (such as irrigation); and
  2. controlled activity approval to carry out any works within 40 metres of a river, lake or estuary (being waterfront land).

Approvals granted under the WMA relate to a particular work or activity and cannot be traded to another location or property. Conditions are attached to each approval and it is an offence under the WMA not to comply with the conditions.

Water licensing

WALs must also be obtained for any activity involving the taking of water from a water source, unless an exemption under the Water Management (General) Regulation 2018 (NSW) or the water is being taken for stock or domestic purposes or pursuant to native title rights. A WAL entitles its holder to specified shares in the available water and to take water in specified circumstances.

A WAL can be temporarily or permanently traded on the open market, subject to the specific rules in the WMA and the WSP. It is also possible under some WSP to carry over a portion of unused water allocations to a following water year in certain circumstances.

Offences under the WMA include intentionally or negligently using water without a WAL or taking water without sufficient water allocation. These offences can carry maximum penalties of $2,200,000 if committed by a corporation and $264,000 for repeat offences.

Metering requirements

Water theft and water meter tampering is an unfortunate consequence of limited water availability. Strict water metering requirements have been introduced in 2019 requiring the majority of non-urban water supply works that meet the metering thresholds to measure and record the take of water from each water supply work, with significant penalties for non-compliance.

Major projects

In the event that a proponent for development in NSW will be interfering with a water source in connection with a State Significant Development (SSD) under the Environmental Planning & Assessment Act 1979 (NSW), then the development consent granted for that activity would address these water impacts and the mitigation measures to be put in place. Therefore, it will not be necessary for a proponent to obtain a water use approval, water management work approval or a controlled activity approval under the WMA. WALs are still required for the take of water associated with a SSD project. Water implications for the resources sector will be explored in further detail in a later article.

Queensland

A similar water management framework to NSW applies in QLD, which is managed by the Department of Natural Resources, Mines and Environment and the Department of Environment and Science. In QLD, all rights to the use, flow and control of water are vested in the State.

Water Act 2000 (Qld) (Water Act)

The Water Act creates a framework which manages the planning, allocation and use of water and other resources. A water regime supports the Water Act and is set up around statutory based water plans, which relate to water in different catchments in QLD.

Somewhat similar to water sharing plans in NSW, the water plans provide for the volume of unallocated water available under a plan, and may state limitations on the taking or interference with water in the plan area and establish criteria for deciding applications for water allocations and water licences. A water licence is tied to land tenure, whereas a water allocation can be traded (subject to the trade rules) separate to any dealing with land. The water plan is the primary tool for managing water allocations and providing for water security and environmental flows.

The term water entitlement refers to both water licences and water allocations. In QLD, a water entitlement is an asset that authorises the take or interference with water from a location. The application process for a water entitlement generally involves public notification, which any person may make a submission about the application. Applications are decided in accordance with the Water Act and the relevant water plan (if one exists).

To operate water distribution infrastructure, such as dams or weirs, a resource or distribution operation licence may be required, with the take and distribution or water within the catchment being subject to conditions and rules. In addition to water entitlements, a water user may also need a development approval in order to construct the physical works (dam, weir, pipeline, bore etc.) that enable the take or interference with water. The requirements and process for development approvals for non-resource activities are regulated under the Planning Act 2016 (Qld).

For resource activities, there are various statutory rights to take and interfere with specific types of water, as well as transitional statutory provisions which may require a proponent to obtain an associated water licence in order to access statutory rights.

A number of offences exist under the Water Act. In general, an offence is committed where water is taken without an appropriate water entitlement and a penalty of up to $1,110,971.25 can be imposed. Water quality is regulated through the Environmental Protection Act 1994 (Qld) by EAs and offences relating to water pollution, as well as through the Water Supply (Safety and Reliability) Act 2008 for the supply of water, including drinking water and recycled water.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.